Le Soleil Hotel (Vancouver): Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc. and other, 2002 BCSC 1778

Citation:

Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc. and other

Date:

20021223


2002 BCSC 1778

Docket:

S022713

Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

LE SOLEIL HOTEL & SUITES LTD.

PLAINTIFF

AND:

LE SOLEIL MANAGEMENT INC. AND OTHER

DEFENDANTS

REASONS FOR JUDGMENT

OF THE

HONOURABLE MR. JUSTICE WILLIAMSON

Counsel for Plaintiff

Mark D. Andrews &

Robert J. Sewell, Q.C.

Counsel for Defendants,

G.B. Gomery &

M.A. Clemens, Q.C.

Dates and Place of Hearing:

December 16 & 17, 2002


Vancouver, BC

[1] In this application, the plaintiff seeks to vary an interim order of this court dated August 28, 2002. That order was made by consent.

[2] The plaintiffs are the operators of a hotel in Vancouver known as Le Soleil Hotel & Suites. The hotel has 128 room units that were offered for sale and leaseback by the original developer. That developer became a bankrupt. The defendants are 86 of the owners of the individual room units.

[3] The plaintiff, after the bankruptcy of the developer, purchased leases of the common areas of the hotel, the parking area of the hotel, and other equipment and chattels.

[4] It is the position of the plaintiff that on April 7, 2002, it entered into an agreement with the defendants whereby they agreed to make their rooms available for use by the hotel. These leases were to commence in May of 2002 with a 17 year term. The plaintiff was to pay to the defendants $13,000 per unit annually in advance. There was also a provision for excess payments should room revenue exceed $6 million annually.

[5] In the underlying action, the plaintiff sues for specific performance of the April 7th agreement. The defendants say there is no such agreement.

[6] The consent order which is the subject of the variation application by the plaintiff appoints a monitor to report to all parties on revenues and expenses, and requires that the plaintiff pay to the defendants an amount equal to $1,200 plus GST each month. It provides that the monies so paid will be accounted for in any final resolution of the dispute. It states that the order continues until further order of the court or until disposition of an injunction application by the defendants dated August 13, 2002. I note that although material has been filed, the injunction application, which seeks to deny the plaintiff's access to the defendants' strata title rooms, has not yet been heard.

[7] It is the position of the plaintiff that the financial circumstances which it understood pertained to the hotel at the time of the consent order in August of 2002 have turned out to be significantly incorrect. As a result, the plaintiff submits that if it is required to make the payments provided for in the interim agreement, all of the revenues will go to the defendants and the owner of the plaintiff will end up subsidizing the plaintiff to a significant degree.

[8] I should also add that the defendants sought to adjourn this application and for reasons which were delivered in court on the morning of December 17th, I dismissed that application.

[9] The defendants take the position that when the plaintiff purported to enter the contract, and when the plaintiff agreed to the consent order of August 28, 2002, it took on certain risks in full knowledge of their potential impact. First, the defendants point out that the plaintiff purchased the above-noted leases to the common area and the parking areas knowing that the validity of these leases was in issue. That is because the defendants, or some of them, had commenced an action challenging those leases.

[10] Further, the defendants submit that the plaintiff entered into the consent order knowing that the hotel was in significant danger of losing the Sheraton franchise which was in place at the time. The defendants point to a letter in which the plaintiff conceded that loss of that franchise would be "devastating".

[11] The defendants therefore submit that as the plaintiff knew it was assuming these risks, nothing has actually changed since the consent order. It is simply that the risks have developed against the interest of the plaintiff.

[12] The plaintiff disputes these submissions. Counsel for the plaintiffs notes that the alleged April 7, 2002 agreement contains a paragraph which states that:

The Common Area Lease and the Parking Lot Leases will revert back to the strata corporation at the end of their term.

[13] Mr. Andrews submits that this demonstrates that at the time of the agreement the plaintiff understood that the lease issues were resolved, for by agreeing that the lease would revert back to the strata corporation, the defendants were agreeing that in the meantime the plaintiff would hold those leases. I note, of course, that it is the position of the defendants that this contract does not exist.

[14] The defendants concede that the validity of these leases is a factor which any potential franchisor would take into account, and submit that the matter could be resolved if the plaintiff would agree to have the matter heard by a court by the device of consenting to such an application by the defendants who presently hold approximately two-thirds of the strata titles within the corporation. Three-quarters are required before an action may be commenced.

[15] Second, the plaintiff says that although it knew that the loss of the Sheraton franchise would be devastating, at the time of the consent order it was working assiduously to preserve that franchise or to enter into a franchise agreement with a different chain. Indeed, counsel points out that paragraph 10 of the April 7th agreement contemplates just that.

[16] Part of the plaintiff's submission, then, is that revenues are down substantially from what it understood was the expectation in August. Indeed, its position is that revenues have plummeted so far that it cannot continue to operate the hotel if the order then entered into stands. In contrast, the heart of the submission of the defendants is that the plaintiff knowingly consented to the court order fully understanding the risks involved.

[17] Both parties, as I understand it, agree that the loss of a franchise has had a significant impact upon hotel revenues, although there is disagreement on the significance of other factors such as difficulties with the restaurant associated with the hotel, and the seasonal downturn in hotel revenues which in the industry is expected over the winter.

[18] On the evidence before me, I am satisfied that the plaintiff undertook reasonable investigations to permit it to consent to the August order believing that hotel revenues would permit it to remain viable. Those predictions were based to the extent possible on the actual performance of the hotel until that date. I am also satisfied that the evidence demonstrates that revenues have fallen far more than expected and that the hotel cannot continue to operate without substantial subsidies.

[19] The difficulty facing all of the parties now is that no one can predict what revenues will be in the future. However, all seem to be in agreement that revenues will be significantly less without a franchise than they would be if the hotel is able to make another franchise agreement.

[20] With this uncertainty in revenues, it makes sense to distribute whatever income is available on a percentage basis, which is the proposal of the plaintiffs. This proposal, in my view, is also more likely to permit the hotel to continue, and to pursue another franchise, than the circumstances which would pertain if the plaintiff were unable to meet its obligations pursuant to the existing consent order, and gave up its alleged right to use the rooms for hotel rental purposes.

[21] In other words, the plaintiff's proposal has the virtue of permitting a distribution of income in a manner that is related to actual revenue and to permitting the parties to resolve their differences and come forward in a united way to seek the franchise which it appears is necessary in the interests of all of the parties.

[22] I note that the defendants take the position that the April 7th contract, if it is a contract, contemplates a revision upwards of the amount payable to the defendants, but not a revision downwards. But I am not here amending the contract. Rather I am varying a consent order of the court which by its very terms gave the parties liberty to apply.

[23] The plaintiff suggested that the appropriate step would be to set aside the consent order. I am not persuaded. In the circumstances, I would make the following orders:

(1) Other than is noted below, the consent order of August 28, 2002, will continue;

(2) Paragraph 8 of that order will be varied so that the plaintiff shall pay to the defendants an amount equal to their share of 29% of the room revenues;

(3) This variation will take effect December 1, 2002; and

(4) This variation is without prejudice to any of the parties' submissions or positions taken in any subsequent proceedings, including further proceedings in this action.

[24] Costs will be in the cause.

"L.P. Williamson, J."
The Honourable Mr. Justice L.P. Williamson

The Monterey (Richmond): Court rules leaky condo owners of Polygon development can pursue prosecution

 

 LRC Monterey by Polygon in Richmond

 

Citation:

The Owners, Strata Plan NW3178 v. Polygon Ventures et al

Date:

20021216

 

2002 BCSC 1729

Docket:

S045719

Registry:  New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN NW 3178

PLAINTIFFS

AND:

 

POLYGON VENTURES LIMITED, POLYGON

CONSTRUCTION LTD., POLYGON HOLDINGS LTD.,

POLYGON PROPERTIES LTD., WINCHESTER INVESTMENTS

LTD., THE POLYGON GROUP, CORPORATION OF THE

CITY OF RICHMOND, GRAHAM F. CROCKART, ARCHITECT

INC., SERTEX PLUMBING B.C. LTD., JKM ENGINEERING

LTD., ALMETCO BUILDING PRODUCTS LTD., ROLAND P.

HOULE DOING BUSINESS UNDER THE TRADE NAME

AND STYLE OF DEC-K-KING AND THE SAID ROLAND

P. HOULE, RAY CARSON, HANSOME & CASTORO (A

PARTNERSHIP), JOHN DOE #3, GRAHAM F. CROCKART,

JAMES K. MAH, OCEAN PARK MECHANICAL LTD.,

AND WEST COAST STUCCO INC.

 

DEFENDANTS

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE MADAM JUSTICE ROSS

(IN CHAMBERS)

 

 

Counsel for the Plaintiffs

R. Glen Boswall

Counsel for the Defendant,

Hansome & Castoro (a partnership)

 

Kevin G. O'Callaghan

Date and Place of Hearing:

November 20, 2002

 

New Westminster, BC

 

[1]            This is an application by the defendant Hansome & Castoro (a partnership) ("Hansome") by which it seeks to enforce an agreement to discontinue the action it alleges was reached with the plaintiffs, The Owners, Strata Plan NW 3178 ("Owners") or, in the alternative, to have the claim against it dismissed for want of prosecution.

[2]            The plaintiffs are the owners of a residential condominium building that is alleged to have suffered extensive water damage due to construction deficiencies including allegedly improperly designed and installed window assemblies and surrounding membrane and caulking.  Hansome has been identified as the subcontractor responsible for installing the windows in the plaintiffs' building.

CHRONONLOGY

 

[3]            The Owners began taking possession of condominiums in the building in April 1990.  Water leaks were reported soon after and the Polygon defendants began to make attempts to repair the problems.

[4]            In 1994, the Polygon defendants ceased their efforts at repair and the plaintiffs retained various contractors in an effort to repair the problems.

[5]            In July 1996, the plaintiffs obtained a report on building envelope deficiencies from Levelton Associates.  The first phase of building repair commenced in 1997.

[6]            The plaintiffs filed a writ naming the Polygon companies as defendants.  In August 1998, plaintiffs' counsel wrote seeking from the Polygon defendants the names of all parties who may have been responsible for the deficiencies in the building.  A further like inquiry was directed in October 1998 to counsel for the Polygon defendants.

[7]            The plaintiffs filed an amended writ in November 1998 adding additional defendants.  In December 1998, a representative of Polygon identified Hansome as the subcontractor responsible for installing windows in the plaintiffs' building.  The plaintiffs filed a further amended writ in February 1999, adding additional defendants including Hansome.

[8]            In May 1999, the plaintiffs filed a Statement of Claim, and issued a demand for discovery of documents and interrogatories to the Polygon defendants and the defendant Graham F. Crockhart Architect Inc.  Supplementary interrogatories were issued to the Polygon defendants in June 1999.

[9]            In July 1999, the plaintiffs filed a Reply, issued demands for particulars to several of the defendants and further Interrogatories, this time to Ronald P. Houle, Graham F. Crockhart Architect Inc. and Graham F. Crockhart.  Additional replies were filed in August 1999.

[10]        In October 1999, the Strata Council was unable to pass a 3/4 majority resolution to provide ongoing funding for the litigation.  A resolution was then passed authorizing the Strata Council to instruct counsel to discontinue or dismiss the action against all the defendants.  Forms were distributed to the individual owners to provide their consent to ending the litigation claims made on their behalf.

[11]        Many of the owners were opposed to giving up their claims in the litigation.  This posed a dilemma for the Strata Council.  The decision was reached to amend the writ such that thereafter the plaintiffs would be only those owners who were willing to give up their claims.  Then discontinuance or dismissal would be sought.

[12]        At about this time, Fasken Martineau DuMoulin LLP was retained to represent Hansome.  Ms. Pratchett took conduct of the file.  In early January 2000, she communicated with Mr. Mendes, then counsel for the plaintiffs.  He informed her that he believed that the plaintiffs had passed a motion to discontinue the action and that she should take no steps in the proceeding.  Ms. Pratchett confirmed this conversation by letter dated January 6, 2000.  She sent a second letter to similar effect dated March 14, 2000.

[13]        There followed a series of communications between Ms. Bauder, Ms. Pratchett's assistant and Ms. Neun, one of the counsel for the plaintiffs.  Ms. Pratchett followed up with another letter dated November 2, 2000, inquiring of the status.

[14]        There followed a letter addressed to all defendants' counsel dated November 21, 2000.  The letter states:

We write further to earlier discussions with counsel about the discontinuance of this matter.  We wish to apprise you regarding how we intend to proceed from this point forward.

 

We are seeking the defendants' consent to discontinue the Plaintiff's action without costs.  Prior to finalizing any such agreement, we will be amending the Owners' pleadings (pursuant to Rule 24(1)(a)) to specify that the Strata Corporation has sued on its own behalf and on behalf of certain individual owners only.  The said individual owners are those who formally consented to an action for damages in respect of their individual strata lots.

 

Without the proposed amendments, the Strata Corporation is otherwise unauthorized to properly discontinue the action.  This is because section 172 of the Strata Property Act (and section 15(7) of the Condominium Act) require that the Strata Corporation obtain the consent of those owners on whose behalf it sues in respect of matters affecting individual strata lots.  As the consents of some owners were obtained it is necessary to formally discontinue the action on behalf of the said owners.  A copy of the as yet unfiled amended pleadings is enclosed.  We will forward a filed copy on receipt of same.

 

If you are prepared to discontinue this action without costs, please sign below to indicate your consent.

 

[15]        Hansome takes the position that by the terms of this letter the plaintiffs offered to discontinue that action against it without costs.  It submits further that it was a term of the agreement that the plaintiffs would file the amended statement of claim and the discontinuance once the amended statement of claim was filed.

[16]        The plaintiffs' position is that the intention was to secure the consent of all defendants and that no individual offer was made or intended.  In other words, unless all defendants agreed, there would be no dismissal or discontinuance.

 

 (More)

Case Studies, Pendrell Place: 1997 - ? The Coleman Caper

(Note: Mr. Oldaker has also written "The AXA Pacific Puzzle". This document expands upon the issue of irregularities with respect to invoicing and payment of work done at Pendrell Place, as touched upon in "The Coleman Caper".)



THE COLEMAN CAPER

- by Richard B. Oldaker, Leaky Condo Owner at Pendrell Place.


While co-chair of the Strata Council from April 1997 to April 1998 Ms Coleman was continuously behind on her Strata Fees and received N.S.F. charges in September 1997, February and March 1998. Upon leaving the Strata Council in April 1998 she was in arrears to the extent to $1,050.00.

In July 1998 the Contingency Reserve Fund was plundered to the extent of its remaining $10,000.00. On September 12 1998 the Strata Plan was invoiced for $10,217.00 to "renovate the Patio and Deck of Apt #102" (it actually was later found to be Apt #103). While this was being done Ms Coleman's deficit grew to $1,261.00 and a further N.S.F. charge was booked.

On December 04 1998 she was placed on foreclosure notice by Vancap which had received three more N.S.F. charges for September/October and November 1998. On December 10 1998 Vancap "RESIGNED" and Ms Coleman later made a $1,000.00 payment. This took place after a windspeed event, that took place on November 25, 1999 was reported to our Insurer to be the cause of water ingress damage that actually occurred in October 1998, (when our roof warranty was voided by the Maintenance Company, which had carried out the $10,217.00 renovation on Ms Coleman's deck as well as those of Mr. & Mrs. Lewis, Mr. Halva that 28/Sep/98 created lienable claims against us in the amount of $29,000.00.

If one assumes Ms Coleman borrowed the $1,000.00, since she had an unbroken record of four successive N.S.F. penalties, she was in debt to the amount of $2,896.00. by January 02 1999, of which $1,896.00 was owed to the Strata Corporation.

On January 12 1999 the rear deck (Patio) of Ms. Coleman's apartment was repaired one further time, at the cost of $2,888.00 for labour and $486.00 for wood. Apparently it was clear to Vancap's successor, Ascent, that there was not any new wood on Ms. Coleman's patio, whereupon it was learned that, albeit invoiced, the wood had never been purchased but was invoiced "FOR STRATA PURPOSES ONLY". The January 12 1999 invoice was cancelled and re issued on February 21 1999, to the amount of $2,888.00 for "LABOUR ONLY". (This was six days after I wrote to Ascent and conveyed my deep concern over the fact we were insolvent).

By the end of January 1999 the insurer had paid the claim, $7,084.00, however, the cheque was unfortunately made payable to Vancap. It was returned by an undisclosed member of the Strata Council with a request that it be made payable jointly to the Maintenance Company and the Strata Corporation..

It was deposited on March 09 1999 and the funds withdrawn the same date. The funds were never reported as received to the Owners, as required by the Condominium Act. One half of $7,084.00 is $3,542.00.

The total amount owing, by Ms. Coleman, on March 02 1999, assuming she borrowed the money to pay her Strata Fees, would have been $3,520.00. Close?

The years end financial statements do not indicate Ms. Coleman owed any money, to the Strata Corporation, so the deficit was cleared before March 31 1999.

In July 1999, Sullivan Construction renovated the rear patio of Apt #103 ONE MORE TIME and installed the pavers that are evident to this date. The decks of Apt #402 & #302 were renovated at the same time. The invoices for those two apartments are in the files. The one for Apt #103 is missing (Ms Coleman had custody of the files from May 2001 to November 2001). Based upon comparative areas it was in the range of $3,690.00.

In November 1999 Ms Coleman felt that her carpets should be replaced because they had been water damaged. Ascent and Sullivan advised the members of the Strata Council that the damage she claimed was attributable to water ingress could not possibly be attributed to that cause. The record reflects that she could not remember when the damage occurred.

As insurance claim was filed, but withdrawn when Ms Coleman offered to claim it on her own insurance, if the Strata Corporation would pay the deductable. It happened. We paid $1,500.00 to replace her carpets, plus a $200.00 bonus because her insurance premiums "might" go up. Our deductible was $1,000.00.

To those who find it difficult to understand why there are those who wonder:

Why did we have a co chair of our Strata Council who was in arrears on her Strata fees for an entire year?

Why was the C.R.F. plundered of $10,000.00 and her patio and deck renovated for $10,000.00, within one month?

Why, if her patio was renovated in August 1998, it required a further $2,888.00 renovation in January 1999 and an additional $3,690.00 renovation in July/August 1999?

Why did we file an insurance claim on November 25 1998 to repair damage that occurred before the event cited as the cause of the damage took place?

Why was the insurance money recovered never disclosed to the owners?

Why was the amount of money required to bail Ms. Coleman out of financial distress almost exactly 50% of the amount of the (fraudulent) insurance claim?

Why was it not until after the Insurance cheques were cashed that the Strata Corporation receivable dropped to zero?

Why did our Property Manger resign (was fired?) only six days after placing Ms. Coleman on NOTICE OF FORECLOSURE?

How did it happen that the damage caused by the defective roof repairs, by pass the fourth and second floors and targeted Apt #103 & #302?

Why was the ratio of labour to material cost billed to the Strata Corporation over twice that billed (at the same time) to our Insurer for Apt #103 & #302?

Why did we choose to pay Ms Coleman $1,700.00 for her new carpets when our insurance deductible was only $1,000.00?

Would not any reasonable person want to know the answers to these questions?

Would it not be in the best interest of the Strata Corporation to receive a reasonable explanation?

Let us never forget, it was Ms. Coleman who, in April 2001 denied the work for which $2,888.00 was invoiced was never done on the highly maintained and troublesome rear patio of Apt #103.

Does not anyone wonder about the fact that, between August 1998 and August 1999 Apt #103 has consumed $20,000, mostly renovating the deck and patio?

Let us also not forget it was Ms Coleman who advised us in the September 20, 2001 minutes that $12,000.00 (Approx) had been "borrowed" from our Contingency Reserve Fund. It has never been repaid! Surprised?