B.C. condo unit owners have yet to take a run at challenging the fairness of deductible downloading bylaws of strata corporations, although case law seems aligned for such an opportunity.
Krista Prockiw of Alexander Holburn Beaudin & Lang LLP mentioned this state of affairs while discussing insurance law issues arising out of British Columbia’s Strata Property Act. She was speaking on May 10 at the Insurance Brokers Association of B.C.’s annual convention in Kelowna, B.C.
First, Prockiw observed the provincial act does not limit the ability of a strata corporation to sue a condo owner to recover a deductible. Such an action can proceed if the strata corporation has a valid bylaw or rule in place allowing the damage to be charged to a unit owner.
Second, a strata corporation can sue a unit owner for the insurance deductible if “the owner is responsible for the loss or damage.”
Prockiw suggested this scenario is akin to strict liability, meaning a condo unit owner can be found “responsible” for damage without requiring a finding of negligence on the part of the owner.
Consider, for example, OSP KAS 1019 v. Keiran, Simkus and Wawanesa Insurance. The owner of a condo unit had a pipe burst in the bathroom wall because high acid levels in the water caused a coupling to break down. The court determined the owner had a duty to repair and maintain the unit, which was not common property, and, therefore, was “responsible for the loss, regardless of the absence of fault or negligence on their part.”
Finally, as Prockiw and brokers attending the seminar noted, policy deductibles for some strata corporations are substantial, running anywhere from $25,000 to $500,000.
“If you live in a strata corporation, you share everything in proportionate shares,” Prockiw said. “You share maintenance fees, you share liability, so this whole idea that one owner is responsible for the entire deductible could be seen as contrary to [the common expense philosophy],” she added.
“No one’s ever taken a run at it, but we are certainly waiting for the case in which you do have an exceedingly high deductible, a strict liability bylaw and no negligence on the part of an owner. The owner might then take a run at [the deductible download] being significantly unfair.”
Four years ago, a case commenced relating to the Strata Property Act’s provisions on “significantly unfair” deductible downloads, Prockiw reported. But the case settled before trial, meaning B.C. courts still have not been called upon to interpret the standard of fairness.
“The courts have held that ‘significantly unfair’ is a really high threshold to meet,” Prockiw said. “It might not be possible to meet that.”
May 11, 2012 canadianunderwriter.ca article, read online at http://www.canadianunderwriter.ca/news/opportunity-exists-for-b-c-condo-unit-owners-to-challenge-fairness-of-deductible-downloading-bylaws/1001253862/