COURT OF APPEAL RULES ON
OCCUPANCY AGREEMENT TERMINATIONS
USING CHF BC MODEL RULES

On December 13, 2006, the Court of Appeal rendered its decision in Corbett vs. Still Creek Housing Co-operative, 2006 BCCA 567.  The issue here was whether or not the Co-operative could terminate an Occupancy Agreement that is attached as a Schedule to the Rules under the terms of the Occupancy Agreement itself or was the Co-op compelled to use the termination procedures under the Co-operative Association Act such that Occupancy Agreement terminations are not available to the Co-op.  The Rules were the CHF BC Model Rules.  This was a very important decision to the Housing Co-operative industry as the CHF BC Model Rules have been adopted by many Co-ops in the Province.

The Co-op prevailed at the Supreme Court level.  Grant Haddock of Haddock & Company was retained by CHF BC to make an application for intervenor status and to make submissions on behalf of CHF BC and their members.  The Supreme Court Judge noted the distinction between the termination of Membership and termination of Occupancy Agreement.  Section 35 to 39 of the Co-op Act deal with termination of membership.  In the case at Bar, the Co-op terminated the Occupancy Agreement of the Member which then resulted in the termination of the Member’s Membership by operation of Rule 4.3 which provides for automatic termination of membership should the Board of Directors decide to terminate the Member’s Occupancy Agreement.

At the Court of Appeal level, Corbett argued that Section 35 to 39 of the Act constituted a complete code.  That is, there is no other way by which membership might be terminated.

The Court of Appeal rejected these arguments.  Firstly, the Court noted two other sections in the Act that effectively permit cessation of membership without reference to Sections 35 – 39.

Secondly, the Court noted it would be absurd to apply Sections 35 to 39 of the Act to Rule 4.2 of the Co-op’s Rules which provides, among other things, withdrawal of membership of a member who had died. 

Thirdly, Corbett conceded that a Housing Co-operative can bypass the provisions of Sections 35 – 39 if the Lease or Occupancy Agreement is not attached to the Rules (a recommendation made to clients of Haddock & Company prior to this decision).

Lastly, the Court found that there were procedural safeguards available to Members under alternate termination procedures available to the Co-op.

In the end, the Court of Appeal relied heavily on the same distinction that the Supreme Court Judge relied on, namely that Mr. Corbett had failed to recognize a critical distinction between termination of membership and withdrawal.  Section 35 to 39 of the Co-op Act deal with termination of membership and the Occupancy Agreement deals with termination of Occupancy Rights.

Mr. Corbett’s appeal was dismissed.

This is indeed good news for CHF BC and the many Co-ops who have adopted the CHF BC Model Rules.  Haddock & Company had recommended that the Occupancy Agreements not be attached to the Model Rules because of the perceived risk, which risk materialized when Mr. Corbett challenged the procedures available to a Co-op who had attached their Occupancy Agreement to their Rules. This Court of Appeal decision appears to have now eliminated the risk that was once associated with attaching the Occupancy Agreement to the Rules.