Le Soleil Hotel (Vancouver): Tjandra v. Interval Properties Ltd. et al, 2004 BCSC 1131

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Tjandra v. Interval Properties Ltd. et al,


2004 BCSC 1131

Date: 20040830
Docket: S022027
Registry: Vancouver

Between:

JANUAR TJANDRA and
LISAYANI ANGGORO

PLAINTIFFS

And

INTERVAL PROPERTIES LTD.,
INTERVAL RESORTS LTD.,
BARRY HONG and JOE SINGH

DEFENDANTS


Before: The Honourable Mr. Justice Burnyeat

Reasons for Judgment

Counsel for Plaintiffs, Januar Tjandra and Lisayani Anggoro

A. Rees-Thomas

Counsel for Interval Properties Ltd. and Interval Resorts Ltd.

B.J. Promislow

Barry Hong and Joe Singh

Acting in Person

Date and Place of Trial:

March 8 %u2013 11, 15, 16,

18 & 29, 2004


Vancouver, B.C.

[1] Responding to an advertisement in an Indonesia newspaper, the Plaintiffs paid $160,000 to Interval Resorts Ltd. (%u201CResorts%u201D) in partial payment of the amounts required to be paid under a contract (%u201CContract%u201D) to purchase a strata lot hotel suite in the LeSoleil Hotel (%u201CHotel%u201D) in Vancouver. The Plaintiffs allege that the Defendants jointly and severally represented that the Contract was part of a larger agreement whereby half of the ultimate purchase price would be available to the Plaintiffs financed either by the Defendant, Barry Hong or by financing arranged by Resorts, that there would be a guaranteed 10% net return based on a lease arrangement with the hotel management company which the Plaintiffs were led to believe would be the Sheraton Hotel Group, that the management agreement would run for 18 years, that the Plaintiffs would be entitled to stay in the suite they were purchasing for a minimum of 7 days per year without cost, and, if the Plaintiff paid the total purchase price of $320,000 in cash, the Defendants represented that they would arrange for a 5-year buy back guarantee. Finally, the Plaintiffs allege that the Defendants jointly and severally represent that the Defendants would arrange for Mr. Tjandra to be eligible for permanent residence status in Canada as a result of the purchase of the hotel suite, all of which representations are said to become the terms of what is said to constitute the %u201CAgreement%u201D between the Plaintiffs and Resorts, Interval Properties Ltd. (%u201CProperties%u201D) and Barry Hong.

[2] The Plaintiffs also allege that the Defendants represented that they would arrange for the preparation for all of the documents necessary to give full effect to the Agreement and that these documents would be professionally prepared and available for execution by the Plaintiffs by December, 2001.

[3] The Plaintiffs submit that the Defendants breached the terms of the Agreement of which the Contract formed a part when they failed to provide the 50% financing for the purchase of their unit, the mechanism whereby the Plaintiffs would be guaranteed an income of 10% per annum on their investment for 18 years, an acceptable management company to operate their unit within the Hotel, the Plaintiffs with any services such as cleaning, linen services, room services as might be required to operate the hotel suite as a room in the Hotel, the means whereby the Plaintiffs would have the right to use their unit for 7 days each a year, and the means whereby Mr. Tjandra would obtain permanent residency in Canada as a result of his investment.

[4] The Plaintiffs also submit that the Contract is void for uncertainty and that it was never intended that the Contract would stand alone as it was always to be a part of the Agreement. Accordingly, the Plaintiffs claim general and special damages and the return of the $160,000 paid.

[5] As the Contract provided for the forfeiture of the $160,000 paid if the Plaintiffs did not complete the purchase contemplated by the Contract, in the alternative the Plaintiffs seek to be relieved from the forfeiture of their $160,000 on the basis that the amount does not constitute liquidated damages as it is extravagant and unconscionable in comparison with the greatest loss that could conceivably be proved to have resulted from any alleged breach by the Plaintiffs and that the sum was not a genuine pre-estimate of damages but is in the nature of a penalty.

[6] The Defendants deny the allegations and Resorts submits that the only agreement it entered into with the Plaintiffs is the Contract and that the deposit of $160,000 is properly characterized by the Contract as liquidated damages and a genuine pre-estimate of damages in the event of default by the Plaintiffs taking into account the place of residence of the Plaintiffs and the nature of the property sold.

BACKGROUND: DEVELOPMENT OF THE LESOLEIL HOTEL

[7] Mr. Hong was one of the developers of the Hotel. The concept was to create a 130 strata-titled lots that would be available for sale in order to build a %u201Cboutique%u201D hotel/residence. By 1996, all units in the Hotel were sold, mostly to Singapore and Malaysian purchasers. In 1999, 30 of the 130 sales did not complete and, in order to protect their investment, some of the original investors arranged to buy the 30 unsold units in order to avoid the risk that their life savings would be lost.

[8] Properties and Resorts were incorporated in 1999 with Frank Horvath as President and Director, Istvan Huff as a Director and Fung Yee Leung (the mother of Mr. Hong) as the Secretary.

[9] In an October 15, 1999 Trust Agreement registered in the Land Title Office, Properties, as the %u201COwner%u201D of the 30 strata lots, entered into an agreement with Resorts as the Trustee (%u201CTrust Agreement%u201D). The Trust Agreement contained the following recitals:

B. The owner will cause timeshare interests in the Strata Lots to be leased to users pursuant to leases (each an %u201CInterval Lease%u201D), with the intent that each such lease will provide its holder with the right to use a designated type of strata lot for a certain time interval during a designated season;

C. The Owner intends to file a prospectus (the %u201CProspectus%u201D) under the Real Estate Act (British Columbia) with the office of the Superintendent of Real Estate for British Columbia relating to the leasing of timeshare interests in the Strata Lots;

D. The Owner has directed that title to the Strata Lots be transferred to the Trustee in trust for the benefit of the Lessees (as defined hereafter) and the Owner in accordance with the terms and conditions of this Agreement; and

E. The Trustee has agreed to hold the Strata Lots in trust, record all Interval Leases granted by the Owner in the Register (as defined hereafter) and perform certain other duties as set out in this Agreement.

[10] It is clear that the Trust Agreement contemplated and was therefore established for the purpose of a time share arrangement for the units owned by Properties. I find that Properties and Resorts entered into the Trust Agreement so that future sales of the 30 strata lots could be accommodated without the payment of Land Title Office transfer fees and in contemplation of selling all 30 strata lots either in bulk or on an individual basis.

[11] The %u201CConveyance File Opening Form%u201D relating to the transfer of the 30 strata lots to Properties notes that the %u201CInstructions [were] Taken From%u201D Julius Pataki. The records of the solicitor for Resorts and Properties indicate that instructions were often provided by Messrs. Hong and Pataki.

[12] Much time was spent by Messrs. Hong and Pataki on behalf of Resorts and Properties to arrange for a sale of all 30 units to one purchaser who would then make the units available on a time-share basis. Those negotiations with Shell Vacations LLC (%u201CShell%u201D) came to an end in the Summer of 2001 when Messrs. Hong and Pataki came to the conclusion that their negotiations on behalf of Resorts and Properties would not result in a sale of all of the 30 units.

[13] I find that Messrs. Hong and Pataki had been authorized by Resorts and Properties to act as their agents to negotiate the sale of all 30 units to Shell and that they had the actual and apparent authority to do so. In this regard, it is clear that Mr. Pataki was providing all the instructions relating to the potential contract with Shell, that a February 12, 2001 Letter of Intent between Shell and Resorts shows the proposed signatory on behalf of and as agent for Resorts as Mr. Hong, and that a March 9, 2001 Letter of Intent between Shell and Resorts was signed on behalf of Resorts by Messrs. Hong and Pataki describing Mr. Hong as the %u201Cauthorized representative%u201D and Mr. Pataki as the %u201Cauthorized agent%u201D.

[14] When it was clear that it would be impossible to complete any contract with Shell, Resorts and Properties changed their strategy. In June 2001, Resorts entered into negotiations with New Ark Development Company Ltd. of Hong Kong (%u201CNew Ark%u201D) to appoint New Ark as the agent of Resorts to market the sale of individual strata units to potential purchasers in China and Saudi Arabia. In the Agency Agreement as drafted, the sale price for any particular unit was stated to be $260,000 (Canadian). Mr. Hong dealt exclusively with the solicitor for Resorts and Properties on this Agency Agreement and his e-mail correspondence with the principal of New Ark described it as an %u201CImmigration Investment Proposal%u201D.

[15] In a June 17, 2001 e-mail to Mr. Tu of New Ark, Mr Hong advised:

The immigration process usually takes anywhere from 12 to 18 months. As for the structure, what I see happening is that your investors buy the shares of Interval Resorts Ltd. And Interval will be the investment vehicle for your group to do various business with regards to the hotel and hospitality industry, which is a preferred type of investment for immigration.

[16] In what is headed up as an %u201CAgency Agreement%u201D and dated June 14, 2001, Mr. Hong as the %u201Cauthorized representative%u201D of Resorts agreed to provide an exclusive agency agreement to New Ark to sell the 30 units in China, excluding Hong Kong and Macau for a purchase price of $8,060,000. This exclusive agency agreement was said to be valid until September 30, 2001.

[17] In his June 20, 2001 e-mail letter to Mr. Tu, Mr. Hong stated: (a) %u201CEach investment would qualify for one individual and their dependents to immigrate to Canada, under the entrepreneur category, subject to final qualification and interview with Immigration Canada%u201D; (b) %u201CMartin and Associates, an immigration Law firm will assist the investors with the application process and the removal of condition procedures for a fee of $7,500 per investor.%u201D; (c) While the returns were stated to be all subject to the final performance of the hotel, Mr. Hong suggested that returns could be %u201Cconceivably up to 12% to 15% per annum when the hotel achieves maximum profitability and stability in the future.%u201D

[18] In a June 23, 2001 e-mail to Mr. Tu, Mr. Hong stated: %u201CI have already run the plan with Vivian Wong at Martin & Associates, and apparently she said it would work as they have done a similar type of structure before with the Holiday Inn.%u201D

[19] I find that Mr. Hong had been authorized by Resorts and Properties to act as their agent to negotiate with New Ark regarding the appointment of New Ark as the agent of Resorts to market the strata title hotel units in China, Macau, and Saudi Arabia. Mr. Hong had the actual and apparent authority to do so.

[20] The question which arises in these proceedings is whether Mr. Hong and others had the actual and apparent authority to arrange for individual sales outside China, Macau, and Saudi Arabia and, in particular, the sale to the Plaintiffs and, if so, the nature of any agreement between the Plaintiffs and Mr. Hong and others on behalf of Resorts and/or Properties.

[21] Mr. Pataki on behalf of Resorts was attempting to arrange other sales. In a July 25, 2001 facsimile transmission to Mr. Wang Ta Shan, Mr. Pataki advises that a $200,000 second mortgage loan from Resorts had been arranged subject to the potential purchaser completing and signing an application for the loan. Mr. Pataki described the purpose of the loan as follows:

The purpose of the loan is to start the sale of the strata lots owned by Interval Resorts Ltd. We have an offer from a large American company, Shell Vacation LLP to purchase all the strata lots at an average price of $248,000 per unit. If they do not pay us a non-refundable deposit by the end of August, we will start selling the units ourselves. All our family money is tied up as equity in the units, we greatly appreciate your help.

Interval Resorts Ltd. has agreed to provide a Promissory Note and a second mortgage for the $200,000 line of credit against S.L. 34/Unit 609, S.L. 82/Unit 1009, S.L. 124 /Unit 202, and S.L. 125/Unit 203. I have informed Mr. Tommy Tao about the terms of your loan to Interval Resorts Ltd., but he requested that you confirm it with him directly by fax. Barry Hong and Julius Pataki will also provide a separate personal guarantee for the above loan.

[22] While this transaction does not relate directly to the case at bar, I find this %u201Cstart [to] selling the units ourselves%u201D is what was being implemented by Messrs. Pataki and Hong on behalf of Resorts in the late Summer and Fall of 2001. I also find that Messrs. Hong and Pataki continued to be authorized to represent and bind Resorts as Resorts entered into the phase of selling individual units in the Hotel. I also find that the offer of personal guarantees from Messrs. Hong and Pataki as well as mortgage support from Resorts was part of the general plan developed by Resorts through Messrs. Hong and Pataki to %u201Cstart selling the units%u201D.

ROLE OF THE DEFENDANT SINGH

[23] In his January 16, 2004 affidavit, Mr. Pataki describes himself as the %u201CManager%u201D of and %u201Cconsultant to the company at the material time ....%u201D. Mr. Pataki states:

In or about the month of September 2002 [sic %u20132001] Joe Singh contacted me by telephone and indicated to me that he was apologetic for the failure of his original clients to complete their purchases [in 1999] and that he knew that Interval had purchased only to allow the operation to go ahead, that he had purchasers who would purchase from Interval and that he would like to come to Vancouver to meet with Interval to negotiate such sales.

As a result thereof I met with Joe Singh in the office of the company%u2019s solicitor, Ms. Sheila Braaten, and we discussed his proposal %u2013 he made it clear that he had cash buyers and that he would obtain contracts from them provided that he received a healthy commission %u2013 in discussions held with him and with Sheila Braaten she agreed to draw and provide him with an acceptable contract (that is the contract that was later signed by the plaintiffs) and Interval agreed to pay him a commission of ten percent on any sale that he obtained and which completed.

As a result of conversations which I became aware of between the defendants Barry Hong and Joe Singh I became aware that those two were planning on establishing a management company to deal with the owners of the Le Soleil Suites, the previous owners and the new owners (whom Joe Singh would sell to the Interval units.)

I journeyed to Indonesia to meet with Joe Singh and his customers to make sure they had only the prescribed contract and to suggest to them that before they completed any contract they would come to Vancouver and view the property, make their own investigations, as I did not want to have contracts entered into which did not complete as had been the sad case with the original purchasers of whom many when it came time to close claimed financial or personal reverses precluding their ability to close %u2013 eventually most did close but I did not want to experience similar problems and especially as Joe Singh had assured me that his purchasers (including the plaintiffs) were all cash buyers I wanted to make certain that they would complete and if they were being persuaded by Joe Singh and Barry Hong to enter into a management agreement with their company that they did not look to Interval for any management for the unit.

[24] At trial, Mr. Singh described his previous involvement with the Hotel including introducing many of the pre-construction purchasers and then later assisting in a legal action which had been commenced by a number of owners who alleged that they had not received the return on investment which was part of what was originally agreed when they purchased their units. Mr. Singh described his role in the Fall of 2001 as attempting to %u201Chelp them sell suites%u201D. He testified that Messrs. Hong and Pataki on behalf of Resorts and Properties agreed that the marketing of units in Indonesia would feature a 10% net return, 7 days free stay every year, a 50% loan to help purchase the properties, a management contract guaranteeing the 10% net return and Sheraton as the Manager of the units. Mr. Singh testified that he met with Messrs. Hong and Pataki %u201Cquite a few times%u201D between March and December 2000 to %u201Chelp them sell suites%u201D.

INTRODUCTION OF THE PLAINTIFFS TO THE PROJECT

[25] A number of advertisements ran in Indonesian newspapers. It was these newspaper ads which originally attracted Mr. Tjandra to the possibility of investing in the Hotel. The translation of the words in the advertisement in evidence indicates the following:

Guaranteed Annual Rate of 12% for 18 years

Investment Loan of up to 50%

One Week Complimentary Stay per year

Bonus Permanent Residency in Canada

[26] Frank Horvath was examined as a representative of Resorts and Properties. As to whether the advertisements in the Indonesian newspapers were authorized or not, the following question was asked and answer given:

Q: But I understand you to say, Mr. Horvath ... that the actual placement of the advertisement was authorized by Interval.

A: Well, I guess it was authorized because we were trying to sell the units ..

[27] Mr. Singh testified that the terms of the advertisements were discussed and agreed upon with Messrs. Hong and Pataki. Mr. Singh indicated that he prepared the advertisements but that Messrs. Hong and Pataki agreed on the %u201Cformat, wording, size%u201D and that they met in Vancouver before the advertisements were placed. Mr. Singh stated that, just before the advertisements were placed by him, he sent a copy to Messrs. Hong and Pataki.

[28] At trial, Mr. Hong testified that Mr. Singh showed him the advertisement, he was %u201Cquite shocked%u201D as %u201CI didn%u2019t think we could do all of these things,%u201D he asked Mr. Singh where he got the authorization to run the advertisements, and that Mr. Singh said %u201Che didn%u2019t%u201D [get it]. Mr. Hong also testified that he told Mr. Tjandra in Indonesia that %u201Cthe ad should not have gone out%u201D.

[29] At his discovery, Mr. Horvath was asked the following question and gave the following answer regarding the advertisements:

Q: I am asking you if the advertisement correctly outlines the terms of the offer that Interval was making to the public.

A: Yes.

[30] On the basis of the testimony of Messrs. Horvath and Singh, I find that the advertisements were authorized by the two Interval companies, that the two Interval companies received copies of the advertisements which ran in the Indonesian newspapers, and that the Interval companies took no steps to countermand or correct what had been stated in the advertisements.

[31] If Mr. Hong was so %u201Cshocked%u201D by the advertisement, I would have expected him to have taken steps to advise Mr. Singh that they were inappropriate, to advise Resorts and Properties that they were being run, and to check with Mr. Horvath as to whether they had been authorized or not. There is no evidence before me which would allow me to conclude that he did any of those things. I find that the advertisements set out at least part of what was being offered on behalf of the two Interval companies when Messrs. Singh and Hong met with potential purchasers including the Plaintiffs.

[32] In response to the advertisements, Mr. Tjandra met twice in Jakarta to receive information about the Hotel. Mr. Singh testified that he met with Mr. Tjandra in October and that he explained to him the benefits of the investment including that the Hotel would be managed by Sheraton and that he would get 10% net return, a 50% loan, 7 days free stay and permanent residency status. Mr. Singh testified that he told Mr. Tjandra that any necessary loan would be arranged by Mr. Hong and guaranteed by Mr. Hong. Mr. Tjandra testified that Mr. Hong stated the he could arrange for 50% financing although I do not record him as testifying that Mr. Hong stated that he would be a guarantor of that financing. Mr. Tjandra also testified that Mr. Hong stated that individuals buying strata units would have immigration status arranged for them and that this had been accomplished previously.

[33] Mr. Singh testified that he then met the next day with Mr. Tjandra who was accompanied by Ms. Nani Wangidja. A second presentation was made to Mr. Tjandra, Ms. Wangidja along with five friends. Mr. Singh testified that the same presentation was made regarding what would be available to purchasers. When a decision was made by Mr. Tjandra that he would purchase a unit, Mr. Singh and Mr. Tjandra agreed that Mr. Tjandra would come to Canada to look at the suite.

[34] Mr. Hong was at the second meeting. Mr. Hong testified that there was no doubt in his mind that he was there merely representing the manager of the suites, that he would try to rent on a long term basis any suite purchased by Mr. Tjandra, and that he advised Mr. Tjandra that he managed another hotel, and that he was not there to represent the interests of either of the Interval companies.

[35] I find Mr. Hong%u2019s testimony in this regard to be unbelievable. First, Mr. Hong testified that at least one of the purposes of the trip to Jakarta was to attempt to sell the remaining units owned by Properties and Resorts in the Hotel. Second, while it may have been necessary for Mr. Hong to travel to Jakarta to deal with Mr. Singh regarding the possibility of their forming a new management company, there would have been no real purpose to Mr. Hong joining the meeting with potential purchasers other than to participate in the attempt to sell units in the Hotel. I have no reason to believe that Mr. Singh was not fully able to advise potential purchasers about the management of any unit they purchased. Third, while Mr. Hong testified that he was in Jakarta merely because %u201CMr. Singh asked me to come%u201D, it was a very expensive trip to be undertaken when any negotiations regarding a new entity to manage the Hotel on behalf of unit holders could have been conducted by telephone, correspondence, e-mail transmissions, or facsimile transmissions. Fourth, I find that a new management company with Messrs. Hong and Singh as principals had not been formed at this time and that there was no arrangement in place with the Interval companies or the existing manager to have any new entity manage the Hotel. I accept the evidence of Ms. Wangidja that, in fact, Mr. Hong took the lead in the discussions with Mr. Tjandra about what would be available to potential purchasers.

[36] Throughout, I prefer the testimony of Messrs. Singh and Horvath about the role of Mr. Hong in Jakarta. I find that Mr. Hong had both the apparent and the actual authority from the Interval companies to negotiate sales of individual strata units, that his trip to Jakarta was for that purpose, and that he was fully authorized on behalf of the two Interval companies to make representations on their behalf.

[37] Even if I am incorrect in coming to that conclusion, I find that Mr. Singh was fully authorized on behalf of the Interval companies to make representations on their behalf. In this regard, the solicitor for Resorts wrote to Mr. Tjandra on November 28, 2001 to confirm that Mr. Singh was the %u201CSales and Marketing Agent%u201D for Resorts for Indonesia and that Mr. Singh was %u201Cduly authorized to sign the Purchase and Sale Agreement on behalf of Interval Resorts Ltd.%u201D.

[38] After Mr. Tjandra attended the two meetings and had decided to purchase one of the 30 units, Mr. Tjandra made arrangements to travel from Jakarta to Vancouver to visit the Hotel and sign the necessary documentation.

[39] Once particulars were added, Mr. Tjandra and Ms. Anggoro signed the Contract, the form of which had been prepared by the solicitor for Resorts and supplied to Mr. Singh. Ms. Wangidja signed indicating that she had witnesses both signatures. She gives a Coquitlam address and lists her occupation as a %u201Crealtor%u201D. As Mr. Tjandra was still in Jakarta and Ms. Anggoro was in Vancouver, it is unlikely that the Contract could have been signed by both on November 17, 2001 as is indicated in the Contract or that Ms. Wangidja could have witnesses both signatures that day.

[40] The Contract was accepted on November 17, 2001 on behalf of Resorts by Mr. Singh who signed as %u201Can Authorized Signatory%u201D. There was no documentation signed by the Plaintiffs or by Resorts relating to what is said to constitute the Agreement.

THE CONTRACT

[41] Under the Contract, the %u201CClosing Date%u201D was set out as not later than February 16, 2002. The %u201CDeposit%u201D was defined as follows: %u201C... means the sum of $32,000 to be increased to $160,000 as hereinafter provided in paragraph 2.3%u201D. The Purchase Price was set at $320,000 excluding G.S.T. Under the heading %u201CPayment of the Purchase Price%u201D, the following was set out:

Subject to the adjustments described in this Agreement, the Purchase Price shall be payable by the Purchaser as follows:

(1) by payment of the Deposit in the sum of $32,000 to the Vendor on execution and acceptance of this Agreement by the Vendor;

(2) by payment of the increased Deposit in the sum of $128,000 to the Vendor on December 15, 2001; and closing date not later than February 15, 2002;

(3) by payment of the balance by delivery on the Closing Date of a bank draft, certified cheque, or solicitor%u2019s trust cheque for the amount of the balance payable to the Vendor%u2019s solicitor in trust.

[42] Paragraph 2.4 of the Contract states:

The Deposit will be retained by the Vendor if the Purchaser is in default under this Agreement, unless such default is waived in writing by the Vendor and the Deposit so paid to the Vendor will be absolutely forfeited to the Vendor as liquidated damages as the Vendor%u2019s sole and exclusive remedy and this Agreement will terminate.

[43] On the Closing Date, the Vendor was to deliver a %u201Cduly executed registerable Form A, the Vendor%u2019s Statement of Adjustments, and %u201Csuch other documents and assurances as may be reasonably required by the Purchaser to give full effect to the intent and meaning of this agreement%u201D.

[44] Under the section %u201CPayment of Fees%u201D, the following handwritten provision was added: %u201CThe Vendor will pay legal fees for Purchaser for this sale.%u201D Paragraph 5.1 of the Contract provided: %u201CTime shall be of the essence of this Agreement and the transactions contemplated in this Agreement.%u201D Paragraph 5.12 (Entire Agreement) stated:

This Agreement constitutes the entire agreement between the parties with respect to the subject matter of the Agreement and contains all of the representations, warranties, covenants and agreements of the respective parties, and may not be amended or modified except by an instrument in writing executed by all parties. This Agreement supersedes all prior agreements, memoranda, and negotiations between the parties.

[45] Mr. Singh testified that he signed on behalf of Resorts as he had received authorization from Messrs. Pataki and Hong to do that.

[46] Regarding the Contract, Mr. Horvath stated at his discovery: %u201CI have the knowledge of this taking place.%u201D He was also asked whether the Contract was presented to him for acceptance and he answered: %u201CWell, I, I authorized this contract to, to be made.%u201D

VISIT OF MR. TJANDRA TO VANCOUVER

[47] To follow up on the suggestion made to Mr. Tjandra and perhaps for the purposes of obtaining the necessary travel documentation, when the solicitor for Resorts wrote to Mr. Tjandra on November 28, 2001 to confirm that Mr. Singh was the %u201CSales and Marketing Agent%u201D for Resorts in Indonesia, she also confirmed the %u201Cwish%u201D to invite Mr. Tjandra and his family to visit Vancouver to %u201Cdiscuss various joint venture opportunities between our companies in British Columbia%u201D. A %u201Ccomplimentary hotel reservation%u201D was indicated for Mr. Tjandra from December 8 through December 15, 2001 at Le Meridian Hotel.

[48] Prior to the Vancouver visit, Mr. Singh said that he, Mr. Hong and Mr. Pataki all discussed the arrangements that would be necessary to make prior to signing the Contract. Ms. Anggoro resided in the Lower Mainland. Mr. Singh testified that he and Mr. Hong discussed the project with Ms. Anggoro and Ms. Wangidja at a meeting they had with them on November 17, 2001. Mr. Singh testified that Ms. Anggoro was adamant about the loan and that Mr. Hong told her it would be available when the next deposit was due. I accept the evidence of Mr. Singh in this regard.

[49] Mr. Singh testified that Ms. Anggoro raised the issue of other contracts that were to be available in order to implement the Agreement and testified that Mr. Hong gave assurances that the other documents would be ready in due course. I accept the evidence of Mr. Singh in this regard.

[50] Mr. Singh testified that the Contract was discussed and that Ms. Anggoro was advised that the paragraph headed %u201CEntire Agreement%u201D meant that it related only to the Contract and that there would be other contracts dealing with financing, leasing, management, and the permanent residency application of Mr. Tjandra. I find that, based on the assurances received from Messrs. Hong and Singh, on behalf of Resorts, Ms. Anggoro provided the $32,000 initial downpayment. Her cheques were deposited into the account of Resorts.

[51] A meeting was arranged in order that Mr. Tjandra could be shown through the Hotel to inspect the unit that he was intending to purchase, and in order that he could provide the next downpayment of a further $128,000. Scheduled to be in attendance at a meeting that day were Messrs. Hong and Singh on behalf of the Interval companies, Mr. Tjandra, Ms. Anggoro, and Ms. Wangidja. By the time Mr. Singh had arrived at the meeting, Mr. Tjandra had already provided the balance of $128,000. Mr. Singh testified that, after he arrived, Mr. Tjandra asked questions about the other documentation and that Mr. Tjandra received assurances from Mr. Hong that a lawyer was preparing the documentation, was not available as he was on vacation, and that the lawyer would have all of the documents ready upon his return from vacation.

[52] On either December 21 or 22, 2001 and at the suggestion of Mr. Hong, Messrs. Singh, Hong, Tjandra and Ms. Anggoro attended the office of a notary public. Upon arrival at the office of the notary public, it was evident that there were no documents ready for signature and no one at that office seemed to know anything about document preparation or the Contract or the Agreement.

[53] I accept the evidence of Messrs. Singh and Mr. Tjandra that Mr. Tjandra was very upset at the documents not being ready. Mr. Hong testified that he had to return to Hong Kong for family matters and this may well have been the reason why arrangements may not have been made to prepare all of the documents which would be necessary to document the Agreement. However, I also accept the testimony of Messrs. Singh and Tjandra that Messrs. Hong and Singh provided Mr. Tjandra with assurances that the relevant documentation would be available in due course.

[54] After Mr. Hong left Canada in late December or early January, Mr. Tjandra spent time in Vancouver attempting to obtain the documents that he thought were necessary in order to document the Agreement but, before leaving for Jakarta, Mr. Tjandra only received a copy of a lease signed by Spectra Pacific Development Corporation (%u201CSpectra%u201D) which was provided to him by Mr. Pataki on the day that Mr. Tjandra left Vancouver.

 

Pacifica (Vancouver): Tradesman Ross guilty: "exercised not an iota of diligence or care"

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Strata Plan LMS 597 v. Camsix et al.,

 

2004 BCSC 961

Date: 20040809
Docket: C973918
Registry: Vancouver

Between:

The Owners, Strata Plan LMS 597

Plaintiff

And

Camsix Development Ltd. and Others

Defendants

And

Building Materials Manufacturing Corporation

Third Party


 

Before: The Honourable Mr. Justice McKinnon

(In Chambers)

Reasons for Judgment

Counsel for the Plaintiff:

A. Zasada

Counsel for the applicant, Bob Ross carrying on business as Dragon Master:

 

S.G. Cordell

 

Date and Place of Hearing:

May 13, 2004

 

New Westminster, B.C.

[1]            The plaintiff, The Owners, Strata Plan LMS 597, is a strata corporation comprised of the owners of a condominium complex known as “The Pacifica” in the City of Vancouver.  On July 15, 1997, the plaintiff commenced an action for damages against various parties involved in the design, construction and inspection of the Pacifica. 

[2]            On October 31, 2003, I granted an application by the plaintiff to join Bob Ross, carrying on business as Dragon Master, as a defendant in this action.  Mr. Ross was served with notice of the application but did not appear.  It is alleged that Mr. Ross provided certain services as a subtrade which may have been negligently carried out, or were carried out in breach of his contract.

[3]            Mr. Ross now applies to set aside this order or alternatively to vary same to provide the defendant with the ability to rely upon any limitation defence that may be available to him as at October 31, 2003.

[4]            The applicant claims the Court can use any one of three grounds upon which to base this relief: Rule 52(5), Rule 15(6)(c) and the inherent jurisdiction of the Court.  I do not accept that I have jurisdiction under Rule 15(6)(c) since that rule refers to orders made in the absence of notice to the parties.  Here notice was given.  There is no issue that I have jurisdiction under rule 52(5) and under the inherent jurisdiction of the Court.

[5]            Rule 52(4) states:

If a party to an application fails to attend, whether on the return of the application or at the time appointed for the consideration of the matter, the court may proceed if, considering the nature of the case it thinks it expedient to do so and may require evidence of service it thinks necessary.

[6]            Rule 52(5) provides for a reconsideration after the order is made:

If the court has proceeded under subrule (4), the proceeding shall not be reconsidered unless the court is satisfied that the party failing to attend was not guilty of wilful delay or default.

[7]            There are three aspects involved in a consideration under Rule 52(5), see Dasmesh Holdings Ltd. v. MacDonald (1985), 60 B.C.L.R. 80 (C.A.), Columbia Trust Co. v. Carter, [1987] B.C.J. No. 134.  These are:

1.    the applicant must not be guilty of any wilful default in respect of the non appearance;

2.    the application to set aside must be made as soon as reasonably possible; and

3.    the applicant must show there is merit to the applicant’s position in respect of the original application.

[8]            In considering the term “wilful delay” or “default”, a party’s non-attendance must be blameworthy.  The failure may be “purposeful, deliberate” or “intentional” but, depending on the circumstances, may not be blameworthy.  If a satisfactory explanation is given for the delay or default, it is open to the court to reconsider the order made, see Anderson v. Toronto Dominion Bank (1986), 70 B.C.L.R. 267 (C.A.).  I accept as well that even given a finding of “blameworthy” conduct, the court may interfere if, on the balance of probabilities, it appears a serious miscarriage of justice occurred: see Lynn v. Tang (1997), 37 B.C.L.R. (3d) 325 (C.A.)

THE APPLICANT’S EXPLANATION

[9]            In his affidavit in support of the application, Mr. Ross describes himself as a “tradesman” who had “never been sued or involved in litigation before”.  The process server, a Mr. Larry Galvin, deposed that he served Mr. Ross personally on October 9, 2003 with the notice of motion and all material in support, including the lengthy affidavit of Judy Lee.  In a somewhat astounding admission, Mr. Ross deposed that he did not appreciate that these were “legal” documents and did not “open them”, believing they related to “my other affairs” and thus set them aside for several weeks.

[10]        It would appear that he did commence reading the documents some time before the application was heard on October 31, but claims he did not even then appreciate their significance, believing that the materials related to some other project and that he was being asked to appear as a witness.  He says he dropped the papers when reading them thus mixing the pages which he attributes to his erroneous interpretation.

[11]        He claims it was not until late November or early December that he gained a true appreciation of the application when discussing his general insurance needs with his agent.  During the course of this conversation he says he mentioned the “package” of papers and the agent asked to look at them.  She quickly realized what it was all about and told him that “it was an application to add Dragon Master as a defendant in these proceedings.”

[12]        I agree entirely with the plaintiff’s view of this admitted course of conduct.  The inferences of fact that can be drawn from such conduct leads to a conclusion that Mr. Ross is guilty of wilful delay or default and neglect worthy of blame.  He deliberately chose not to even read the material when it was personally served on him.  It takes no degree of skill to appreciate that when one is served papers by a process server they must have some legal significance.  He may not have any experience in litigation but, as a “tradesman”, he must be familiar with contracts, invoices, and claims generally. 

[13]        Mr. Ross exercised not an iota of diligence or care.  I accept that he ignored the documents for weeks, but I find it hard to accept that when he did read them, he did not appreciate their significance.  The documents may be lengthy but the motion is easily read.  Indeed the insurance agent had no trouble discerning its content and so advised Mr. Ross.

[14]        In the result, I conclude that the conduct of Mr. Ross amounts to wilful delay or default and I would not, therefore, set aside the order under Rule 52(5).  However, given the provisions in Lynn v. Tang, (above), it remains to determine whether, notwithstanding this “wilful delay or default”, the order should be set aside on the basis that a serious miscarriage of justice may occur. 

[15]        The test enunciated in Lin v. Tang, (above) places a burden or onus upon the applicant to demonstrate that a “serious miscarriage of justice” would occur should the application to join not be set aside and the matter reheard on its merits. 

[16]        Thus it seems to me that I must first determine whether a “serious miscarriage of justice” will occur if I fail to accede to the application.  Only if I find such a result “will occur” am I able to move to the test associated with original applications, e.g. whether it would be “just and convenient” as found in Rule 15(5)(a)(iii)

[17]        Counsel both spent some time in this application speaking of the criteria associated with the “just and convenient” aspect.  They spoke of the extent of the delay, the reasons for the delay, the prejudice and the extent of the connection between the existing claims and the proposed new cause of action.  I assume those arguments were advanced in the event I determined that a “serious miscarriage of justice” would occur if the joinder order was not set aside.

[18]        One aspect upon which counsel did agree was that the applicant should in any event be entitled to rely upon any limitation claim that might have accrued to it to October 31.

[19]        The applicant alleges that certain problems will arise if it continues as a defendant, such as an inability to locate employees, loss of documents and the inability to review pre remediation conditions. 

[20]        These concerns do not amount to a serious miscarriage of justice, particularly when there is a right to argue a limitation period.  Rather they go to a consideration of the “just and convenient” test.  As nothing was advanced that would satisfy the “serious miscarriage of justice” test, I am not entitled to assess whether it would be “just and convenient” to add the applicant.

[21]        On all of the evidence before me I am unable to say that failure to set aside the joinder would result in a serious miscarriage of justice.  In the result, the application to set aside the joinder is refused.  

[22]        Since I have made no assessment of the limitation argument as envisaged by the process in Brito (Guardian ad litem of) v. Wooley (1997), 15 C.P.C. (4th) 255, and given the consent of both counsel on this issue, it remains open to the applicant to advance this argument at trial.

“R.A. McKinnon, J.”
The Honourable Mr. Justice R.A. McKinnon