Abstract Projects Inc. v. The Owners, Strata Plan EPS6069

2023 BCSC 42 Abstract Projects Inc. v. The Owners, Strata Plan EPS6069

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Abstract Projects Inc. v. The Owners, Strata Plan EPS6069, 2023 BCSC 42 Date: 20230110 Docket: S212540 Registry: Victoria Between: Abstract Projects Inc. and Black & White Parking Co. Ltd. Petitioners And The Owners, Strata Plan EPS6069 Respondent Before: The Honourable Mr. Justice Armstrong Reasons for Judgment Counsel for the Petitioners: A.L. Faulkner-Killam Counsel for the Respondent: A.J. Chang Place and Date of Hearing: Victoria, B.C. March 23, 2022 Place and Date of Judgment: Victoria, B.C. January 10, 2023 Table of Contents I. Introduction. 3 II. Background. 5 III. Issues. 8 IV. The Parties' Positions. 9 A. The Petitioners' Position. 9 B. The Respondent's Position. 11 V. Discussion. 12 A. Enforceability of the Lease. 12 1. Strata Property Act 13 2. Land Title Act 16 3. Real Estate Development Marketing Act 16 VI. The Case Law.. 17 VII. Conclusion. 33 A. Interpretation of the Lease. 34 B. Contractual Interpretation Principles. 34 C. The Lease. 38 D. The Disclosure Statement 40 E. The Filed Strata Plan. 44 F. Bylaws and Compliance Agreement 46 VIII. Conclusion. 49 A. Proprietary Estoppel 51 B. Capability to Comply. 54 C. Evidence. 55 IX. Conclusion. 55 I. Introduction [1] Beginning in 2016, the petitioner Abstract Projects Inc. ("Abstract") began developing a residential strata located on Cook Street in Victoria, BC. The

building included underground parking stalls some of which were eventually designated in the filed strata plan as "Limited Common Property for the Exclusive use of" residential strata lot owners (the "Residential Parking Stalls"). The Residential Parking Stalls are located behind an interior security gate, whereas the parking stalls designated as "Limited Common Property for the Exclusive use of" commercial strata lot owners (the "Commercial Parking Stalls") are located in front of the interior security gate. [2] In a contract titled Parking Facility Lease (the "Lease") dated October 4, 2019, Abstract purported to lease parts of the development's common property comprising all of the parking stalls in the development to Black and White Parking Co. Ltd. ("B&W") for 99 years, permitting B&W to "partially assign or sublet this Lease and its rights under this Lease to an owner or purchaser of any strata lot within the development or to the Strata Corporation." The Lease was dependant on filing of the strata plan creating the strata and common property (being the parking stalls) to be subdivided by the Lease: see para 2.01 of the Lease. [3] The respondent and the petitioners also entered into an agreement on October 22, 2019 titled "Agreement-Parking Facility Lease" (the "Compliance Agreement") under which the respondent acknowledged notice of the Lease and agreed to comply with its

terms. [4] The issue in this case is whether the Strata Corporation is obligated to comply with the Lease to give effect to B&W's right to assign Residential Parking Stalls to non-residential strata lot owners. Put another way, the question is whether the respondent strata corporation is obligated to respect assignments of Residential Parking Stalls by B&W to assignees that do not own residential strata lots in the face of the "limited common property for exclusive use or residential strata lot owners". [5] The petitioners seek a declaration construing the Lease as requiring the respondent to recognize and register lease assignments of Residential Parking Stalls to non-residential strata lot owners or others. They seek an order compelling the respondent to facilitate use and access to Residential Parking Stalls by entities that do not own residential strata lots, in spite of the designation of those stalls in the strata plan as being "for the Exclusive use" of residential strata lot owners. [6] The petitioners argue the respondent has failed to comply with the Lease and the Compliance Agreement and seek orders compelling the respondent to take specific steps to respect the Lease assignments. [7] The petition invokes the Court's jurisdiction to make declaratory and mandatory orders concerning enforcement of agreements including the Lease and Compliance Agreement. The petitioners

want to compel the respondent to "establish a register of parking stalls indicating the Strata Lot that has the benefit of partial assignments of the Parking Lease" and "to provide the Tenant with means of access to any security device as necessary to enable the Tenant and subsequent assignees to use and enjoy the Leased Stalls". [8] Ancillary to those requests the petitioner seeks an injunction prohibiting the strata corporation from interfering with the rights of assignees of Residential Parking Stalls to uninterrupted access to their leased stalls and failing compliance, permission to remove the interior security gate from the parkade. [9] The petitioners rely on Rule 2-1(2)(c) of the Supreme Court Civil Rules, B.C. Reg. 168/2009 in contending that the sole or principal question to be considered on this petition is the construction of the Lease and whether mandatory or injunctive relief should be granted. [10] There are no claims for relief advanced by the respondent except those mentioned in its reply. II. Background [11] The development includes 82 strata lots forming a mixed-use residential and commercial strata now constituted as The Owners, Strata Plan ESP6069 in the City of Victoria. Michael Miller is the president, chief executive officer and principle of both petitioners. [12] The development consists of 75 residential strata lots and seven commercial strata lots.

The strata plan for this development includes 75 parking stalls designated as "Limited Common Property for the Exclusive use of Strata Lots 8-82" (lots 8-82 being the residential strata lots) and seven parking stalls designated as "Limited Common Property for the Exclusive use of Strata Lots 1-7" (lots 1-7 being the corporate strata lots). Importantly, the strata plan designated an interior security gate to be placed separating Residential Parking Stalls from Commercial Parking Stalls. It is necessary for anyone accessing the Residential Parking Stalls through the interior security gate to be provided with a key fob to pass through the security gate. [13] Early in the development of the strata, Abstract published its initial disclosure statement dated March 30, 2016 (the "Initial Disclosure Statement") containing descriptions of common property, limited common property and parking. This statement was issued prior to completion of the construction work and was later amended April 12, 2016, December 28, 2016, March 14, 2017 (the "Third Amendment"), March 19, 2018, December 18, 2018 and May 15, 2019. [14] The Initial Disclosure Statement at part 3.4 included the following: Limited Common Property is an area within the Common Property that is designated for the exclusive use of one or more Strata Lots. The Developer may designate as Limited Common Property on the Strata Plan

certain areas for the benefit of one or more of the Strata Lots. Limited Common Property may be subject to restrictions as may be set out in the bylaws of the Strata Corporation, any leases, licenses, easements granted by the Developer prior to or with the registration of the Strata Plan or subsequently approved or granted by the Strata Corporation in accordance with the bylaws and the Strata Property Act (B.C.). [15] The Third Amendment to the disclosure statement removed details concerning parking that were included in the Initial Disclosure Statement at part 3.6 and inserted a new part 3.6 which includes the following: The parking stalls for the Development will be located on two underground parkade levels. The upper parkade level (P1) will have 4 parking stalls allocated for use by the Commercial Strata Lots, and 5 parking stalls allocated for visitor use by Residential Strata Lot owners. The upper parkade level (P1) will have a security gate, behind which will be 35 parking spaces for Residential Strata Lot owners, as well as bike parking. The lower parkade level (P2) will have 30 Residential Strata Lot parking stalls, as well as bike parking and storage locker areas. The parking stalls and the storage units will be subject to a 99 year lease (" Parking Facility Lease") by the Developer to a company to be incorporated by the Developer (the "Parking Co.") and the parking

stalls may be allocated for the exclusive use of owners of Strata Lots by the Developer causing the Parking Co. to grant a partial assignment of the Parking Facility Lease for such stalls to prospective purchasers of Strata Lots for such consideration and terms as established by the Developer. There will be some of the Residential Strata Lots that will not be assigned a parking stall, and the terms of each particular Agreement of Purchase and Sale of a Strata Lot will determine that issue. [Emphasis added.] [16] This disclosure concerning parking in the development remained unchanged from the Third Amendment to the filing of the Strata Plan. [17] On October 4, 2019 Abstract entered into the Lease with B&W to lease the parking stalls and storage lockers in the underground parking facility, shown on an attached plan, for the later of 99 years and the date the strata corporation is dissolved. B&W paid notional consideration of $10 to Abstract. The Lease was made in contemplation of Abstract subdividing the lands by means of a strata plan under the Strata Property Act, S.B.C. 1998, c. 43 [SPA] and designating space that was to become "common property" upon deposit of the strata plan. The leased parking stalls and leased storage lockers were separately described as limited common property for the exclusive use of residential strata lot owners. [18] On October 10, 2019 Strata Plan

EPS 6069 (the strata plan) was filed at 11:42 AM along with the schedule of bylaws, forming a strata corporation under the name "The Owners, Strata Plan EPS 6069". In the filed strata plan, seven parking stalls were described as "Limited Common Property for the Exclusive use of" commercial strata lot owners and 75 parking stalls were described as "Limited Common Property for the Exclusive use of "residential strata lot owners; these were the same designations as in the Third Amendment to the disclosure statement. [19] The respondent's first bylaws provided that the commercial strata lots would be responsible for expenses related solely to limited common property designated for the exclusive use of commercial owners and that residential owners were responsible for expenses solely related to the limited common property designated for the exclusive use of residential owners. Other expenses would be shared in accordance with the type of owner benefiting from those expenses. [20] On October 22, 2019, Abstract, B&W, and the respondent entered into the Compliance Agreement, which references the Lease. The petitioners characterize this agreement as an "assumption agreement"; it does not appear to be an assumption agreement but rather an agreement binding the respondent to comply with certain terms of the Lease including the establishment of a register of parking stalls and storage

lockers. [21] The first sale of a strata lot in the development to a third-party purchaser happened December 6, 2019. [22] In March 2021, before the commercial parking stalls in the development were entirely built Mr. Miller purchased a residential strata lot and requested six key fobs to access a single parking stall as a residential strata owner. Mr. Miller contends that the strata corporation refused to deliver to him more than two key fobs based on a recently created rule limiting the number of access fobs the strata corporation would issue to residential owners. [23] In May 2021, B&W assigned parking stall number 25, a Residential Parking Stall, to Abstract in connection with its ownership of commercial strata lot 83. The respondent declined to recognize Abstract's right as assignee to access and use that parking stall by refusing to issue a certificate and refusing to deliver fobs as required to use and enjoy the stall. It was this action which gave rise to this petition. [24] The prospect of B&W assigning leases of Residential Parking Stalls to commercial strata lot owners and entities unconnected with the residential lots prompted the respondent to restrict access to the Residential Parking Stalls to residential strata lot owners. The respondent contends that permitting persons other than owners of residential strata lots, such as customers of commercial strata lot

owners, to use Residential Parking Stalls represents a security concern to all residential strata lot owners who are assignees of Residential Parking Stalls. In response to this concern, the respondent acted, in part, by restricting the number of key fobs provided to residential strata lot owners and declining to provide access requested by B&W for entities who were not residential strata lot owners. [25] The strata bylaws were amended May 7, 2021 and registered at the land title office. The designation of the 75 parking stalls for the exclusive use of the residential strata lots has not been altered in any disclosure document nor in the filed strata plan. III. Issues [26] Central to the issues on this petition is whether the Lease is void or unenforceable due to the elimination of the parking stalls as common property and more importantly as limited common property without compliance with the SPA or because it is made contrary to the subdivision requirements of the SPA and the Land Title Act, R.S.B.C. 1996, c. 250 [LTA]. The petitioners contend the Lease should be construed as granting B&W the right to assign its leases of Residential Parking Stalls to commercial strata lot owners or entities not owning any strata lots in the development. [27] Another issue involves consideration of the right of residential strata lot owners to rely on a designation of the Residential Parking

Stalls as "Limited Common Property for the Exclusive use" of those owners and whether the Lease interfered with or eliminated those rights. [28] The respondent framed its second alternative response on the basis that the assignment of parking stalls to non-residents owners would be inequitable and should not be allowed under the doctrine of promissory estoppel. [29] The petitioners do not rely on any portions of the SPA in support of their claims; they contend the issue is limited to enforcement of the Compliance Agreement based on their contention that the Lease unambiguously permitted Abstract to lease all of the Residential Parking Stalls to B&W without limitation despite the designation of those stalls in the strata plan as "Limited Common Property for the Exclusive use of" residential strata lot owners. [30] Conversely, the respondent contends that a proper interpretation of the Lease reflects the parties objective intention to restrict B&W's right to assign lease rights to Residential Parking Stalls to non-residential strata lot owners with restricted access to Residential Parking Stalls behind the interior security gate. [31] This proceeding is brought under Rule 2-1(2)(c). Although I have some doubt that this application centers on the sole or principal question of the construction of the Lease, this point was not argued and in the absence of a specific challenge I will

not decide the petition on this point. IV. The Parties' Positions A. The Petitioners' Position [32] The petitioners concede that the Lease was a pre-incorporation contract and became binding on the respondent by October 22, 2019 when the Compliance Agreement was signed. They argue that both the Lease and the Compliance Agreement became enforceable and that the respondent is in breach of its obligations under the Compliance Agreement because it has restricted or limited access to Residential Parking Stalls contrary to the rights granted to B&W and assigned to entities other than owners of residential strata lots in the development. [33] The petitioners submit that the granting of the lease to B&W inherently included the right to assign the lease to any person without restriction or limitation and that nothing in the respondent's submissions can successfully undermine that right. In short, the petitioners submit that the designation of the parking stalls as "Limited Common Property for the Exclusive use of " residential strata lot owners has no impact on B&W's rights to assign leases to any person or entity. Moreover, the petitioners contend each residential strata lot purchaser acknowledged receipt of the Lease when they acquired assignments of parking stall leases from B&W. [34] They contend that the current owners of residential strata lots in the development were aware,

before purchasing their strata lots, that Abstract had leased all of the parking stalls in the strata development to B&W, including those parking stalls dedicated for the exclusive use of residential strata lot owners. [35] The petitioners also argued that there were sufficient references in the disclosure statements about the possibility that leases of the Residential Parking Stalls could be granted to non residential strata lot owners to alert future residential strata lot owners of the insignificance of the exclusive use terms of the strata plan. The petition sets out a request for this Court to construe the Lease on the basis that it contains no uncertainty or ambiguity and to conclude that the Lease transferred an unlimited leasehold interest in all underground parking stalls to B&W without any restrictions as to which entities could acquire leases to parking stalls designated "for the Exclusive use of" residential strata lot owners. [36] The petitioners contend the words of the Lease, read in the context of the surrounding circumstances prevalent at the time of contracting, are clear and unambiguous and therefore it is not necessary to interpret the Lease taking into account current or post-contracting facts. In the event there is any ambiguity in the Lease, the petitioners argue that, taking into account the post-contracting conduct of the parties, Abstract had leased

all of the parking stalls to B&W without any limitation as to the range of potential assignees and the respondent assumed this obligation without regard to the exclusive use designation. [37] In summary, the petitioners argue that the Lease granted an unencumbered leasehold interest in common property of the strata corporation comprised of all parking stalls in the development to B&W with freedom to assign its interest in any parking stall to any entity, regardless of whether or not they are a residential strata lot owner. B&W alleges that all 75 Residential Parking Stalls can be assigned to anyone chosen by B&W and are not reserved in any way for the exclusive use of residential strata lot owners. B. The Respondent's Position [38] The respondent advances a number of arguments which if successful could lead to a finding that, either the Lease is void at law or is incapable of granting assignments of the Residential Parking Stalls to non-residential strata lot owners. [39] The respondent's primary position is that the Lease is void at law under LTA and the SPA or void to the extent that the Lease allegedly allows the assignment of the Residential Parking Stalls to anyone other than owners or purchasers of the residential strata lots. [40] Alternatively, if this Court finds that the Lease is enforceable, the respondent contends that the Lease cannot be interpreted as permitting

B&W to lease any of the 75 Residential Parking Stalls to any persons regardless of whether they are a residential strata lot owner. They assert that the Residential Parking Stalls are dedicated for the exclusive use of residential strata lot owners and that taking into account all of the surrounding circumstances, the parties did not objectively intend to lease the Residential Parking Stalls except to residential owners. [41] The respondent contends that the designation of the Residential Parking Stalls as "Limited Common Property" in the strata plan, representations contained in disclosure statements, and representations made by Abstract's sales agents to prospective purchasers of strata lots provided assurance to residential strata lot purchasers that the Residential Parking Stalls would not be accessed by entities other than residential strata lot owners. [42] In the further alternative, they contend that Abstract and B&W are estopped from demanding enforcement of B&W's right to assign Residential Parking Stalls to entities other than residential strata lot owners pursuant to the doctrine of proprietary estoppel. It contends that representations or assurances were made by the petitioner concerning benefits that the residential strata lot owners would enjoy upon purchasing a unit. The purchasers of residential strata lots relied on the representations made by the Abstract and

suffered a detriment as a result of their reliance such that it would be unfair or unjust to permit assignments of the Lease to non-residential strata lot owners. [43] The respondents relied on principles concerning proprietary estoppel in arguing that it would be unconscionable, inequitable and unjust to allow abstract to resile from representations that the Parking Stalls reserved to the exclusive use of residential strata lot owners would not be respected. [44] Last, the respondent also contends that it does not have the authority to change access to the Residential Parking Stalls. It argues that the strata plan and bylaws do not permit The Owners, Strata Plan EPS6069 to manage these parking stalls because those functions are reserved for the "residential section" created by the bylaws and allowed for under s. 191 of the SPA and no claims are made in this petition against the "residential section". V. Discussion A. Enforceability of the Lease [45] To begin, I will review the legal structure and underlying legislation relevant to the respondent's claim that, if the petitioners' interpretation of the Lease is correct (which is not admitted), the Lease is void for having the effect of disposing of the limited common property designation without complying with the requirements of the SPA or that the Lease is void for causing a subdivision without compliance with the SPA and the LTA. It also argues that the Lease is unenforceable because it permits partial assignments to other entities that are not residential strata lot owners. [46] Among other claims the respondent contends the Lease cannot bind the Strata corporation because the strata corporation did not exist when the Lease agreement was made.

1. Strata Property Act [47] First, I will review the relevant provisions of the SPA. The definitions of common property and limited common property in s. 1 of the SPA are important in the analysis of this dispute: "common property" means (a) that part of the land and buildings shown on a strata plan that is not part of a strata lot, and (b) pipes, wires, cables, chutes, ducts and other facilities for the passage or provision of water, sewage, drainage, gas, oil, electricity, telephone, radio, television, garbage, heating and cooling systems, or other similar services, if they are located (i) within a floor, wall or ceiling that forms a boundary (A) between a strata lot and another strata lot, (B) between a strata lot and the common property, or (C) between a strata lot or common property and another parcel of land, or (ii) wholly or partially within a strata lot, if they are capable of being and intended to be used in connection with the enjoyment of another strata lot or the common property; "limited common property" means common property designated for the exclusive use of the owners of one or more strata lots; [48] Strata corporations are established from the time a strata plan is deposited in the land title office: SPA s. 2(1). [49] Strata corporations have the power and capacity of natural persons and are responsible for managing and maintaining common property and common

assets of strata corporations for the benefit of the owners: SPA ss. 2(2) and 3. [50] Owner developers (i.e. Abstract) control strata corporations from the date strata plans are deposited in the land title office and must perform their duties honestly and in good faith with a view to the best interests of the strata corporation: SPA ss. 5 and 6(1). [51] Before the first conveyance of a strata lot, the owner developer may pass resolutions of the strata including resolutions to amend the strata corporation's bylaws without holding a meeting. After the first conveyance, no transactions or contracts may be made with the owner developer or person not at arm's length: SPA ss. 8 and 10. [52] Strata corporations must prepare and keep copies of resolutions that deal with changes to common property, including the designation of limited common property: SPA s. 35(2)(e). [53] Owners of strata lots own the common property and common assets of the strata corporation as tenants-in-common in a share equal to their unit entitlement: SPA s.

66. The strata corporation is not permitted to make significant changes in the use or appearance of common property or land that is a common asset unless such changes are approved by three-quarter vote at a general meeting: SPA s. 71. [54] Common property may be designated as limited common property by the owner developer by designation on the strata plan when deposited at the land title office or by a plan amendment under section 258 of the SPA: SPA s. 73. [55] Common property may also be designated as limited common property by resolution passed by three-quarter vote at a general meeting. These resolutions must be filed in the land title office with a sketch plan that satisfies the registrar of land titles; the designation of limited common property by resolution does not require the filing of an amended strata plan: SPA s. 74. [56] Where designations of common property as limited common property are made at the time a strata plan is deposited, the designation may only be removed by amending the plan under s. 257 of the SPA. Conversely, if a designation of common property as limited common property is made by a three-quarter resolution under 74, it can be removed by a resolution of three-quarter vote at a meeting. [57] A limited common property designation can "only "be removed by a resolution that must be filed in the Land Title Office. In this case, no resolution was passed

or filed in the Land Title Office. [58] Owner developers may, at any time before the first annual general meeting of the strata corporation, amend the strata plan to designate parking stalls as limited common property for the exclusive use of owners of strata lots in the strata plan: SPA s. 258(1). In doing so, the owner developer acts as the council and must act honestly and in good faith with a view to the best interests of the strata corporation: SPA s. 258(2). [59] If limited common property was designated at the time a strata plan was deposited, the designation may only be removed by amending the strata plan under s. 257 of the SPA: SPA s. 75(1). Section 257 requires the strata plan be amended by: (a) resolution passed by unanimous vote at an annual or special general meeting; or (b) an application to the registrar accompanied by a reference or explanatory plan as may be required: SPA s. 257. [60] To dispose of common property in ways set out in section 253(1) of the SPA, the strata must ensure that the requirements of Part 7 of the LTA are met: SPA s. 80. [61] Any disposition of common property by way of a lease for a term exceeding three years is a subdivision of land and Part 7 of the LTA applies to that subdivision: SPA s. 253(1). When common property is subdivided, it ceases to be common property and becomes land held in the name of or on behalf of the strata corporation but not shown on the strata plan: SPA s. 253(4).

2. Land Title Act [62] Next, I will review the relevant provisions of the LTA. The LTA applies to the SPA, unless inconsistent with the SPA, except Parts 7 and 8: LTA s. 3(1). Despite s. 3(1), Parts 7 and 8 of the LTA apply to the SPA where stated to apply by the SPA: LTA s. 3(1.1). [63] Except as against the person making an instrument purporting to transfer an estate or interest in land, a transfer (except a lease for a term not exceeding three years) does not pass an interest in the land unless the transfer is registered: LTA s. 20. [64] Except on compliance with Part 7 of the LTA, persons must not subdivide land into smaller parcels than those of which the person is the owner for the purpose of leasing it for a term exceeding three years: LTA s. 73(1). [65] Section 73(1) does not apply to a subdivision for the purpose of leasing a building or part of the building: LTA s. 73(3). [66] Part 7 of the LTA requires, among other things, that a subdivision plan be tendered for examination and approval by the approving officer: LTA s.

83. A subdivision plan must be signed by each owner of the land subdivided: LTA s. 97(1). [67] A lease of a part of a parcel of land is not unenforceable between the parties to the lease by reason only that it does not comply with Part 7 of the LTA or that an application for registration of the lease may be refused: LTA s. 73.1. In Idle-O Apartments Inc. v. Charlyn Investments Ltd., 2014 BCCA 451 at para. 29, the Court said: As we have seen, the effect of s. 73.1 was that a lease that does not comply with Part 7 of the [Land Title Act] or is unregistrable is not unenforceable between the parties to the lease.

3. Real Estate Development Marketing Act [68] Developers are not permitted to market development units unless a disclosure statement respecting the development is prepared and filed with the Superintendent. The statement must be made without misrepresentation, plainly disclosing all material facts and setting out a purchaser's right of rescission: Real Estate Development Marketing Act, S.B.C. 2004, c. 41 [REDMA] ss. 5, 14 and 15. [69] Taking into account these statutory terms, I will review the case law, the parties' submissions and the implications of these statutory requirements on the question of the enforceability of the Lease. VI. The Case Law [70] One aspect of the issues in this case concerns the nature of limited common property and the petitioner's assertion that the Lease of the Residential Parking Stalls is not inconsistent with the "exclusive use" designation in the strata plan. [71] The nature of limited common property was discussed by the Court of Appeal in Stratton v. Richter, 2022 BCCA 337 at para. 86: [86] The British Columbia Law Institute discussed the nature of limited common property in its July 2019 report, Report on Common Property, Land Titles, and Fundamental Changes for Stratas. It made the following observations, which are correct assessments of the law: Court cases have considered the nature of a strata-lot owner's interest in a designation of

limited common property. A leading case [Moure v The Owners, Strata Plan NW2099, 2003 BCSC 1364 at para 22] has described it "as a special category of property over which the unit owner has a substantial degree of control and something approaching a beneficial interest." The key word in this passage might be approaching, as a later case [Yestal v New Westminster (City of), 2012 BCSC 925] has emphasized the balance between the owner benefiting from a designation and the other strata-lot owners: It is clear, however, that the unit holder is not the beneficial owner of the limited common property. The other owners retain more than simple legal title. They retain a bundle of rights and responsibilities as set out, inter alia, in ss. 71-75 of the Strata Property Act. This is consistent with the communal nature of common property. [72] In Moure v. The Owners, Strata Plan NW2099, 2003 BCSC 1364, this Court concluded that limited common property is a "special category of property over which the unit owner has a substantial degree of control and something approaching a beneficial interest" (at para. 22). See also 356 Cathedral Ventures Ltd. v. Owners of Strata Plan BCS3598, 2020 BCSC 1583 at para. 41. [73] In Chow v. The Owners, Strata Plan NW 3243, 2017 BCCA 28 at para. 2, Justice Harris discussed the significance of limited common property as a "registered right associated with

title": On the strata plan, these parking spaces are not shown as common property. They are described rather as "limited common property". The strata plan was deposited and registered in the Land Title Office ("LTO") in May 1990. The effect of describing these lots as "limited common property" is that the owners of the adjacent units can assert the exclusive right to use the space adjacent to that unit. While limited common property is not part of indefeasible title under s. 23(2) of the Land Title Act, R.S.B.C. 1996, c. 250, it is a registered right associated with title constituting a special category of property "over which the unit owner has a substantial degree of control and something approaching a beneficial interest": see Moure v. The Owners, Strata Plan NW2099, 2003 BCSC 1364 at para. 22. [Emphasis added.] [74] In Frank v. The Owners Strata Plan LMS 355, 2016 BCSC 1206 at paras. 35-36, Justice Fisher, then a judge of this Court, also discussed the nature of limited common property: [35] This case involves not just common property, but limited common property, important, in my view, to the analysis required here. "Limited common property" is defined in the SPA as "common property designated for the exclusive use of the owners of one or more strata lots". Thus, as Burnyeat J. observed in Mott v. Leasehold Strata Plan LMS 2185 UBC Properties Inc., [1998] B.C.J. No 2730

(S.C.) once common property has been designated as limited common property, the other owners in the strata corporation no longer have the right to use and enjoy that space. Such a designation confers on the owner a substantial degree of control and something approaching a beneficial or equitable interest: see Mott at para. 59; Moure v. Strata Plan NW 2099, 2003 BCSC 1364 at para. 22; Chow v. Strata Plan NW 3243, 2015 BCSC 1944 at para.

19. This is particularly so where the designation was made in the original strata plan, as under s. 75(1) of the SPA, such a designation can only be removed by a unanimous vote of the members of the strata corporation under s. 257 (subject only to a limited relaxation of unanimity in s. 52). This is clearly a higher threshold than the ¾ vote required for significant changes to common property, as it gives the owner of limited common property an effective veto over any change to it. [36] The importance of the rights designated in the strata plan was recognized in Chow and Re Owners of Strata Plan NW 2212, 2010 BCSC 519. [Emphasis added.] [75] The petitioners contend that a designation of limited common property in the strata plan does not indicate that there is any inherent restriction in the use to which that property can be put: see Winchester Resorts Inc. v. Strata Plan KAS2188 (Owners), 2002 BCSC 1165 at para. 27 [Winchester]. [76] In Winchester, the petitioner was proceeding with construction of a fishing resort on several strata lots he owned, a use which was explicitly permitted under the applicable zoning bylaw. In response, the respondent strata corporation passed a bylaw prohibiting use of strata property in a way that was contrary to the purpose for which the strata lot or common property was intended, including for commercial purposes, relying on a statutory

declaration in the strata plan which stated that "the strata plan is entirely for residential use" (at para. 26). Justice Blair found that the new strata bylaw contravened the SPA, as it went against uses permitted as per the strata's disclosure statement, which noted that the zoning for the strata lots was "Rural RL-1" and permitted uses including "recreational cottages" and "rustic guest ranches" (at para. 20). The Court accepted that considerable effort had been spent to create a building scheme and zoning that did not restrict property development to residential purposes and concluded that the declaration on the strata plan that lots were "residential" was made to assist the superintendent of real estate and not to restrict or expand uses to which the strata lots might be put. [77] This case involves significantly different factors than those in Winchester and I am satisfied that decision does not assist the petitioners. Notably, Winchester did not involve a question about the designation of limited common property for the exclusive use of owners. [78] The respondents contend that at the time of granting the Lease, Abstract was the owner of title to the land that became the strata property. After filing the strata plan, Abstract became the owner of all strata lots and common property and, notwithstanding the limited common property designation, it was free to adopt the

Lease of the parking stalls without any restriction as to the transferees and was under no obligation to change the designation in the strata plan. [79] They argue that any interests in the common property designated for the exclusive use of the residential owners were subject to the pre-incorporation Lease and did not impair B&W's right to assign the leasehold interests as they saw fit. [80] Further, the petitioners submit that a formal resolution was not necessary to approve the Lease after filing of the strata plan and by agreeing to the terms of the compliance agreement the respondent was bound to the Lease terms. [81] The petitioners focused submissions on the reasoning and outcome in One West Holdings Ltd. v. The Owners, Strata Plan LMS2995, 2021 BCSC 473 and relying on similarities in the issues to urge this Court that the SPA does not apply to the pre-stratification Lease. They argued that the designation of the Residential Parking Stalls as limited common property on the strata plan received no priority because the Lease was operative before stratification and before the first conveyance: see One West Holdings Ltd. v. The Owners, Strata Plan LMS2995, 2021 BCSC 473 at paras. 96- 97 [One West]. [82] One West dealt with a pre-stratification option and lease over a planned parking area which was to become common property after filing the strata plan. The owner developer

registered the option/lease against the pre-stratification title. When the strata plan was filed, it was subject to the existing registered option and there was no limited common property designation imposed on the common property as created by the filed strata plan. [83] In One West, the owner developer granted the registered option on October 29, 1997 and filed the strata plan for registration at the Land Title Office on October 31, 1997. The applicable statute at the time was the Condominium Act, R.S.B.C. 1979, c.

61. At para. 68 Justice Myers refused to interpret the Condominium Act as applying backwards to land intended to be stratified, concluding that "the Condominium Act does not apply to the granting of the option and the lease". In his summary of conclusions at para 49, Myers J. set out certain relevant elements related to the Condominium Act, R.S.B.C. 1979, c. 61. as follows: a. before the filing of a strata plans, there is one unitary land title which is cancelled upon registration creating individual strata lots and common property: after registration of the strata plan, the owner developer owns all strata lots until conveyed to other purchasers; b. until first meetings of strata councils, the owner developer controls the strata corporation; c. strata developments contain individual strata lots and common property provided that strata corporations may acquire other property; d. common property is owned by strata lot owners as tenants-in-common; e. common property may be designated as limited common property or may be disposed of, but only by way of special resolutions and other formalities; and f. there are no specific restrictions in the LTA or Condominium Act with respect to charges against what "is to be designated as common property" after registration of the strata plan [Emphasis in original.] [84] With these comments in mind, it is necessary to distinguish the facts and

circumstances in this case from those in One West. In this case, the Lease was intended to be a lease of a portion of common property "commencing October 4, 2019" for the later of 99 years and the date the strata corporation is dissolved. Neither the common property nor parking stalls existed as of October 4, 2019. The Lease preamble said that "The strata plan would designate the Leased Stalls as common property of the strata corporation formed upon deposit of the Strata Plan " The Lease of parking stalls was separate from other areas of common property and does not refer to the designation of limited common property for the exclusive use of owners of residential lots. [85] The Lease was specific to parking stalls separate from other areas of common property and does not refer to or address the designation of limited common property for exclusive use of residential lots; it purports to encumber the "common property". [86] The Lease could not become effective until after filing of the strata plan after which point covenants in the lease were to run with the land. [87] The petitioners argue that the Lease was a pre-incorporation contract that was ratified by the respondent upon executing the Compliance Agreement on October 22, 2019. Thus, the Lease became binding on the respondent on that day. In the meantime, the common property and exclusive use designation of the parking

stalls had existed from October 19 with the filing of the strata plan. [88] The petitioners contend that the Compliance Agreement was sufficient evidence of the strata corporation's intent to enter into a post incorporation contract on the terms of the Lease and that each individual owner had accepted the Lease when they signed the assignment of the Lease with B&W for a parking. [89] As noted in One West, the disposition of common property after registration of a strata plan was subject to the restrictions and formalities set out in the Condominium Act and remains true under the SPA. [90] While I accept that the SPA does not govern the actions of an owner developer prior to filing the strata plan particularly when an option or lease are registered as a charge on title before stratification, when a lease is made in contemplation of the stratification of land, and the lease is not registered as a charge against title, that lease becomes effective only after stratification and subject to the strata plan. [91] A pre-stratification lease may bind the parties to that agreement but cannot operate after filing the strata plan in such a way as to avoid application of the SPA immediately after filing the plan. [92] Moreover, under pursuant to the petitioners' interpretation, in this case, the Lease has a significant impact on use of parking stalls intended for the" exclusive use of

strata Lots 8-82 "; this component of the limited common property designation that otherwise operates to change permitted uses of those Residential Parking Stalls without compliance with the SPA. [93] In One West, the option was registered as a charge on title prior to stratification and when the common property was created by filing the strata plan, that designation was subject to the pre-stratification option agreement: at paras. 19-22. [94] In the circumstances of this case, there was no registered option against the unitary title encumbering the common property before registration of the strata plan. This distinction underscores the differences cited by Myers J in One West. [95] The petitioners argue that a change of designation could have been approved by a unanimous vote when Abstract owned all of the residential lots. Abstract owned all the residential lots in October 2019. The petitioners also submit that a formal resolution was not necessary to dispose of common property or, presumably, remove the designation of the Residential Parking Stalls as limited common property on the strata plan given that the Lease was operative before the first conveyance: see at paras. 96- 97 (One West). [96] Relying on Phelps Holdings Ltd. v. Strata Plan VIA 3430, 2010 BCCA 196 [Phelps Holdings], Justice Myers concluded in One West that any disposition of land occurred when the option was

granted and that when the post-incorporation lease was entered into by the strata there was no need for a formal resolution for the exercise of the option to be effective, as the exercise of the option by the owner developer constituted a unanimous approval of all the owners": One West at paras. 96-97. [97] In this case, the strata did not enter into the Lease; the Lease indicated that the strata corporation, upon coming into existence, would comply with the Lease acknowledging that it had been entered into between Abstract and B&W before stratification. Moreover, the petitioners' submissions do not take into account the rights arising from the designation of the Residential Parking Stalls as limited common property on the strata plan, a designation that was not displaced or altered when the strata corporation entered into the Compliance Agreement. [98] Abstract had the choice of filing the strata plan without the limited common property designation for the Residential Parking Stalls or to alter the designation by resolution. It took neither of these steps. In the result, prospective purchasers examining the title, strata plan and resolutions of the strata corporation would not have understood B&W to have the authority to assign leases of Residential Parking Stalls to entities that are not residential strata lot owners. [99] By October 2019, a revised disclosure statement was

in place which differentiated between the use of parking stalls 1-7 and 8-82. None of the subsequent disclosure statements nor the bylaws filed coincidentally with the strata plan varied from the designation of the Residential Parking Stalls as" Limited Common Property for the Exclusive use of strata lots 8-82". [100] The petitioners contend that the Lease was disclosed to prospective purchasers and thus its enforceability" was not undermined because disclosure revealed the nature of the lease and its purpose: see Marshal Mountain Telecom Ltd. v. The Owners, Strata Plan EPS 4044, 2021 BCCA 21 [Marshal Mountain ] at para. 54. [101] In this case, the disclosure statements were given to potential purchasers of residential strata lots were not clear. The referred to the potential of a 99 year lease over parking stalls that" may be allocated for the exclusive use of the owners of strata lots by the developer ". The Third Disclosure Statement and Initial Disclosure Statement were consistent in describing the parking spaces, behind the security gate, for exclusive use of Strata Lots 8- 82. [102] The position taken by the petitioners is that mention of the 99 year lease in the disclosure statements was sufficient to bring to the attention of residential strata lot owners that reference to their " exclusive use" of those parking stalls had been abrogated and, as such reasonably

discharged Abstract's duty. [103] At para. 53 of Marshal Mountain Justice Newbury quoted from Peel Condominium Corporation No. 505 v. Cam-Valley Homes Limited (2001), 196 D.L.R. (4th) 621, 2001 CanLII 24035 (ONCA), which the Court found offers some guidance concerning the standard of disclosure in this context, quoting with approval comments of Robins J.A. for the Court in Abdool v. Somerset Place Developments of Georgetown Ltd. (1992), 96 D.L.R. (4th) 449, 1992 CanLII 8658 (ONCA): The objective of consumer protection is attained by the requirement of full disclosure under s. 52 of the Condominium Act and must be seen in the context of the full disclosure package. As Robins J.A. stated at p. 145: The vagueness of the requirements and the absence of statutory guidelines mandate a broad and flexible approach --not a rigid or stringent one--in determining whether a given disclosure statement is adequate. As I indicated earlier, the disclosure statement cannot be viewed as separate from and unrelated to the other documents called for by s. 52(6) and (7); it must be seen in the context of the entire disclosure package. The narrative section of the disclosure statement can realistically be expected to do no more than highlight or summarize the most important features of the condominium documents and assist purchasers in comprehending those documents by directing them to the full

text. Earlier, Robins J.A. dealt with the standard of compliance by which disclosure is to be measured by the court. He said at p. 136: These disclosure provisions must of course be given a construction consistent with their consumer protection objectives. However, in judging the adequacy of the disclosure for the purposes of deciding whether an agreement is binding, the rights of both parties to the agreement must be taken into consideration. The purchaser is clearly entitled to the information called for by the Act in order to make an informed decision about his or her condominium purchase. At the same time however, once the ten-day period has expired, the vendor is entitled to assume that it has a binding agreement of purchase and sale and to rely on the certainty of that agreement in developing the project and conducting its business affairs. [At 635-6 of Cam-Valley; emphasis added.] [104] If the Lease has the meaning asserted by the petitioners (which is not admitted by the respondent, and will be dealt with below by the Court below), I find that the disclosure did not inform prospective purchasers that the Lease displaces or abrogate the limited common property exclusive use designation. Unlike the lease in Marshal Mountain Telecom the disclosure statements did not highlight or summarize the most important feature concerning the limited common property parking stalls,

that is the Lease would permit G&W to assign parking stalls to persons who were not owners of residential units in the development. Section 253 of the SPA and s. 73 of the LTA. [105] The respondent argued that the strata could not grant rights to use limited common property contrary to those rights set out in the strata plan. The strata can only dispose of property rights associated with title by passing a unanimous resolution under s. 257 of the SPA. [106] Further, the respondent argued that, if the petitioners' interpretation of the Lease is correct (which is not admitted), the Lease was a disposition of property rights and the strata could not dispose of or change the use of common property without complying with the requirements of sections 80 or 71 of the SPA and without registration of the instrument filed with the Land Title Office under s. 20 of the LTA. [107] This submission calls into question the impact of the Lease on the common property of the respondent. I accept the petitioners' argument that s. 73 of the LTA does not apply to prevent subdivision for the purpose of leasing a part of the strata development building as in this case occurred. [108] However, before the Lease was affirmed by the Compliance Agreement, after the filing of the strata plan, the Residential Parking Stalls were designated for the exclusive use of residential strata lot owners by reason of

the limited common property designation without mention of the impact of the Lease on the identity of users of parking stalls 8-82. [109] Subsection 252(3) of the SPA requires the registrar to "note on the common property record a charge or other interest that separately charges the common property". In this case, this provision would require a recording of any leases of common property that may have been granted. [110] In British Columbia (Minister of Transportation and Infrastructure) v. Registrar, Victoria Land Title Office, 2018 BCCA 288, the Court considered s. 253 of the SPA and the requirement to comply with the LTA: [58] The Registrar determined that the Minister needed the signatures of all strata owners in order to deposit a plan dedicating common property as a highway under s. 107 of the LTA. The Registrar cited s. 253 of the SPA in support of this decision. This indicates that he viewed the disposition in this case as a "transfer of a freehold estate" within the meaning of s. 253(1) of the SPA. As noted, a disposition of common property that falls under the categories listed in s. 253(1) is deemed to be a subdivision and is governed by s. 80(2) of the SPA, which incorporates the requirements of Part 7 of the LTA. Section 97(1) of the LTA, found in Part 7, requires a subdivision plan to be accompanied by the signatures of all owners of the land subdivided. [111]

Section 253 of the SPA is apposite to this case and provides that dispositions of common property by way of leases exceeding three years become subdivisions of land and Part 7 of the LTA applies. When common property is subdivided, it ceases to be common property and becomes land held in the name of the strata corporation or on its behalf but not shown on the strata plan: SPA s. 253(4). [112] Under the SPA, the Lease of common property exceeds three years and results in a subdivision of land that triggers the operation of s. 253(4) . [113] Section 253 of the SPA stipulates that Part 7 of the LTA applies to subdivisions of land under that section. This triggers the need to adhere to Division 4 of Part 7 including the requirement of tendering a subdivision plan for approval by an approving officer under s. 83 of the LTA. Section 97(1) requires that a subdivision plan be signed by each owner of the land subdivided and those signatures operate to release a charge or interest that affects common property. In this case, there was no suggestion that a subdivision plan was submitted to the registry for approval or that the plan was singed by Abstract. [114] In The Owners, Strata Plan VIS2968 v. K.R.C. Enterprises Inc., 2009 BCCA 36 [K.R.C. Enterprises], the Court addressed the outcome of cases where subdivisions were not approved under the LTA. The Court said: [34] It is useful to note

that common law rights to subdivide land have been curtailed by statute for some time. In City of Vancouver v. Simpson, [1977] 1 S.C.R. 71, 65 D.L.R. (3d) 669, the Supreme Court of Canada considered the effect of the Land Registry Act, R.S.B.C. 1960, c. 208, on the common law right to subdivide land. Martland J., for the majority, stated (at 77): The enactment of that statute took away a free right to subdivide. The landowner has no right to subdivide save subject to the approval of the approving officer who is required by the Act to determine if the contemplated development would be against the public interest. The very exercise of the power given to the approving officer by the Act must necessarily curtail the landowner's right to subdivide. [35] While I have some sympathy for the position taken by the respondent and its pragmatic interpretation of s. 73 of the Land Title Act, regard must be had to the words of the applicable statutes. I am impelled to the view that the combined effect of ss. 20(1) and 21(4) of the Condominium Act and s. 73 of the Land Title Act render the options invalid, as they constitute subdivisions which have not first obtained subdivision approval. [115] An agreement to sell an interest in a strata property before stratification does not create an equitable interest in the strata property because the subject of the agreement does not exist until after

filing the strata plan: see: Yi Teng Investment Inc. v. Keltic (Brighouse) Development Ltd., 2019 BCCA 357 at paras. 24-26. The principle that no equitable interest in land is created prior to stratification or subdivision of property underscores the principle that the Lease could not create an enforceable interest in the post stratification parking stalls because the subject of the Lease did not exist. In One West at para 110, Myers J. affirmed and highlighted the differences between the facts in that case where the option and lease agreement were registered before stratification in this case where the Lease was not registered. [116] Moreover, if the Lease takes effect as contended by the petitioners, it would have changed the designation and nature of common property impacting the control and maintenance of those spaces. The petitioner's right to lease common property would result in the space becoming land owned by the strata corporation but not common property. [117] In my view, extinguishing the designation of the parking stalls as common property and constituting those parking stalls as property of the strata corporation but not common property is problematic because it purports to extinguish the designation of the limited common property for the exclusive use of lots 8-84 without complying with those sections of the SPA requiring unanimous resolutions to remove a

designation of limited common property made by the owner developer when the strata plan was deposited. [118] The petitioners contend that s. 73(3) of the LTA exempts a lease of part of the building from the prohibition against subdividing property set out in s. 73(1) of the LTA. They contend that the respondent's reliance on requiring the registration of the Lease is misapplied because granting the Lease did not cause subdivision of the common property. [119] Although the petitioners concede the parking garage is part of the building, they argue that subdivision of parts of buildings are not prohibited under the LTA because of the exemption in s. 73(3) of the LTA. However, s. 73(3) does not change the requirements under s. 253 of the SPA that a lease for more than three years of common property is a subdivision of land and requires compliance with Part 7 of the LTA. [120] The issue in this case is not whether a subdivision of common property is prohibited under the LTA; the issue is whether Abstract was required to comply with Part 7 of the LTA when purporting to lease the parking stalls that would become common property after stratification. [121] The Lease was signed before the common property came into existence albeit in contemplation that the parking stalls would become common property. It follows that after filing the strata plan, the Lease became a lease of common

property exceeding three years and is governed by s. 253 of the SPA. [122] It is apparent from the facts, that abstract did not comply with the provisions of s. 257 requiring it to pass a resolution and apply for registration of the change with a "reference or explanatory plan". [123] In K.R.C. Enterprises, parcels of land to be subdivided had not been validly approved by the registrar and subdivision could not be perfected without approval and official permission of an approving officer. The Court found the underlying option to lease void because it purported to subdivide land without the subdivision receiving a valid approval without which subdivision could not be perfected. [124] In One West, Myers J. discussed the findings in K.R.C. Enterprises and observed that in K.R.C. three options had been granted, one before stratification and two after. He noted that the Court of Appeal dealt with all the options as if they had been granted after the strata plan was filed. In that case the owner developer had conceded that all three options with dispositions but no argument was made concerning the pre-stratification option. He rejected the suitability of the K.R.C. decision because the court did not address the impact of the one pre-incorporation option that was granted. [125] Similarly, in this case the Lease specifically sets out: Both of the parties to this Lease agree that the

common property of the Strata Corporation will be encumbered by this Lease as it pertains to the Least Stalls and Leased Storage Lockers. [126] Thus, the Lease could not become effective until after filing of the strata plan, creation of common property and limited common property constituting subdivision of common property. Part 7 of the LTA applied to the subdivision and those steps were not followed when neither the Lease nor Compliance Agreement and the lease may be considered void absent the required approvals. [127] The petitioner contends that the Lease remains enforceable even if unregistered. [128] The petitioners argue that Section 2.02 of the Lease indicates it intended to burden portions of the lands which will become common property upon registration of the strata plan and will run with and bind the subdivided parcel or part thereof which contains the leased stalls. [129] The petitioners argued that authorities addressing subdivision issues are limited to subdivisions of bare land and therefore not applicable to Lease. Nothing in the statute suggests that s. 253 of the SPA is restricted to subdivisions of bare land stratas but not to common property parking facilities subdivided by leases exceeding three years. [130] This is confirmed in s. 265 of the SPA: 265 (1) A subdivision of common property is required to make common property into land held in the name of or

on behalf of the strata corporation but not shown on the strata plan. (2) The subdivision referred to in subsection (1) is a subdivision of land to which Part 7 of the Land Title Act applies. (3) Section 253 (2), (3) and (4) applies to a subdivision of land referred to in this section. [131] Section 257 of the SPA sets out the requirement of amending a strata plan to remove the designation of limited common property made by an owner developer when the strata plan was first deposited. The requirements are: 257 To amend a strata plan to designate limited common property, or to amend a strata plan to remove a designation of limited common property made by the owner developer at the time the strata plan was deposited or by amendment of the strata plan, the strata plan must be amended as follows: (a) a resolution approving the amendment must be passed by a unanimous vote at an annual or special general meeting; (b) an application to amend the strata plan must be made to the registrar accompanied by (i) a reference or explanatory plan, whichever the registrar requires, that (A) shows the amendment, and (B) is in a form required under the Land Title Act for a reference or explanatory plan, and (ii) a Certificate of Strata Corporation in the prescribed form stating that the resolution referred to in paragraph (a) has been passed and that the reference or explanatory plan conforms to

the resolution. [Emphasis added.] [132] There is no doubt that the Lease constituted a disposition of common property by way of a lease exceeding three years. Disposition of common property effected by the Lease only takes place after the approval of a subdivision plan by an approving officer. The clear impact of a subdivision plan being approved changes the areas designated as "common property", and transforms them into land held in the name of the strata corporation and no longer common property and eliminating "limited common property for exclusive use "designation. [133] In this case, the Lease was a subdivision of common property which, if properly effected, could have had the effect of extinguishing the rights of residential strata lot owners to exclusive use of the parking stalls. In order to achieve this result, the owner developer acting as the strata corporation counsel (before the first conveyance) could have complied with s. 257 of the SPA to amend the strata plan to remove the designation of limited common property made by the owner developer. It is clear Abstract did not take those steps under s. 253 or in compliance with s. 265 of the SPA. [134] For reasons similar to the Court's in K.R.C. Enterprises at para. 35, I find that the owner developer did not meet its obligations triggered by the Lease after filing the strata plan and is not a valid transfer of

interests in the strata development without having "first obtained subdivision approval" and complying with s. 257 of the SPA. [135] Absent the filing of an amended plan indicating that the designation of limited common property had been removed from the parking stalls, persons searching the title to these residential strata lots in the development would not have understood that persons other than residential strata lot owners could have access to and use of Residential Parking Stalls. Moreover, absent resolutions that might have been passed reflecting the owner developer's decision to change the status of the parking stalls, that information would not come to the attention of prospective purchasers by examining the historical resolutions of the strata corporation. [136] The importance of designating parking stalls as limited common property for exclusive use of owners before the first annual meeting of the strata corporation is highlighted by s.

258. In designating those stalls owner developers are not required to act in the best interests of the strata corporation although they must act honestly and in good faith. [137] In The Owners, Strata Plan 1261 v. 360204 B.C. Ltd., [1996] B.C.J. No. 955, 1996 CanLII 3513 (S.C.) [Strata Plan 1261 1996] , Justice Thackray (as he then was) is relied upon by the respondent. In that case, the court pointed to two of several reasons for why it concluded in The Owners, Strata Plan 1261 v. 360204 B.C. Ltd. (1995), 50. R.P.R. (2d) 62, 1995 CanLII 659 (B.C.S.C.) [Strata Plan 1261 1995] that a lease dealing with parking was invalid. While I accept that the Thackray J.'s decision in Strata Plan 1261 1995 has been overtaken by other decisions on the question of fiduciary duties owed by owner developers, the Court addressed the same factors extant in this case, namely, failure to comply with the subdivision provisions of the SPA. In Strata Plan 1261 1996, the Court said: VII. In summary I held that the parking agreement to be invalid for the following reasons: The contract was, in substance, a lease and as a lease it was invalid as it was not registered with the Land Titles Office as required by the Land Titles Act; Since the contract was a disposition of common property, it was ineffective as the requisite authorizations called for in ss. 20(1) and 58 of the Condominium Act were not in

place; VII. Conclusion [138] As decided in K.R.C. Enterprises, the requirements of the LTA and SPA render the Lease invalid because it constituted a subdivision of common property without compliance with the required application process set out in s. 257 of the SPA. [139] The extinction of the "common property" character of the parking stalls offends the requirement that the owner developer must comply with s. 257 of the SPA in order to remove the limited common property designation. [140] Further, Abstract did not comply with its obligation to provide an explanatory plan reflecting the change in the designation of limited common property, absent which the Lease was subject to that designation. [141] Prospective purchasers informed of the Lease of the parking garage is set out in the disclosure statements would not have understood that the Residential Parking Stalls had ceased to be limited common property and that the "common property" ceased to exist. [142] I am satisfied that the Lease does not grant B&W the right to assign Residential Parking Stalls to entities or persons that are not owners of residential strata lots in the development and that the orders requested by the petitioners cannot be granted. A. Interpretation of the Lease [143] In the alternative, the respondent submits that the intention of the parties when making the Lease did not include a right to assign the

Lease to entities other than owners of residential strata lots in the strata. Although the Lease was influenced by the close relationships between Abstract and B&W (both represented by Mr. Miller) the development and creation of the parking stalls were obviously designed to advance the interests of Abstract, B&W and Mr. Miller separately. B. Contractual Interpretation Principles [144] The legal principles to be applied when interpreting contracts are discussed in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 [Sattva]. In Sattva, the Supreme Court clarified and affirmed principles to be used in interpreting contracts, emphasizing that the interpretation of contracts engages common sense principles and is "not dominated by technical rules of construction"(at para. 47). The goal of contractual interpretation is "to ascertain the objective intention of the parties": Sattva at para. 49. [145] Contracts must be interpreted as a whole rather than interpreting individual parts: Sattva at para.

47. The factual matrix extant at the time of contract formation can be considered without any precondition that the terms of the agreement are ambiguous; rather, considering the factual matrix surrounding the making of a contract is one part of the interpretive exercise: Sattva at paras. 46-50. [146] It is not appropriate to consider the parties' subjective intentions: Sattva at paras. 58-60. Rather, contractual interpretation relies on an objective assessment of the facts known (or that reasonably ought to have been known) to the parties when they made their agreement: Sattva at para.

58. A court may consider anything that could affect the way a reasonable person would have understood the language of a document: Sattva at para. 58. [147] Surrounding circumstances or consideration of the factual matrix cannot overwhelm the words of the agreement itself: Sandhu v. Sidhu, 2019 BCCA 465 at para. 24, citing Sattva at para.

57. Contract interpretation should be centered on the core meaning of the entire contract, and consideration of background facts should only come from objective evidence extant at the time of the execution of the contract: Sattva at para. 58. [148] The Supreme Court has also confirmed that surrounding circumstances cannot be used to "deviate from the text such that the court effectively creates a new agreement": Sattva at para. 57, citing Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 101 B.C.A.C. 62 at para. 20, 1997 CanLII 4085 (C.A.). [149] Before Sattva, the Ontario Court of Appeal discussed the interpretation of agreements and concluded the process can be assisted by analysis of related documents and agreements where the court finds the contract is ambiguous (Salah v. Timothy's Coffees of the World Inc., 2010 ONCA 673): [16] The basic principles of commercial contractual interpretation may be summarized as follows. When interpreting a contract, the court aims to determine the intentions of the parties in accordance with the language used in the written document and presumes that the parties have intended what they have said. The court construes the contract as a whole, in a manner that gives meaning to all of its terms, and avoids an interpretation that would render one or more of its terms ineffective. In interpreting the contract, the court must

have regard to the objective evidence of the "factual matrix" or context underlying the negotiation of the contract, but not the subjective evidence of the intention of the parties. The court should interpret the contract so as to accord with sound commercial principles and good business sense, and avoid commercial absurdity. If the court finds that the contract is ambiguous, it may then resort to extrinsic evidence to clear up the ambiguity. Where a transaction involves the execution of several documents that form parts of a larger composite whole--like a complex commercial transaction--and each agreement is entered into on the faith of the others being executed, then assistance in the interpretation of one agreement may be drawn from the related agreements [Emphasis added.] [150] The BC Court of Appeal in Coast Mountain Aviation Inc. v. M. Brooks Enterprises Ltd., 2014 BCCA 133 at para. 57 stated, with reference to Salah, that it is an "established principle of contractual interpretation that if the court finds the contract is ambiguous, it may then resort to extrinsic evidence to clear up the ambiguity." [151] Evidence of events or conversations happening after the making of an agreement cannot be relied on in the interpretive process unless there is ambiguity in the agreement after considering the pre-contract circumstances. Thus, it is only if a court finds a contract

ambiguous after attempting to interpret the contract in light of the factual matrix and the words of the agreement that it may look to subsequent events. In Wade v. Duck, 2018 BCCA 176, dealing with issues stemming from Sattva and admissibility of conduct subsequent to making of an agreement, Justice Kirkpatrick said: [27] However, as the Court held in Sattva, evidence of surrounding circumstances has limits: [57] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to deepen a decision-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 101 B.C.A.C. 62). [28] In contrast, evidence of subsequent conduct should only be admitted if the contract is found to be ambiguous after one has considered its

text and the factual matrix surrounding the creation of the contract: Re Canadian National Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 252, aff'd [1979] 2 S.C.R. 668 [Canadian National Railways]. In that case, Mr. Justice Lambert, writing for the majority of this Court, explained the circumstances permitting the use of subsequent conduct (at 262): In Canada the rule with respect to subsequent conduct is that if, after considering the agreement itself, including the particular words used in their immediate context and in the context of the agreement as a whole, there remain two reasonable alternative interpretations, then certain additional evidence may be both admitted and taken to have legal relevance if that additional evidence will help to determine which of the two reasonable alternative interpretations is the correct one. It certainly makes no difference to the law in this respect if the continuing existence of two reasonable alternative interpretations after an examination of the agreement as a whole is described as doubt or as ambiguity or as uncertainty or as difficulty of construction. [Emphasis added.] [152] The overarching principles to be considered in the interpretation of agreements include: a) the court must ask what objective intentions of the parties existed at the time the agreement was made; b) words in the contract should be given their plain

and ordinary meaning, while being construed in the context of the agreement as a whole; c) the words of the agreement must be considered in the context of the factual matrix of events preceding the making of the agreement; d) the parties' subjective intentions are not to be considered - the interpretation is based on the perspective of a reasonable person informed by an objective assessment of the surrounding circumstances known at the time; e) the court should not interpret words according to their literal meanings if the result would be a commercial absurdity; f) the court looks to determine whether there is only one reasonable meaning of the words in question or whether the meaning of the words is ambiguous in the sense of being reasonably capable of two different interpretations; and g) it is only if the meaning of the words is ambiguous or if interpreting the words according to their literal construction would result in a commercial absurdity that the court may rely on extrinsic evidence, including facts arising after the agreement was made. C. The Lease [153] In the Lease recital, Abstract represents the following: D. The Strata Plan will designate that portion of the Facility located on the Lands, including the Leased Stalls and Leased Storage Lockers, as common property of the strata corporation formed upon the deposit for registration of the Strata Plan ." E. Both of

the parties to this Lease agree that the common property of the Strata Corporation will be encumbered by this lease as it pertains to the Leased Stalls and Leased Storage Lockers. [154] The Grant in Article 1.01 is framed as follows: owner hereby releases the Least Stalls and Least Storage Lockers to the Tenant. [155] The term of the lease is between 99 years and the date the strata corporation is dissolved whichever is later. [156] Article 1.04 of the Lease titled "Grant and Term" includes the following: [Abstract] will at all times provide [B&W], in its capacity as tenant of the Leased Stalls and Leased Storage Lockers, with means of access to any security devices as necessary to enable the Tenant and subsequent assignees or subtenants to use and enjoy the Leased Stalls and Leased Storage Lockers. [157] Article 2.02 refers to Common Property as follows: This lease is intended to burden only that portion of the lands which will become common property of the Strata Corporation upon the deposit for registration of the Strata Plan in the Land Title Office [158] Article 4 of the Lease speaks to assignment, stating the following: [B&W] may partially assign or sublet this Lease and its rights under this Lease to an owner or purchaser of any strata lot within the Development or to the Strata Corporation .subject to the bylaws, rules and regulations of the Strata Corporation The

consent of the Strata Corporation will not be required for any assignment or sublease of this Lease. The Strata Corporation will not interfere with or attempt to interrupt or terminate the rights of an assignee under any such assignment or subtenant except as expressly agreed by such assignee or subtenant. [159] Looking at the text of the Lease, specifically Article 4 regarding assignment of parking stalls, B&W has the authority under the Lease to assign "its rights under this Lease to an owner or purchaser of any strata lot within the Development" (emphasis added). Interestingly, Article 4 goes on to contemplate situations where an assignee may be "not a member of the Strata Corporation" in the context of discussing the register of stalls to be maintained by the strata corporation but does not extend permission to assign leases to non-strata lot owners in the development. This language is ambiguous because permission is granted to assign the Lease to owners of any strata lot in the development without regard to the designation of lots to the exclusive use of residential and commercial strata lot owners that would have come into effect with the filing of the strata plan. [160] The petitioners contend that the Lease contains no limitation against lease assignment any entity chosen by B&W in spite of the express authority permitting B&W to assign leases "to an owner or purchaser

of any strata lot within the development or to that strata corporation": see Article 4.01. [161] Article 4.01 indicates that leases would be "absolute, and subject to the bylaws of the Strata Corporation to the extent permitted by section 3.01" which speaks to management and maintenance. The only reference to assignment of leases other than to strata lot owners is reflected in an obligation by the strata corporation to maintain a register of stalls with the number of the strata lot owned by an assignee "unless the assignee is not a member of the Strata Corporation": Article 4.06. [162] Reference to an assignee who is not a member of the strata corporation in the Lease does not persuade me that any persons' objective reading of the Lease or the disclosure statements would reveal an intention that that the designation" limited common property for the exclusive use of " was overridden by the Lease or made irrelevant or superfluous before stratification. [163] I find the Lease is intended to burden that part of the common property that includes the parking stalls but not the remainder. There is no mention in the Lease concerning the conflict between the exclusive use provisions of the limited common property designation and the petitioners claim that the exclusive use designation in favour of residential owners is effectively extinguished by the Lease. Although the Lease does not

permit assignments only to residential strata lot owners, it grants permission to make those assignments without mention of any permission to lease parking stalls to entities not owning residential strata lots. [164] The respondent urges an interpretation of the Lease that would respect the exclusive use designation and require the petitioners to assign parking stalls in conformity with that designation. In the result, they contend an objective assessment of the parties' intentions would limit B&W to assigning leases to residential strata lot owners only. [165] I am satisfied that an interpretation of the Lease must take into account this aspect of the factual matrix known to all parties at the time the Lease was entered into on October 4, 2019. D. The Disclosure Statement [166] One element of the factual matrix extant at the time the Lease was executed includes the Initial Disclosure Statement from March 30, 2016 and the Third Amendment to the disclosure statement from March 14, 2017. [167] Sections 3.3 and 3.4 of the Initial Disclosure Statement defined the terms "Common Property" and "Limited Common Property" as follows: 3.3 Common Property and Facilities The common property and facilities of the Development held by the strata corporation and managed for the benefit of the registered owners of the Strata Lots may include underground parking facilities The precise size and

location of the Common Property will be described in and created on registration of the Strata Plan. Each owner of a Strata Lot shall own as tenants-in-common with all of the owners of the Strata Corporation a proportionate share of the Common Property of the Strata Corporation as designated on the Strata Plan The owners' entitlement to use of the Common Property shall be subject to such restrictions as may be set out in the bylaws of the Strata Corporation, any leases, licenses, easements, rights of way or covenants granted by the Developer prior to or with the registration of the Strata Plan, and the designation of common property as limited common property. 3.4 Limited Common Property Limited Common Property is an area within the Common Property that is designated for the exclusive use of one or more Strata Lots. The Developer may designate as Limited Common Property on the Strata Plan certain areas for the benefit of one or more of the Strata Lots. Limited Common Property may be subject to such restrictions as may be set out in the bylaws of the Strata Corporation, any leases or covenants granted by the Developer prior to or with the registration of the Strata Plan or subsequently approved by the Strata Corporation in accordance with the bylaws and the Strata Property Act (B.C.). [168] None of the above statements were altered by the subsequent amendments to the Initial

Disclosure Statement. [169] It bears repeating that the Initial Disclosure statement said the following about the parking stalls at section 3.6: The parking stalls for the Development will be located on two underground parkade levels. The upper parkade level (P1) will have 4 parking stalls allocated for use by the Commercial Strata Lots, and 5 parking stalls allocated for visitor use by Residential Strata Lot owners. The upper parkade level (P1) will have a security gate, behind which will be 35 parking spaces for Residential Strata Lot owners, as well as bike parking. The lower parkade level (P2) will have 30 Residential Strata Lot parking stalls, as well as bike parking and storage locker areas. [Emphasis added.] [170] Following the Third Amendment, the disclosure statement says the following about the parking stalls in the new section 3.6: The parking stalls for the Development will be located on two underground parkade levels. The upper parkade level (P1) will have 4 parking stalls allocated for the use by Commercial Strata Lots, and 5 parking stalls allocated for visitor use by the Residential Strata Lot owners. The upper parking level (P1) will have a security gate, behind which will be 35 parking spaces for Residential Strata Lot Owners, as well as bike parking. The lower parkade level (P2) will have 30 Residential Strata Lot parking stalls, as well as bike parking and

storage locker areas The parking stalls and the storage units will be subject to a 99 year lease and the parking stalls may be allocated for the exclusive use of owners of Strata Lots by the Developer causing the [B&W] to grant a partial assignment of the Parking Facility Lease for such stalls to prospective purchasers of Strata Lots for such consideration in terms as established by the Developer. [Emphasis added.] [171] The schedule of parking stalls described in the Third Amendment to the disclosure statement included reference to an interior security gate between commercial parking stalls and the Residential Parking Stalls. [172] The Third Amendment to the disclosure statement contained a representation that some residential strata lots "will not be assigned a parking stall". [173] I find that the reference to limited common property being subject to restrictions as may be set out in leases does not objectively disclose an intention that leases (or lease assignments ) will permit Lease assignments to non-residential strata lot owners in terms effectively eliminate the residential lot owner's interest in the limited common property. [174] Interestingly there were no changes or references to the limited common property designation in the disclosure statement at or before October 10, 2019 or in the May 15, 2019 amended disclosure statement. [175] The various disclosure

statements issued by Abstract that are circumstances known to Abstract and B&W at the time they entered into the Lease (and at the time the Compliance Agreement was made), which were subject to s. 14 of the REDMA: 14 (1) A developer must not market a development unit unless the developer has (a) prepared a disclosure statement respecting the development property in which the development unit is located, and (b) filed with the superintendent (i) the disclosure statement described under paragraph (a), and (ii) any records required by the superintendent under subsection (3). (2) A disclosure statement must (a) be in the form and include the content required by the superintendent, (b) without misrepresentation, plainly disclose all material facts, (c) set out the substance of a purchaser's rights to rescission as provided under section 21 [rights of rescission], and (d) be signed as required by the regulations. [Emphasis added.] [176] In my view, the third disclosure statement continues the reference to a minimum 99 year lease and the allocation "for the exclusive use of owners of Strata Lots by the Developer with a specific declaration that there would be a security gate behind which 35 parking spaces for residential strata lot owners would be located and 30 parking stalls in the lower parkade. [177] All of the plans incorporated into the third disclosure statement clearly

reference the exclusive use declaration in favour of residential strata lot owners. [178] Having considered the language of the Lease and the disclosure statements made prior to October 4, 2019 and circumstances extant at the time the Lease was entered into, I find that the Lease is ambiguous on the issue of whether the intention of the parties assessed objectively permitted B&W to assign any of the 74 parking stall leases to entities other than owners of residential strata lots. [179] The petitioner seeks to compel the respondent to comply with the Lease as they have interpreted that agreement. I am satisfied that the language of the disclosure statements and other facts known at the time when the Lease was made do not resolve the ambiguity on that point. [180] Faced with these circumstances, the Court may look to extrinsic post-contracting evidence, including all of the circumstances extant on the filing of the strata plan and when the Compliance Agreement was signed to ascertain the objective intentions of the parties. E. The Filed Strata Plan [181] Interpreting the Lease involves an analysis of the nature of common property and limited common property as those terms are included in the filed strata plan and the objective intentions of the parties. [182] At page 2 the filed strata plan provides a legend which describes the parking stalls as follows: Legend CP - denotes

Common Property LCPC - denotes Limited Common Property for the Exclusive use of Strata Lots 1-7 LCPR - denotes Limited Common Property for the Exclusive use of Strata Lots 8-82 [183] On the strata plan itself, at page 2, the parking stalls labelled as "LCPR", parking stalls 8-82, are also labelled "Residential Parking". [184] No unanimous resolution has been passed to remove or amend the filed strata plan, as required by s. 257 of the SPA, to reflect the petitioners' desire to expunge the limited common property designation and permit use of the Residential Parking Stalls by non-residents or to eliminate the exclusive use aspect of the limited common property designation. [185] The petitioner submits that "[i]n this case 'exclusive use' has no magic" and that it simply means "limited" in the sense that "users will be limited, but that does not prevent or preclude the class of users from being increased from strictly residential users". This goes directly against the language used in the filed strata plan, which clearly designates 75 parking stalls as "Limited Common Property for the Exclusive use of Strata Lots 8-82" (emphasis added). Further, the submission that "exclusive use" only means "limited" flies in the face of section 1 of the SPA and the statutory definitions of the terms "common property" and "limited common property", discussed above, and the case law reviewed

above, namely, Stratton, Moure, Chow, and Frank. [186] The designation of common property as limited common property on strata plans suggests different property interests. All common property including limited common property is owned by the strata lot owners as joint tenants in proportion to their interests in the strata. [187] The designation of the Residential Parking Stalls as limited common property for the exclusive use of residential strata lot owners on the strata plan is a significant fact in interpreting the Lease. I have also taken into account the opportunities available to Abstract to change the limited common property designation before filing the strata plan or after filing the strata plan and before the first sale in an effort to make an objective assessment of the parties intention at the time. [188] I note that in One West, Myers J. referred to an owner developer's execution of the option agreement as representing a unanimous approval to disposition of common property without the necessity of a formal resolution. However in One West and in Phelps Holdings Ltd. v Owners Strata PlanVIS 3430, 2010 BCCA 196, the court accepted that an owner developer acting for and on behalf of a strata corporation involved registration of option agreements signed by the owner developer thereby giving notice to the public of the disposition. In Phelps, the entire transaction was

carried out at one time by the one person with the ability to bind all interested parties. For 20 years the respondent had enjoyed the benefit of the options but wished to avoid the burden in this litigation. [189] In this case, there are significant differences in the process and the property interest at issue. A resolution extinguishing an exclusive use limited common property designation can be important to the extent that such documents must be kept by the strata corporation and are available for inspection to inform prospective purchasers. [190] This was not the case as in One West or Phelps where options had been registered in the land title office that could inform third parties that a property interest had been disposed of before stratification. [191] Moreover, s. 257 of the SPA governs the removal of a designation of limited common property made by an owner developer and sets out several steps were required: a) a resolution approving the amendment to the strata plan by unanimous vote was necessary; b) an application to amend the strata plan" must be made to the registrar" accompanied by a reference or explanatory plan; and c) a certificate from the strata corporation stating that the resolution had been passed confirming the explanatory plan. [192] Thus, Abstract cannot rely on the principles referred to in One West and Phelps to influence interpretation of the

agreement that it was exempt from the steps required to remove a designation of limited common property. [193] Contrary to the facts in One West and Phelps, the conflict in this case did not surface until March 2021 and May 2021 when the owner developer/Mr. Miller insisted that non-residential owners in the strata could obtain assignments of the Lease. F. Bylaws and Compliance Agreement [194] The respondent's first bylaws also constitute extrinsic facts relevant to the Court's interpretation of the Lease. The first bylaws stipulated that commercial strata lots would be responsible for expenses related to limited common property designated for the exclusive use of commercial owners and residential owners would be responsible for expenses solely related to the limited common property designated for exclusive use of residential owners. Other expenses would be shared in accordance with the type of owner benefiting from those expenses. [195] The bylaws include the obligation of residential strata lot owners (constituting the "Residential Section") to pay for the costs of maintaining limited common property for the exclusive use of residential strata lot owners without any suggestion that some of the Residential Parking Stalls might be leased to commercial strata lot owners or non-strata owners: For the purpose of these bylaws: (a) any term defined in the [SPA] and used in these

bylaws shall have the meaning given to it in the [SPA] unless expressly defined in these bylaws; (b) "Commercial Lots" means strata lots 1 to 7; (c) "Residential Lots" means strata lots 8 to 82, inclusive; and (d) "Section" means either the Residential Section or the Commercial Section 16. Repair and maintenance of property by separate Sections (1) Each separate Section of the Strata Corporation shall repair and maintain (b) limited common property designated for the exclusive use of that Section [196] Division 2 of the bylaws restricts the use of common property as follows: (1) An owner, tenant, occupant or visitor must not use a strata lot, the common property, common assets or common facilities in a way that is contrary to a purpose which the strata lot or common property, common assets or common facilities are intended as shown expressly or by necessary implication on or by the strata plan. [197] Objectively, the decision to make residential strata lot owners responsible for costs incurred in maintaining the common property designated for their exclusive use but leased to non-strata lot owners or commercial strata lot owners is an objective indication that the petitioners did not intend to allow B&W to assign the Residential Parking Stalls to entities other than residential strata lot owners. [198] Notwithstanding the fact that the costs to be borne by the residential

owners may be minor, this factor weighs in favour of an interpretation of the Lease that the exclusive use of parking stalls in favour residential strata lot owners would not be abrogated by the Lease. [199] The first bylaws filed at the Land Title Office on October 10, 2019 also designated the parking stalls behind the interior security gate as limited common property for the exclusive use of residential strata lot owners. [200] The security gate was in the plans attached to the third disclosure statement and repeated in the filed strata plan. Some residential strata lot owners expressed concerns about security issues and the importance of the security gate to them. [201] The Compliance Agreement entered into by the parties also constitutes an extrinsic fact that informs the Court's interpretation of the Lease. The Compliance Agreement includes the following: The Strata Corp. acknowledges notice of the Parking Lease, agrees to comply with its terms, and in particular, confirms that it will establish a register of the parking stalls and storage lockers indicating the Strata Lot that has the benefit of partial assignments of the Parking Lease; [202] The petitioners asserted that the Compliance Agreement between Abstract, B&W and the respondent, was a post incorporation ratification of the Lease; this happened 12 days after the filing of the strata plan. While the respondent

agreed to be bound by the Lease, there is no clear indication in either the Lease or the Compliance Agreement that the limited common property designation did not exist or was not binding on the petitioners. As noted above, limited common property rights are significant. [203] The interpretation of the Lease is, to a degree, informed by the distinction between" common property" and" limited common property". [204] In deciding whether the petitioner's interpretation of the Lease should prevail, it is important to note that Limited common property is an area within the common property that is designated by Abstract for the exclusive use of one or more strata lots. The developer said in its Initial Disclosure Statement that it may designate as limited common property on the strata plan certain areas for the benefit of one or more strata lots: see the Initial Disclosure Statement at 3.4. This is what happened. [205] Designations of limited common property do not constitute the designated owners as "beneficial owners" of those areas, they possess a right which "approaches a beneficial interest" that is to be respected: Moure at para.

22. This is a special category of property over which the unit holders have a substantial degree of control and should be able to assert the exclusive right to use the space; they have a special category of property over which the they have a substantial degree of control and something approaching a beneficial interest. [206] Given the meaning of "limited common property", I find that it could not have been the objective intention of the parties to allow B&W to assign the Residential Parking Stalls to non-residential strata owners and non-owners without having properly removed the limited common property designation by way of the procedure provided for in s. 257 of the SPA. [207] In One West, the court said that an owner developer's execution of an option, registered against the title, when it controlled the strata corporation constituted a unanimous approval of the owners to disposition of common property. Nonetheless, Myers J. concluded that a new contract was formed on the terms of the lease effective 14 days after filing of the strata plan. These comments do not help the respondent because a disposition of limited common property cannot take place without compliance with the SPA. [208] On this point, there is a distinction between resolutions necessary for a strata corporation to dispose of common property and the steps necessary to eliminate a limited common property

designation from the strata plan. The latter option was open to Abstract but not taken. VIII. Conclusion [209] In interpreting objective intentions of the petitioners in the Lease, I have taken into account the following: a. Abstract's representations in the disclosure statements concerning parking, including the designation of parking stalls for the exclusive use of residential strata lot owners which was repeated in the filed strata plan; b. Abstract included the exclusive use designation in the filed strata plan and choosing not to change that designation before filing the strata plan or by resolution under s. 257; c. Creating the first bylaws allocating the costs of repairing and maintaining the Residential Parking Stalls to the Residential Section; d. the absence of a clear reference to limited common property in the Lease which would have indicated a transfer from Abstract to B&W of the ability to assign that special category of property intended to be held by the residential strata lot owners; e. the right of residential strata lot owners to assert exclusive use of Residential Parking Stalls without any limitation of that right in the Lease; f. the repeated reference to limited common property for exclusive use by residential strata lot owners located behind the interior security gate in the disclosure statement, strata plan, and bylaws; g. the burden of expenses related

to all limited common property parking stalls falling on the residential owners; and h. the prohibition in the strata bylaws against using common property for a purpose for which the common property was not intended. [210] I conclude that the objective intention of the parties was to grant B&W the right to assign all of the parking stalls designated as limited common property but that right did not extend to Lease assignments to entities that were not residential strata lot owners. I conclude that the Lease precluded B&W assignments of Parking Stalls 8-82 to entities or persons that are not residential strata lot owners. Viewed objectively Abstract did not intend to extinguish the limited common property rights established under the filed strata plan. In the result the Compliance Agreement does not bind the respondent to enforce the Lease in a manner contrary to the limited common property designations of strata is lots 8-82. [211] As noted above, I have found that Abstract failed to comply with the provisions of the SPA insofar as it did not change the designation in the strata plan that parking stalls beyond the interior security gate were limited common property for the exclusive use of the residential strata lot owners. [212] Thus, I find that the respondent was not in breach of the Compliance Agreement in refusing access to parking stalls behind the interior security gate

to non-residential strata lot owners. A. Proprietary Estoppel [213] In the further alternative to its arguments regarding enforceability of the Lease and the objective interpretation of the Lease, the respondent argues that assignment of the parking stalls to non-residents would be inequitable and should not be allowed under the doctrine of proprietary estoppel. [214] The parties agree that the test for proprietary estoppel was set out in Cowper‑Smith v. Morgan, 2017 SCC 61: [15] An equity arises when (1) a representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over property; (2) the claimant relies on that expectation by doing or refraining from doing something, and his reliance is reasonable in all the circumstances; and (3) the claimant suffers a detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on her word: see Thorner v. Major, [2009] UKHL 18, [2009] 1 W.L.R. 776, at para. 29, per Lord Walker; see also Sabey v. von Hopffgarten Estate, 2014 BCCA 360, 378 D.L.R. (4th) 64, at para. 30; Clarke v. Johnson, 2014 ONCA 237, 371 D.L.R. (4th) 618, at para. 52; Idle-O Apartments Inc. v. Charlyn Investments Ltd., 2014 BCCA 451, [2015] 2 W.W.R. 243, at para. 49; Scholz v. Scholz, 2013 BCCA 309, 340 B.C.A.C. 151, at para.

31. The representation or assurance may be express or implied: see Wolff v. Canada (Attorney General), 2017 BCCA 30, 95 B.C.L.R. (5th) 15, at para. 21; Sabey, at para. 33; B. MacDougall, Estoppel (2012), at p. 446; Snell's Equity (33rd ed. 2015), by J. McGhee, at p.

335. An inchoate equity arises at the time of detrimental reliance on a representation or assurance. It is not necessary to determine, in this case, whether this equity is personal or proprietary in nature. When the party responsible for the representation or assurance possesses an interest in the property sufficient to fulfill the claimant's expectation, proprietary estoppel may give effect to the equity by making the representation or assurance binding. [16] Proprietary estoppel protects the equity, which in turn protects the claimant's reasonable reliance: see S. Bright and B. McFarlane, "Proprietary Estoppel and Property Rights" (2005), 64 Cambridge L.J. 449, at p.

452. Like other estoppels, proprietary estoppel avoids the unfairness or injustice that would result to one party if the other were permitted to break her word and insist on her strict legal rights: see Taylors Fashions Ltd. v. Liverpool Victoria Trustees Co., [1981] 1 All E.R. 897 (Ch.), at pp. 909, 915-16 and 918. As Lord Denning M.R. put it in Amalgamated Investment & Property Co. (In Liquidation) v. Texas Commerce International Bank Ltd., [1982] 1 Q.B. 84 (C.A.), at p. 122: When the parties to a transaction proceed on the basis of an underlying assumption -- either of fact or of law -- whether due to misrepresentation or mistake makes no difference -- on which they have conducted the dealings between them -- neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands. See also Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53, at para. 51; MacDougall, at pp.15-16. [215] The respondent contends that if the Lease is interpreted in a way permitting the assignment of Residential Parking Stalls to non-residents, equity would demand the Court block the petitioner from insisting on that strict legal right. [216] The disclosure statements specified that parking stalls would be subject to a lease and that the

upper and lower parking levels included parking spaces for residential strata lot owners. [217] The petitioners argue that a suggestion of a proprietary estoppel cannot independently operate as a defence to the petition. Further, the petitioners contend that the undisputed evidence of the residential strata owners and salespersons acting for Abstract included delivery of disclosure statements, advice to obtain independent advice, and copies of the Lease. Thus, the petitioners contend that in the face of all of the disclosure cases, the strata members cannot succeed on an allegation that any facts were not disclosed to them. Thus, they contend there is no evidence of a detriment to the respondents or the residential strata lot owners. [218] The respondents contention is that owners relied on the disclosure information when purchasing their strata lots and their expectations are defeated if the Lease is enforced on the basis requested by the petitioners. [219] Some residential owners provided affidavit evidence about being misled by a sales agent of Abstract concerning the use of the parking facility. Although prospective purchasers would have received copies of the Lease, nothing in the disclosure statements or copies of the Lease clearly disclosed that the G&W was permitted to assign parking stalls to non residential owners in the face of the limited common property

designation. [220] Purchasers dissatisfied with disclosure were entitled to exercise remedies under the REDMA or under common law principles engaging their individual complaints of harm. [221] The petitioners contend that none of the purchasers of residential strata lots relied on any assurances or promises that the Residential Parking Stalls were for the exclusive use of residential owners nor that they would not be leased to commercial lot owners or other people. [222] In my view this petition is not an appropriate process to raise issues of equity and proprietary promissory estoppel between an owner developer and Residential property owners who might have claims against Abstract under REDMA based on their allegation that they relied on some assurance as a representation and suffered a detriment as a result of that reliance. [223] This proceeding concerns an application by the petitioners to enforce the terms of a Lease as against the strata corporation. It is not the strata corporation that was misled in any way and the strata corporation does not claim it suffered a detriment a result of any reliance on representations. It suggests only that some of the Owners were of residential strata lots were impacted by Abstract's disclosures creating expectations and security concerns with regard to non--residential owners having access to parking stalls 8-82. [224] All prospective

purchasers received disclosure statements and copies of the Lease and had ample opportunity to obtain legal advice concerning their purchases of strata lots. [225] I do not accept that this claim can be a basis to interfere with the claims set out in the petition, that is interpretation of the Lease and enforcement under the Compliance agreement. [226] Moreover, based on my conclusions concerning the interpretation of the Lease, I cannot make the finding requested that the respondents expectations were defeated by the Lease or that it should not be enforced on the basis asserted by the petitioners. [227] Given my reasons noted above, and my view regarding the propriety of this petition, I do not make any finding on the question of proprietary estoppel. B. Capability to Comply [228] Finally, the respondent argues that it would be incapable of complying with the orders requested because the strata corporation lacks capacity to fulfill the remedy sought by the petitioners, which is that the respondent comply with the terms of the Lease. [229] The respondent contends that the Residential Section created in the first bylaws is responsible for management and control of the limited common property for exclusive use of residents and the security gate. The Residential Section is a "distinct corporate entity". Because no orders are sought against the Residential Section, the respondent

argues that the Court should not grant an order requiring the respondent to comply with the terms of the Lease. [230] Given my conclusion that the Lease is void and unenforceable, and in the alternative, that the Lease does not give B&W the authority to assign Residential Parking Stalls to non-residential strata lot owners, it is not necessary to decide this issue. C. Evidence [231] During argument, each party challenged the admissibility of affidavit evidence presented at the hearing. The arguments made in support of those challenges were extensive and complex. In the end, counsel accepted that those objections could not be fully argued and, in final analysist, I did not need to address the objectionable portions of the affidavits. IX. Conclusion [232] In summary: a) I find that the Lease is invalid because it constitutes a subdivision of common property without compliance with the required application process set out in the SPA; b) I find that the Lease resulted in a subdivision of common property resulting in the exclusion of the parking leases from common property; c) The change in status of the common property changes the rights of the respondent to manage the strata and obviates the duty to enforce the Compliance Agreement; d) I do not find the Lease to be void or unenforceable due to a breach of fiduciary duty; e) In the alternative, I find that, on an objective

interpretation, the Lease does not grant B&W the right to assign Residential Parking Stalls to entities or persons that are not residential strata lot owners; f) I do not decide the issue in this matter on the basis of proprietary estoppel; g) I decline to decide the issue in this matter on the basis of the respondent's ability to comply with the orders sought; and h) as such, the orders sought by the petitioners are denied; in particular, I make no order requiring the removal of the interior gate nor for the mandatory injunction requested by the petitioner. "Armstrong J."