Canadian Underwriter

Why these B.C. strata owners didn’t have to pay the corporation’s $5,000 deductible

March 12, 2021   by Greg Meckbach

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A British Columbia strata unit owner is not liable for their strata corporation’s $5,000 deductible on a property claim arising from a fire, the province’s civil resolution tribunal has ruled.

Mei Sum Leung and David Leung own a strata unit on the fifth floor of a 22-storey building. A fire originating from their unit in 2018 caused about $300,000 in damage both to their unit and to common strata property. The strata corporation billed the couple for the $5,000 deductible on the insurance claim it made on its property policy.

But the Leungs don’t have to pay the deductible, CRT Member Julie Gibson ruled in The Owners, Strata Plan LMS2195 v. Leung, released Mar. 9, 2021.

That means the strata corporation cannot collect $1,000, which the corporation says the couple owe the corporation. The Leungs did pay $4,000 towards the corporation’s deductible in 2019, but under protest.

The CRT did not order the strata corporation to refund the $4,000 the Leungs already paid. But this is only because the couple did not file a counter-claim with the CRT against the strata. The strata corporation applied to the CRT to try to force the couple to pay the remaining $1,000.

Much of the March 9 ruling discussed the liability of a strata unit owner for a strata corporation’s property insurance deductible in cases where damage to common property is caused by an accident originating from the strata unit (such as a plumbing leak or fire).

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

At the time of the 2018 fire, the Leungs’ strata corporation had a bylaw stipulating that if damage to common property is caused by an act or omission of an owner or guests, the strata may make a claim to its insurer to repair the damage; the unit owners would pay the strata the lesser of the insurance deductible or the repair costs.

However, the Leungs’ case was different from most negligence lawsuits. In their case, the strata corporation’s bylaws do not require that the unit owners’ “act or omission” be proven to be unreasonable or to be something that falls below a particular standard, wrote Gibson.

Nonetheless, the Leungs are not liable under the circumstances of the fire originating from their unit, Gibson found. This is because the strata corporation still has to prove on a balance of probabilities that an “act or omission” on the part of the unit owners actually caused the fire.

The Leungs were not living in their strata unit at the time the fire started. The Leungs claimed the occupant was in their unit without their permission.

The strata corporation suggests that the fire was likely started when the occupant burned something, because the unit did not have electricity.

But the strata corporation did not prove to Gibson’s satisfaction that the occupant actually did burn something. An investigation report from the local fire department said the cause of fire was “undetermined.”

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4 Comments » for Why these B.C. strata owners didn’t have to pay the corporation’s $5,000 deductible
  1. S Ma says:

    If a pipe behind the wall burst while the unit is VACANT, would the unit owner still be liable to pay for the hefty strata policy deductible? Some older buildings installed undesirable piping materials that are more prone to burst, and if so, is not caused by “an act or omission of an owner or guests”. While vacant, unit owners are not able to obtain strata policy deductible loss assessment coverage to adequately protect themselves from this financial burden.

  2. LU says:

    The strata act indicates the owner of the unit is responsible for the strata’s deductible if the damage originated in their unit. Even if not negligent, this wording shifts the deductible cost to unit owners. Even if vacant.

    The argument then comes down to the definition of the unit. Was the pipe in the unit? In a wall within the unit?

    Also, it is uncommon for the strata to maintain any ownership of common walls between units, common ceiling/floors between units. The deductible for most losses that happen in a strata are born by owners.

  3. C Keep says:

    1) The Strata Property Act does not specify “act or omission”; it states “responsible”. This is not strict liability, and the bylaws will reference what the owners are “responsible” for.
    2) Bylaws can be amended to import a standard of negligence. Standard bylaws do not import this standard.
    3) Insurance can absolutely be purchased for vacant units. Policies will define what “vacant” means, and it may be the unit (with restricted coverages) or it may be the building, in which case a vacant unit within an otherwise occupied building is not “vacant”.
    4.) S. 68 of the Strata Property Act defines a “unit”. It extends beyond the wall. If the pipe services one unit (eg. supply line to a washing machine or a dishwasher) it is part of the unit. If it is a recirculation line or drain stack for the building, it is common property.
    5.) Walls between units are not common property.

  4. patricia harapiak says:

    We have a unit in our Strata that has been unoccupied for 3 years.
    There have been numerous issues arising from the fact that water damage continued for a long time without council’s knowledge.
    There is no insurance coverage for this unit. Can we fine the executors as long as the unit remains unoccupied? They were not interested in selling.
    We have asked them to check the unit every 72 hours but this has not happened.

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