It’s been almost two years since the Strata Property Act was amended to change the process for voluntarily winding up strata corporations. Now it’s possible for owners in a strata development to voluntarily wind up their strata corporation—with or without a liquidator—once the owners pass a resolution with 80% approval.
Previously, unanimous approval was needed. With strata corporations of five or more strata lots, the approved winding-up resolution must be confirmed by a court order within 60 days.
Since the Act was amended, three court orders have been sought to approve a winding-up resolution to cancel a strata plan and appoint a liquidator, as required. In each case, a minority of owners opposed the resolution and sought a subsequent court order.
The first case heard by the B.C. Supreme Court was The Owners, Strata Plan VR 1966, (Bel‑Ayre Villa). While the majority of owners in this case passed a winding-up resolution, upon review by the Court the resolution was deemed invalid due to missing information in the interest schedule for registered charge holders, as required by the Act. The judge determined this deficiency could not be overlooked or rectified at a later date by adding the missing information after the winding-up resolution had been passed.
The second case was The Owners, Strata Plan VR2122 v. Wake, (The Hampstead). Again, the majority of owners passed the necessary winding-up resolution. However, a minority of owners tried to argue, among other things, that the winding-up resolution was invalid due to the name and address of the liquidator not being included, as well as a missing charge in favour of the City of Vancouver. The judge in this case did not view either matter to be fatal or essential such that the missing information should result in the winding-up resolution being declared invalid.
The third and most recent case heard by the Supreme Court was The Owners, Strata Plan VR2702 (Re), (Barclay Terrace). Five days before the special general meeting of owners where a winding-up resolution was to be considered, the decision in the Bel‑Ayre case was released.
As a result of Bel‑Ayre, the strata corporation in the Barclay Terrace case opted to amend the winding-up resolution to change, among other things, the name of the liquidator and add missing information in the interest schedule for registered charge holders. This is permitted by the Act, as long as the amendments do not substantially change the nature of the resolution and the amendments are approved by a three-quarters vote before the resolution is voted on.
The amendments and the amended winding-up resolution were both ultimately passed by the required number of owners but were opposed by a minority of owners when presented to the court for confirmation on the basis that the amendments were substantive changes. Unlike the Bel‑Ayre case, however, the judge in the Barclay Terrace case (who was actually the same judge who heard Bel‑Ayre) was not persuaded that the amendments made to the winding-up resolution were of such significance to change the resolution fundamentally.
As property values for aging strata developments continue to increase, the courts will undoubtedly hear more cases to confirm winding-up resolutions.
Before a vote is held for such a resolution, it is a good idea for strata corporations to review the Act with a lawyer to ensure all necessary information is included in the winding‑up resolution from the outset. Otherwise, the door is open for a minority of owners to challenge the resolution, possibly with success, when the court is asked to confirm it.