Canadian Underwriter

Toilet trouble means strata owner must reimburse corporation’s $5,000 deductible

April 19, 2021   by Greg Meckbach

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A British Columbia townhouse owner whose toilet overflowed and caused damage has to pay the $5,000 deductible on the strata corporation’s insurance claim, the B.C. Civil Resolution Tribunal (CRT) has ruled.

Jefferson Wu is the principal of Kwan-Wu Holdings Ltd., a corporation that owns a strata unit in a townhouse complex. The unit is comprised of a basement, main floor, and an upper floor garage.

The toilet on the second floor of the unit backed up in December 2018. The strata corporation made a claim and the insurer covered the remediation and repair costs, minus a $5,000 deductible.

The strata corporation asked the unit owner in 2019 to pay the $5,000 deductible; ultimately, it took the owner to the CRT to resolve the dispute.

In The Owners, Strata Plan KAS1278 v. Kwan-Wu Holdings Ltd., released Mar. 12, 2021, CRT member Julie Gibson ordered Kwan-Wu Holdings to pay $5,000 to reimburse the strata corporation for its deductible. On top of that, the owner must pay $99.60 in interest and $225 in CRT fees.

The unit owner argued the cause of the toilet backup was not clear. But the strata corporation submitted a report from a claims adjuster saying the toilet “blocked due to contents in the bowl and started to overflow,” and that the “toilet tank flapper did not seal properly causing water to run into the bowl.”

The unit owner did not file any evidence opposing the claims adjuster’s report, so essentially the CRT accepted the claims adjuster’s assessment of the cause of the loss.

Kwan-Wu Holdings, the corporation, has to pay the strata corporation, not Jefferson Wu the individual. This is because Kwan-Wu owns the strata unit.

Section 158(2) of the B.C. Strata Property Act states that a strata corporation may sue an individual unit owner to recover a deductible if the unit owner “is responsible for the loss or damage that gave rise to the claim.”

In ruling that Kwan-Wu must pay the deductible, Gibson cited B.C. case law, which establishes the principle that provincial law makes strata owners responsible for repayment of a strata corporation’s deductible, even where the owner is not at fault. This is because “responsible” does not mean the same thing as negligent.

Notably, the CRT ruling against Kwan-Wu Holdings cites Mari v. Strata Plan LMS 2835, released in 2007 by the B.C. Supreme Court. In Mari, B.C. Supreme Court Justice Douglas Burnyeat noted that the Strata Property Act uses the term “responsible for” rather than legally liable, liable, or negligent.

“The choice of the term ‘responsible’ provides the owners [of units in a strata property] with the opportunity to allocate to a particular owner the cost of an insurance deductible in cases where an owner was thought to be responsible for a loss,” Justice Burnyeat wrote in Mari.

“The presence of washing machines, dishwashers, air conditioners, and water dispensing refrigerators are examples of items that pose a risk for water escape. Unless there is a mechanism to direct the payment of the deductible by an owner who keeps or installs an appliance that has the potential for water escape, owners are free to act without the consequence that affects homeowners in single family homes where the homeowner’s insurance will repair the damage but the homeowner will be responsible for the amount of the deductible.”

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