- Primary Criteria
- Is the Subject of the Dispute Eligible for Arbitration?
- Other Statutes Must Not Apply
- The Effect of Court Proceedings
- Consolidating Two or More Arbitrations
- Arbitrations Involving the Strata Corporation
- Prior Authorization
- Arbitration Begun by Strata Corporation
- Arbitration Against the Strata Corporation
- Starting an Arbitration
- Failure to Meet Deadlines
- Persons Who May Not Be An Arbitrator
- Pre-Hearing Matters
- The Arbitration Hearing
- Enforcing an Arbitrator’s Decision
- Overturning an Arbitrator’s Decision
The Strata Property Act permits arbitration if certain requirements are met.
In an arbitration under the Strata Property Act, a strata corporation may arbitrate a dispute with an owner or tenant. Alternatively, an owner or tenant may arbitrate with the strata corporation, or with another owner or tenant. To arbitrate under the Act as an owner or tenant, a person must be an owner or tenant at the time the dispute arises.
Alternatively, if the parties wish, they may arbitrate their strata dispute under the Commercial Arbitration Act in certain cases.
This chapter describes the way the Strata Property Act regulates arbitration. In October 2009 the province passed amendments 1 to the Strata Property Act which, at the date of this writing, are not yet in force. If the province brings these amendments into force, they will repeal most of the current statutory arbitration system and replace it with a scheme based upon regulations. The amendments authorize the government to create regulations establishing when mediation or arbitration must occur, as well as procedures for mediation and arbitration respectively. Until the government publishes its proposed regulations for mediation and arbitration, and in each case the necessary procedures, we do not know how this scheme will work. A regulation is necessary to bring these amendments into force. 2
The Strata Property Act describes when arbitration is available.
To qualify for arbitration under the Strata Property Act, a dispute must involve particular subjects. In addition, the dispute must not be governed by certain other statutes.
Is the Subject of the Dispute Eligible for Arbitration?
To be eligible for arbitration, the dispute must concern one or more of the following matters: 3
- the interpretation of the Strata Property Act, regulations, bylaws or rules,
- the common property or common assets,
- the use or enjoyment of a strata lot,
- money owing under the Act, regulations, bylaws or rules, including fines,
- an action or threatened action by the strata corporation,
- the exercise of voting rights by a person who holds 50 per cent (50%) or more of the votes, including proxies at a general meeting.
By contrast, in court proceedings a strata corporation is not similarly restricted to certain types of dispute. In a representative lawsuit, the strata corporation may sue about any matter affecting the corporation. 4
Other Statutes Must Not Apply
Sections 2 and 4 of the Residential Tenancy Act govern the resolution of disputes between landlords 7 and tenants in most residential tenancies. Suppose, for example, that an owner rents the owner’s residential strata lot to a tenant. Imagine they have a dispute about their rights or obligations under the Residential Tenancy Act, or about the tenant’s use of the rental unit or common facilities under their tenancy agreement. 8 If they cannot resolve the dispute themselves and they want to resolve it, they must arbitrate under the Residential Tenancy Act. To arbitrate, the owner or tenant must apply at the Residential Tenancy Branch for a hearing to resolve the dispute under Part 5 of the Residential Tenancy Act.
The Commercial Arbitration Act establishes arbitration procedures for resolving a wide variety of disputes in British Columbia. 9 Typically, the Commercial Arbitration Act applies where legislation which provides for arbitration refers to the Commercial Arbitration Act or if there is an agreement to arbitrate under the Act. 10 Many commercial agreements, for example, contain an agreement to arbitrate under the Commercial Arbitration Act. In addition, if an arbitration agreement refers to “the Arbitration Act,” it is deemed to be a reference to the Commercial Arbitration Act. The Commercial Arbitration Act does not apply to certain disputes; for instance, where the International Commercial Arbitration Act governs the arbitration. 11
Arbitrating a Strata Dispute Under the Commercial Arbitration Act
The parties may choose to arbitrate under the Commercial Arbitration Act instead of the Strata Property Act, if they meet certain criteria. If all parties agree to the use of the Commercial Arbitration Act, and Part 5 of the Residential Tenancy Act does not apply to the dispute, then the Strata Property Act arbitration provisions do not apply to the dispute. 12
Although the Commercial Arbitration Act contains some arbitration provisions similar to those in the Strata Property Act, there are differences. The following illustrate some, but certainly not all, of the differences. The Commercial Arbitration Act requires the parties to use the Domestic Commercial Arbitration Rules of the British Columbia International Commercial Arbitration Centre, unless the parties agree otherwise. 13 The Commercial Arbitration Act allows a party to issue a subpoena to a witness.
With respect to awarding costs, the Commercial Arbitration Act specifically allows an arbitrator to order a party to pay the actual, reasonable legal expenses of another party, and permits an arbitrator to refer the question of costs to the Supreme Court for assessment. 14 Any party to the proceedings, or an arbitrator, may refer the arbitrator’s account for fees and expenses to a District Registrar of the Supreme Court of British Columbia for an independent review. The review involves the same procedure used to review a lawyer’s bill for fees, disbursements and other charges. 15
The Effect of Court Proceedings
After court proceedings commence, a dispute may no longer be referred to arbitration. 16
However, if arbitration proceedings start first, and someone then initiates court proceedings over the same matter, any party to the arbitration may apply to the court for an order to suspend the court proceedings while the arbitration continues. 17
In one case, an owner started the arbitration first, and then asked the Supreme Court of British Columbia for an injunction to halt certain repairs pending the arbitration. 18 The strata corporation hired a contractor to repair a building envelope. A small portion of the repairs involved replacing some common property windows, doors and decks adjacent to the owner’s strata lot. In the repairs to the adjacent common property, the owner asked the strata corporation to incorporate certain upgrades at the owner’s expense. While they discussed the owner’s request, the strata corporation temporarily stopped work in the relevant area. Despite several months of discussion, the strata corporation and the owner had not yet agreed on the specific upgrades for inclusion and their cost. To avoid more delay, the contractor resumed work in the area in question. In response, the owner promptly began an arbitration against the strata corporation to determine which upgrades should be incorporated in the work. Then the owner applied to court for an injunction to halt the repair work in the relevant area pending the arbitration.
After considering the interests of each of the owner and the strata corporation, the court refused to grant an injunction. In the court’s view, the strata corporation’s needs prevailed. There was no way to know how long the arbitration would take. Meanwhile, the strata corporation had a statutory duty to make the repairs. Delaying the work for weeks, or perhaps months, would make the repairs more expensive for the strata corporation, and consequently for all of the owners. It would be unfair for the rest of the owners to have to carry the extra expense caused by waiting for the arbitration.
Consolidating Two or More Arbitrations
Where similar disputes arise between different parties, section 180 of the Strata Property Act allows those disputes to be heard in a single arbitration if the following criteria are met. The disputes must involve matters that may be arbitrated, and all parties must agree on the appointment of an arbitrator and the steps necessary to consolidate the disputes.
If an arbitration commenced before July 1, 2000, when the Strata Property Act came into force, then the arbitration provisions in the Act do not apply. For this purpose, the regulations define when an arbitration commenced. According to the regulations, an arbitration commenced before July 1, 2000 if before that date an arbitrator was appointed under section 44 of the former Condominium Act. If so, the arbitration procedures in section 45 of the former Condominium Act govern the arbitration. 19
Arbitrations Involving the Strata Corporation
If a strata corporation is a party to an arbitration, the Strata Property Act extends the following provisions concerning a lawsuit to the arbitration.
Where a strata corporation is a party to an arbitration, then with appropriate changes, the Strata Property Act requires the eligible voters at a general meeting to first authorize the arbitration, just like in a lawsuit. The Act also imposes on each owner liability for expenses and judgments in the same fashion as in a lawsuit. 20
These requirements for prior-authorization are explained in more detail in Chapter 27, Lawsuits. That chapter includes information about a Strata Property Act amendment that removes the ability of any other party in an arbitration to raise as a defence, or to object to, a strata corporation’s failure to first obtain a required 3/4 authorization or written consent. In addition, that chapter lists certain exceptions where prior authorization is not required.
Arbitration Begun by Strata Corporation
If a strata corporation wishes to arbitrate as a representative of all the owners, the arbitration must be authorized by a resolution passed by a 3/4 vote at a general meeting. An owner against whom the arbitration is brought is not an eligible voter for the purpose of that vote. Except for an owner against whom the arbitration is brought, in respect of every other strata lot each owner must contribute to the expense of the arbitration according to the schedule of unit entitlement. When calculating each owner’s contribution to the arbitration expenses, the strata corporation must not use the unit entitlement of a strata lot owned by an owner against whom the arbitration is brought. 21
If a strata corporation wishes to arbitrate as a representative of one or more, but not all, of the owners, there are two additional prerequisites to the arbitration. 22
Before the strata corporation begins the arbitration:
1. The strata corporation must obtain the written consent of the owners on whose behalf the corporation wishes to bring the arbitration, and
2. The strata corporation must authorize the arbitration by a resolution passed by a 3/4 vote at a general meeting.
Only those owners on whose behalf the arbitration is brought must contribute to its expense. Each of those owners, in respect of his or her strata lot, must contribute a proportionate share of the expense of bringing the arbitration according to the schedule of unit entitlement. 23
Arbitration Against the Strata Corporation
When a strata corporation is served with a Notice Beginning Arbitration (Form L), it must inform the members as soon as feasible. 24
In respect of each strata lot, every owner shares the expense of the arbitration according to unit entitlement, with one exception. Where an owner commenced the arbitration against the strata corporation, that owner does not have to contribute. 25
In the same way that the owners are personally liable for a court judgment against the strata corporation, the owners are personally liable if an arbitrator makes a monetary award against the strata corporation. If, for instance, the strata corporation collects money to pay the award, each owner, in respect of his or her strata lot, must contribute according to the schedule of unit entitlement. An exception occurs where an owner brought the arbitration against the strata corporation. That owner does not have to contribute to payment of the award against the corporation. 26 For more information about an owner’s liability for a judgment against the strata corporation, see Chapter 27, Lawsuits.
The Strata Property Act contains detailed procedures for the arbitration process. Section 179 of the Act prescribes the forms and time frames that apply to begin an arbitration process. The various arbitration forms are found among the forms in the regulations.
At any stage of arbitration, a party may be represented by another person, including a lawyer. 27
Starting an Arbitration
The arbitration starts with an exchange of Notices which the parties give to one another. For information about the requirements for properly giving a Notice, whether the notice is given by, or to, an individual or a strata corporation, see Chapter 12, Meetings.
Notice Beginning Arbitration (Form L)
To begin an arbitration, a Notice Beginning Arbitration (Form L) must be used. The party seeking arbitration must give a Form L to the other party. The Form L must describe the dispute, and should set out the relief sought. The Form L must also propose either a single arbitrator, or a choice of one of several suggested arbitrators or a method for appointing an arbitrator. 28
Notice of Reply (Form M)
After receiving a Notice Beginning Arbitration (Form L), the other party(ies) must respond by giving a Notice of Reply (Form M) to the party that began the arbitration. In the Form M, the party responding must state, in effect, whether that party agrees with the choice of an arbitrator, or with the method for appointing an arbitrator, as the case may be, proposed in the Form L by the party that began the arbitration.
If the party responding does not agree with the choice of arbitrator, or the method for selecting one, proposed in the Notice Beginning Arbitration (Form L), then in the Notice of Reply (Form M), the party responding must counter-propose another arbitrator(s) or a different method of appointing an arbitrator. 29
Time Limit for Giving a Notice of Reply (Form M)
The other party has up to 15 days to respond to the Notice Beginning Arbitration (Form L) by giving a Notice of Reply (Form M) to the party who began the arbitration.
Section 179(2) of the Strata Property Act says that the other party must respond by giving a Notice of Reply (Form M) to the party who began the arbitration “within two weeks.” The Interpretation Act, however, requires that we calculate this two-week period by excluding the first day of the period of time, and including the last day. In effect, when Section 179(2) of the Strata Property Act and Section 25 of the Interpretation Act 30 are read together, this means that the other party must respond by giving a Form M to the party who began the arbitration within 15 days.
Notice Responding to Reply (Form N)
If a Notice of Reply (Form M) counter-proposes another arbitrator(s) or a different method of appointing an arbitrator, the person who began the arbitration must respond to the counter-proposal by giving the other party a Notice Responding to Reply (Form N). In the Form N, the party who began the arbitration must state, in effect, whether that party agrees with the other party’s Form M counter-proposal for the appointment of an arbitrator.
Time Limit for Giving a Notice Responding to Reply (Form N)
To respond to a counter-proposal for the selection of an arbitrator in a Notice of Reply (Form M), the party who began the arbitration has up to eight days to give the other party a Notice Responding to Reply (Form N).
Section 179(4) of the Strata Property Act says that the person who began the arbitration must respond by giving a Notice Responding to Reply (Form N) to the other party “within one week” after receiving the other party’s Notice of Reply (Form M). For the reasons explained above, the Interpretation Act dictates the calculation of time. 31 When Section 179(4) of the Strata Property Act and Section 25 of the Interpretation Act 32 are read together, it means that the party who began the arbitration must give a Form N to the other party within eight days.
If the party who began the arbitration agrees with the other party’s Form M counter-proposal for the appointment of a specific arbitrator, the parties should promptly notify the arbitrator. If, instead, the parties agree on a method for appointing the arbitrator, then the parties should use that method to select the arbitrator and, once chosen, immediately notify that arbitrator. Once the arbitrator is notified of his or her selection, the arbitrator may proceed to the hearing, as described below.
If, in the Notice Responding to Reply (Form N), the person who began the arbitration rejects the other party’s Form M counter-proposal for the appointment of an arbitrator, then each party must appoint his or her own arbitrator, and the two arbitrators must either: 33
- name a third person as the sole arbitrator, or
- name a third arbitrator to act with them and to chair the panel.
Time Limit for Each Party to Appoint One Arbitrator
Where there is no agreement for the selection of an arbitrator in the Notice Responding to Reply (Form N), section 179(6) of the Strata Property Act says that each party “has one week” to appoint his or her own arbitrator. For the reasons explained above, the Interpretation Act governs the calculation of time. 34 When Section 179(6) of the Strata Property Act and Section 25 of the Interpretation Act 35 are read together, it means that each party must appoint their respective arbitrator within eight days of delivery of the Notice Responding to Reply (Form N).
If, for any reason, a single arbitrator or a panel of arbitrators is not appointed “within six weeks after the Notice Beginning Arbitration (Form L) is given,” any party may apply to the Supreme Court of British Columbia to appoint an arbitrator. 36
For the reasons explained above, the Interpretation Act dictates the calculation of time. 37 When Section 179(7) of the Strata Property Act and Section 25 of the Interpretation Act 38 are read together, it means that in the first 43 days from the date the Notice Beginning Arbitration (Form L) was given, a party may apply for a court-appointed arbitrator if, for any reason, the parties fail to appoint a single arbitrator, or a panel of arbitrators.
Failure to Meet Deadlines
Despite its detail, the Strata Property Act does not clearly state what process to use if a party who receives a Notice fails to respond in accordance with the Act. For instance, what happens if a party who receives a Notice Beginning Arbitration (Form L) fails to respond at all, or responds late, after the 15-day time limit provided by the Act to give a Notice of Reply (Form M)?
The simplest, most cost-effective solution is likely to wait six weeks and then apply to the Supreme Court of British Columbia for the appointment of an arbitrator, as described above.
If, on the other hand, the other party responds, but gives the response late, the party beginning the process may choose to overlook the delay and move forward with the process. Later, in the hearing, an arbitrator may, in some circumstances, take the laggard’s delay into account when determining the arbitration.
If it is unworkable to wait six weeks to apply to the court to appoint an arbitrator, one might characterize the failure to respond as a failure to perform a duty. For each Notice in the arbitration process, the Strata Property Act describes the requirement to respond in mandatory language. So, for example, following receipt of a Notice Beginning Arbitration (Form L), a party must respond. 39
The Strata Property Act permits a strata corporation to apply to the Supreme Court of British Columbia for an order compelling an owner, tenant or other person to perform a duty that he or she is required to perform under the Act. Similarly, an owner, tenant or interested person may apply to the court to order a strata corporation to perform a duty under the Act. 40
Whether the party that fails to respond to the Notice is an owner, a tenant, a strata corporation or, in rare cases, some other person, it appears the innocent party may apply to the court for an order compelling the laggard to perform the duty of responding to the arbitration notice. Legal counsel would likely not consider this option cost effective unless the benefits outweigh the legal expenses.
Alternatively, if the dispute is one that may be resolved by the courts, the party who unsuccessfully attempted to initiate arbitration may instead choose to sue in court.
Persons Who May Not Be An Arbitrator
Unless all parties consent, section 179(8) of the Strata Property Act prohibits the following persons from serving as an arbitrator:
- an owner,
- a tenant in the strata corporation,
- an occupant in the strata corporation. The Strata Property Act defines the term occupant as a person, other than an owner or tenant, who occupies a strata lot, 41
- the strata manager, or
- any employee of the strata corporation.
Before holding a hearing, the arbitrator must advise the parties of the possibility of a mediated settlement. 42
The parties to the arbitration must submit to the arbitrator, prior to the hearing, a written statement describing the nature of the dispute and the evidence they intend to call. 43
Prior to a hearing, the arbitrator may also give notice to a person who is not a party, but who, in the arbitrator’s opinion, may be directly affected by the issues in question at the hearing. Upon receiving notice, the person may submit a written statement to the arbitrator. After the person provides a written statement, that person may then be joined as a party to the arbitration if:
- the person consents,
- the arbitrator requests that the person be joined, and
- the other parties consent.
The wording of section 182 of the Strata Property Act suggests that all three of these conditions must exist before the person may be joined as a party to the arbitration.
The Arbitration Hearing
The arbitrator must hold a hearing as soon as possible at a location in or near the strata corporation’s premises. Alternatively, if all parties agree, the hearing may consist instead of the exchange of written statements, or any other procedure. 44
An arbitration hearing is open to all owners or tenants, unless all the parties to the arbitration agree that the hearing should be held in private. 45
An arbitrator may conduct a hearing in the manner the arbitrator considers appropriate, subject to the Strata Property Act and regulations. 46 The duty of an arbitrator is summarized by the Law Reform Commission of British Columbia in its 1979 Working Paper on Arbitration as follows: 47
While there are no specific requirements for any particular procedure to be followed by arbitrators in determining a dispute referred to them, they must act in accordance with natural justice, they must not exceed the jurisdiction conferred upon them by the submission and they must decide the dispute in accordance with the law applicable thereto. . . .
In this passage, the duty to act “in accordance with natural justice” means the arbitrator must ensure procedural fairness. In other words, an arbitrator must be independent and act impartially, without bias, giving all sides an opportunity to be heard. In this regard, the Strata Property Act says the arbitrator must allow each party adequate opportunity to present and rebut evidence. 48 With these objectives in mind, some arbitrators adapt the procedures in the Domestic Commercial Arbitration Rules established by the British Columbia International Commercial Arbitration Centre, referred to earlier in this Chapter. 49
The Strata Property Act specifically gives an arbitrator certain powers to facilitate the hearing process. The arbitrator may require that a party, or a witness, who testifies does so under oath or affirmation. The arbitrator may administer that oath or affirmation to the individual who is going to testify. 50
When ordered by the arbitrator, a party to the arbitration must submit to questioning by the arbitrator and produce all relevant documents that the arbitrator may require. Apart from the authority to question a party and request that party’s documents, the Strata Property Act does not give an arbitrator the power to compel a witness to attend and testify.
A person who is not a party to the dispute may only give evidence if two criteria are met. First, the individual must consent to testify. Second, a party to the dispute must ask that person to give evidence. 51
In the arbitration, the Strata Property Act allows an arbitrator to admit evidence that the arbitrator considers relevant to the issues in dispute, whether or not that evidence would be admissible in a court. 52
An arbitrator must give a decision in writing, signed by the arbitrator. The arbitrator may make whatever decision he or she considers just, having regard to the Strata Property Act, the regulations, and the bylaws and rules. The decision, however, must include the arbitrator’s reason(s) for the decision. When making a decision, the Act gives an arbitrator the authority to do one or more of the following: 53
- order a party to do something,
- order a party to refrain from doing something,
- order a party to pay money as damages.
An arbitrator’s authority to award damages is the power to order a party to pay money as compensation for harm, in accordance with the common law principles of damages. 54 In Strata Plan NW 3079 v. Chan the court overturned an arbitrator’s damage award because there was no evidence that the party in question suffered compensable harm. In Chan, an arbitrator considered whether the strata corporation improperly charged back certain costs to an individual strata council member. Despite finding that the strata corporation wrongly charged back the costs to its council member, the arbitrator found the charge-back had no clear, measureable effects on the council member. The arbitrator ordered the strata corporation to pay the council member $3,000 in damages, even though there was no evidence that the council member suffered any loss as a result of the charge-back. When the strata corporation appealed against the arbitrator’s $3,000 damage award, the court set it aside because there was no evidence the council member suffered pecuniary harm that justified damages. While it is clear an arbitrator may award damages if there is evidence of pecuniary loss, the court expressly refrained from deciding in this case whether an arbitrator under the Strata Property Act may award damages for other types of loss,