IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT

 

CONCERNING:

 

 

City Of White Rock

 

APPELLANT

 

AND

 

 

Assessor Of Area #14 - Surrey/White Rock AND

 owners of strata plan 226

 

RESPONDENTS

 

Appeal No.:	2009-14-00015
Refer to as:	City of White Rock v. Area 14 et. al. (2010 PAABBC 20092029)
Date of Decision:	January 13, 2010
Properties:	See Appendix “A”
Heard:	By Written Submissions, closing December 4, 2009
Submissions:	From the Appellant received October 26 & December 4, 2009
	From the Respondent Assessor received November 20, 2009
	From the Respondent Owners received November 20, 2009
Board Panel:	Robert A. Kasting, Panel Chair

 

INTRODUCTION

 

[1] The Appellant, City of White Rock (the “City”) appeals the decision of the 2009 Property Assessment Review Panel respecting the classification of twenty-six (26) strata units at the Ocean Promenade All Suites Hotel.  These strata units were assessed under s. 10 of the Prescribed Classes of Property Regulation (Reg 438/81 as amended up to Reg 302/2008 and referred to as the “Regulation”) as a split classification between “Class 1 – residential” and “Class 6 – business and other”.  The City disputes this classification, asserting that the strata units do not have the requisite elements of a residential property class designation. 

 

facts

 

[2] Ocean Promenade All Suites Hotel is located at 15611 Marine Drive, in White Rock, British Columbia.  It contains 42 strata units.  Twenty-six (26) of these are the subject of this appeal.  These strata units operate, to the public eye, as a short-stay hotel.  They hold a business license for operation as a hotel; they maintain a website as a hotel; they are listed in the Yellow Pages as a hotel.

 

[3] The 26 units are the subject of a Covenant (the “Covenant”) which was negotiated between the developer of the property and the City.  The City approved the Covenant through a resolution of its Council.  The Covenant was registered against the titles of the units in the Land Title Office in July 2001. 

 

[4] The Covenant restricts the use which the owners of the units can make of their units.  Clause 2(a) of the Covenant provides that the units:

 

“shall be used only for Public Rental Resident Use and for no other use and shall be offered for rent or rented for periods of less than 7 days to persons or a person as overnight accommodation for at least 50% of the 12 month period ending on October 31 in each year.”

 

[5] In the Covenant, “Public Rental Residential Use” is defined as “the use of a Unit for commercial rental to the Public for tourists, visitors and travelers’ transient accommodation.”  The “Public” is defined as “all persons other than the Strata Lot Owner”.

 

[6] In order to qualify for a “split classification” under s. 10 of the Regulation, a property must fall into two or more prescribed property classes.  In order that one of those property classes be “Class 1 – Residential”, the property must meet the conditions described in s. 1(a)(iii) of the Regulation.  They are that:

 

a.         the owners of the strata units must have the right to use the units “for 7 or more days in the 12-month period…”:  s.1(a) (iii) (A).  In this Appeal, this issue is governed by the terms of the Covenant.

 

b.         the owner must exercise that right, or more than 50% of the owners of the strata plan must exercise their right to use the property:   s. 1((a),(iii) (B).  This is not an issue in this Appeal.  The owners have used the property to the extent required.

 

c.         the owner must supply information about unit usage as required by s. 11 of the Regulation:  s. 1(a) (iii) (C).  In this Appeal, this information was accurately provided by the strata management company which operates the hotel as an agent for the owners.

 

[7] The Appellants, the owners, and the Assessor have prepared an Agreed Statement of Facts which sets out the factual basis of this Appeal.  Although accepted in its entirety for the purposes of rendering a decision, it is unnecessary to catalogue all of the facts agreed upon by the parties.  The assistance of counsel in this regard is acknowledged and appreciated.

 

Issues

 

[8] The principal issue is whether the owners have the right to use the units for 7 or more days in a 12 month period as contemplated by the Regulation.  It is an interpretative issue:  what is the effect of the Covenant on the right of the strata unit owners to occupy their units?  If the Covenant prevents them from occupying their units, then the units do not qualify as “residential strata units”, they do not qualify for “Class 1 – Residential” classification, and they do not receive a split classification designation.  The units must then be assessed as “Class 6 – business and other”. 

 

[9] If the Covenant can be interpreted to allow occupancy by the strata unit owners, then I must consider the City’s additional concern, namely whether the supply of the strata unit usage information by the strata management company, instead of the actual owners, satisfies s. 1(a) (iii) (C) and s. 11 of the Regulation. 

 

ANALYSIS

 

The classification issue

 

[10] The City says that a plain reading of the Covenant prohibits the owners from occupying their units.

 

[11] The City is correct in its interpretation of the Covenant.  A plain reading of the Covenant does not allow the strata unit owners to occupy their units.  The words of the Covenant are clear.  Section 2(a) allows for use “only for Public Rental Resident Use and for no other use”.  This use, according to the definitions in the Covenant of Public Rental Residential Use and Public excludes the owners.

 

[12] The owners, in their submissions, take a long and broad view of the history of the regulatory regime which resulted in the Covenant and the Regulation; they ask that it inform the interpretation of the Covenant.  Although context is always useful, it does not assist in the interpretation of the words of the Covenant.

 

[13] Regarding the interpretation of the Covenant itself, the owners take the position that the phrase:

 

“(F)or at least 50% of the 12 month period ending on October 31 in each year”

 

independently modifies each of the phrases:

 

             “the Lands shall be used only for Public Residential Rental Use and for no other use” and

            “shall be offered for rent or rented for periods of less than 7 days to persons or a person as overnight accommodation”. 

 

[14] They assert that through this meaning, the units can be used by the owners.  This is an interpretation that the words of the Covenant cannot bare.  It distorts the natural meaning of the words beyond what any reasonable interpretation permits. 

 

[15] The owners also assert that these same words must be interpreted to mean that for at least 50% of the period, the owners were permitted to occupy the units.  Again, this is not an interpretation that withstands examination.  The phrase, interpreted within the context of the full sentence in which it is set, means that short term rental to the public must be available for 50% of the year.  It does not say and does not imply that the units are available to owners during the balance of the year.  The 50% restriction implies, instead, that for the other 50% of the year, the units can be offered for rent or rented for periods of greater than 7 days. 

 

[16] Alternatively, the owners submit clause 2(a) of the Covenant is sufficiently ambiguous that it should be interpreted in the owners’ favour.  This argument fails.  Despite the best attempts of the owners to make these words dance, there is nothing ambiguous about them.

 

[17] Lastly, the owners argue that the Covenant, as interpreted, is invalid and unenforceable, because the plain words are not what was authorized by the Council for the City when it was originally passed.  The argument of invalidity is not one which I can consider under the adjudicative authority given to me by the Assessment Act and any attempts to strike the Covenant as invalid must be the subject of another proceeding in a different forum.  However, as an argument, I do not think it is likely to succeed.  There is nothing in the Memorandum of the City’s Planning Department to the City’s elected Council requesting authority to enter into the Covenant which is inconsistent with the City’s present position.  Additionally, there is nothing in the Resolution authorizing the City to enter into the Covenant which is inconsistent with the City’s current position.

 

[18] The Assessor, in addition to adopting the submissions of the owners, says that the Covenant was not meant to restrict the strata unit owner’s use entirely, but to keep the owners’ use in line with the regulation which was in effect in 2001 when the Covenant was entered into.  The Assessor says that the intention of this Covenant was to “mirror the Regulation, not to restrict the Strata Lot Owner’s use entirely”.

 

[19] The original intent of the Covenant might have been to mirror the regulation then in effect.  However, the regulation changed and the Covenant was not renegotiated.  It is clear from the words chosen by the City and the developer that the Covenant was intended to prohibit the usage of the units by their owners.  Ultimately, it is the words of the Covenant, not the ex post facto interpretation of intentions, which controls the meaning of the Covenant.  The obligations in the Covenant bound the developer and continue to bind the strata unit owners. 

 

The reporting issue

 

[20] The City also argues that if the Covenant is insufficient to prevent a split-classification designation of the strata units, then the owners have failed to properly report their use of the strata units.  The City bases this assertion upon the fact that s. 11 of the Regulation requires that “the owner of a strata accommodation property must supply…” strata usage documentation, whereas it is common ground that the information was not supplied directly by the owners but by their strata management company.  The City argues that this information must be supplied directly by the owners and receipt of it through their agent is not sufficient to satisfy s. 11 of the Regulation.

 

[21] This issue clearly has consequences to both the Assessment Authority and to strata owners in general.  Because of this, despite disposing of this Appeal on the interpretation issue, I have decided to comment on the reporting issue.

 

[22] The City’s position on this issue is untenable.  There is nothing in the legislation which speaks to how the strata use information must be supplied.  There is no indication in the Regulation who is to supply that information to the Assessment Authority on behalf of the owners.  There is nothing which prevents the owners from using their agent to provide this information.  In addition, the City does not even dispute the accuracy of the information received.  Indeed, as suggested in the submissions, it is likely the strata management company will have the most accurate information about strata usage.

 

[23] In the circumstances, there is no basis for the City to suggest that the strata unit owners have failed to comply with the strata use reporting requirements of s. 11 of the Regulation.  If this was the sole basis of the appeal, it would fail. 

 

CONCLUSION

 

[24] I find that the effect of the Covenant is that the owners do not have the right to use the units for seven or more days in a 12 month period ending June 30 as required by section 1(a)(iii)(A) of the Regulation.  The units, therefore, do not qualify for a split classification including Residential class and must be classified as Class 6 – Business and Other.

 

ORDER

 

[25] The Board orders the Assessor to amend the 2009 roll to classify each of the units as Class 6 – Business and Other.