October 28, 2020 by David Gambrill
A recent decision by B.C.’s Civil Resolution Tribunal (CRT) may motivate strata (condo) corporations to adjust their bylaws so that they can charge insurance policy deductibles back to their strata unit owners.
Based on the outcome of the CRT decision, if condo corporations wish to charge back insurance deductibles to unit owners, they will need to change the wording of their bylaws to eliminate language that requires the corporations to prove the unit owners were negligent in a damage loss.
At issue in The Owners, Strata Plan EPS2532 v. Komala was whether the condo corporation had to prove the unit owners were negligent in order to charge a $5,000 insurance deductible payment back to the owners.
Devi Komala and Preman S. owned Unit 607 in a B.C. strata building. On Jan. 9, 2019, water leaked from their washing machine, causing damage to two strata lots below. An owner of the one of the damaged strata lots took photographs upon noticing the leak. The photographs showed water on the floor coming from the washing machine area.
On the same day, a property maintenance technician, who worked for 18 years as a trained plumbing and heating engineer, inspected the washing machine in Suite 607. He found no plumbing-related or drainage-related sources for the leak. He offered his opinion that the leak was an “unforeseen incident” that was not due to “negligence or carelessness” by the owners.
The strata made an insurance claim to Platinum Pro-Claim for repairs to the two strata lots that were damaged when the washing machine leaked. On Feb. 12, 2019, Platinum invoiced the strata $5,000 for the deductible. Ten days later, the condo corporation informed the owners of Unit 607 that they were required to pay the deductible.
The unit’s owners argued before the Civil Resolution Tribunal that they were not negligent, and therefore they should not have to pay the insurance deductible. The CRT agreed with the owners.
In May 2019, the strata amended its bylaws, making owners liable for loss or damage where the cause originates in their strata lot, as CRT Member Julie Gibson wrote. “I find this wording does not apply to this dispute because the leak and repairs pre-date the May 2019 amendment.”
Consequently, the pre-May 2019 wording of the Condo’s Bylaw 3.23 applied. According to the CRT decisions, the previous wording of the bylaw says “an owner must indemnify the strata from any expense necessary to common property, limited common property, common assets or any strata lot caused by the owner’s act, omission, negligence or carelessness or by that of an owner’s visitors, occupants, guests, employees, contractors, agents, tenants or family members, to the extent that the expense is not reimbursed by insurance policy proceeds.”
The tribunal noted this wording is almost identical to the wording of other condo bylaws that have appeared in precedent-setting tribunal and court decisions.
“The strata did not expressly argue that Ms. Komala and Mr. S were negligent, but as noted above that is what the strata must prove,” Gibson wrote. “To prove negligence, the strata must show that the owners owed it a duty of care, they breached the standard of care, the strata sustained damage, and the damage was caused by the owners’ breach…
“Here, the only expert evidence about negligence is from [the property maintenance technician], who gave an opinion that Mr. S and Ms. Komala were not negligent. While the owners may have owed the strata a duty of care, there is no evidence the owners acted unreasonably. For these reasons, I find that the strata has not proven that the owners were negligent.”