Absentee Landlord Responsible for $50,000 Strata Insurance Deductible
The BC Supreme Court has issued an authoritative statement on the issue of whether a strata corporation is obligated to pay for damages to a unit owner’s property which are below the strata corporation’s insurance deductible. In Louie v. The Owners of Strata Plan VR-1323, 2015 BCSC 1832, a unit owner sued her strata corporation and the strata’s insurers for damages caused by a fire originating in her unit. The fire was caused by the operation of a meth and ecstasy lab operated by her long term tenant.
The damage was contained to the strata unit and limited common property. The estimates obtained by the independent adjuster valued the damages close to but slightly below the $50,000 deductible (at trial damages were found to be $36,000). The strata’s insurer agreed to provide coverage for the loss subject to the $50,000 deductible. The strata council requested the plaintiff provide payment, or a payment plan for the $50,000 deductible prior to work being commenced. The plaintiff refused, arguing the strata corporation was responsible for authorizing the repairs and paying the insurance deductible.
In arriving at his decision, Justice Greyell comprehensively reviewed the relevant provisions of the Strata Property Act (SPA) and the bylaws governing the strata corporation. The court placed significant weight on the duties to repair outlined in the Act and the bylaws, which clearly placed the duty to repair on the unit owner in this case.
Justice Greyell’s decision turned on interpretation of the insurance provisions of the SPA and in particular section 158 which states that an insurance deductible is a common expense which can be claimed back from the responsible owner. The nub of Justice Greyell’s decision is at paragraph 123:
…In my view, [s. 158] does not impose a mandatory obligation on a strata corporation to pay an insurance deductible in every event of a claim under such a policy. Clearly there are situations where there may be damage to common property or limited common property which a strata corporation will be required to repair for the benefit of all or a number of owners and which may be subject to an insurance deductible. In such a situation, the strata corporation would want to proceed with repair. That, in my view, is the situation the section addresses. That is not what happened in this case where the damage was caused by the unlawful conduct of a tenant of one owner and, apart from damage to the carpet in the hallway, the damage occurred to the plaintiff’s Unit only.
The court concluded that the Strata had the right to insist the plaintiff pay for remediation up to the amount of the deductible.
The principle to be taken from the court’s reasoning is that a strata corporation is not mandated by the SPA to pay an insurance deductible where the damage is within a strata unit. The purpose of section 158 is to address circumstances where there is damage which the strata corporation is required to repair under the SPA and bylaws. In this case, the damage caused by the fire was required to be repaired by the unit owner and thus the unit owner was obligated to pay for the deductible.
Case law summary by: Chelsea Lott