Specific Legal Issues

May, 16 2019 Published by Vancouver Chapter - By Lisa Frey

Is This Unit Really Occupied? BC Court of Appeal Weighs In

From CCI Vancouver Condo News, Spring Issue 2019

HighStreet Accommodations Ltd. v. The Owners, Strata Plan BCS2478. (BC Court of Appeal) February 21, 2019

The court of appeal recently upheld a decision regarding the important distinction between "rentals" and "licenses" in the context of strata corporation bylaws. In this case, the strata corporation had passed a bylaw that restricted occupancies, including a prohibition of short-term occupancies (less than 180 days in duration). The tenant of one of the strata lots, HighStreet Accommodations Ltd., is company well-known in BC for placing tenants and subtenants in higher end strata corporations for various temporary purposes (i.e. short term work in BC, such as in connection with the film industry, or relocation of individuals whose houses are being restored following flooding, etc.). As tenant, HighStreet had been granting short-term licenses of the strata lot to the tenant’s clients. That tenant challenged the bylaw as being in contravention of Section 143 of the Strata Property Act - commonly known as the "grandfathering" of existing tenants. Section 143(1) provides as follows:

143 (1) Subject to subsection (4), a bylaw that prohibits or limits rentals does not apply to a strata lot until the later of

(a) one year after a tenant who is occupying the strata lot at the time the bylaw is passed ceases to occupy it as a tenant,

and (b) one year after the bylaw is passed.

HighStreet argued that it was the tenant of the strata lot, and therefore was exempt from any rental restriction bylaw until one year after its tenancy ended, pursuant to subsection (a). The lower Court, however, upheld the bylaw and found that it applied to the unit one year after it was passed, pursuant to subsection (b).

The owner appealed, and ultimately, the Court of Appeal dismissed the appeal. The Court of Appeal provided a rationale for Section 143 as follows:

[This section] establishes a grace period of at least one year before a rental restriction bylaw applies to a residential strata lot regardless of whether an existing tenancy is in place, providing the owner with a reasonable period in which to adjust previously-held expectations (based on a Rental Disclosure Statement or existing bylaws). However, where an owner has no relevant previously-held expectation, there is no grace period and a rental restriction bylaw applies to a strata lot immediately (s. 143(4)). In addition, s. 142 limits the scope of permissible rental restriction bylaws by providing that they cannot prevent an owner from renting to a family member and s. 144 enables an owner to apply for an exemption on the grounds that a rental restriction bylaw causes the owner hardship.

...

The words "occupying" and "ceases to occupy" in s. 143 are used here in a provision which establishes a reasonable grace period before a valid rental restriction bylaw passed by the collective membership of a strata corporation applies to an individually-owned residential strata lot. In this context, in my view, they must mean physical occupation by a tenant, whether that tenant is a corporation or a natural person. If it were otherwise, an individual owner could defeat the collective will of the strata membership by renting a residential unit to a non-resident tenant who would be free for an indefinite period thereafter to ignore duly passed rental restrictions applicable to other strata lots in the development. In my view, such an interpretation would undermine the carefully calibrated balance of individual and collective rights established by the SPA and defeat the intention of the legislature. It is not required by the plain meaning of the words in s. 143 and, in any event, would produce an absurd result.

As noted, Bylaw 46.5 is, at least in part, a rental restriction bylaw. HighStreet, as the tenant, did not physically occupy the strata lot when it was passed. Therefore, Bylaw 46.5 applied to the strata lot one year later, rather than one year after the tenancy ends (which could be perpetual).

This case may also have important implications for other provisions in the Strata Property Act and other pieces of housing legislation which use the word "occupancy".

Decision: Appeal Dismissed. Court of Appeal upholds strata corporation’s rental restriction by-law.

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