Glacier Lodge Whistler 1/4 share condo deal goes sour

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Morell et al v. Nedoma,

 

2007 BCSC 431

Date: 20070329
Docket: S055451
Registry: Vancouver

Between:

Renate Morell and Lorne Yeudall

Plaintiffs

And

Bohumir Nedoma aka Robert Nedoma aka Bob Nedoma

Defendant


Before: The Honourable Mr. Justice Cullen

Reasons for Judgment

Counsel for the plaintiffs

M.J. Braidwood

Counsel for the defendant

M.K. Woodall

Date and Place of Trial/Hearing:

December 11 – 14, 2006
January 4, 2007

 

Vancouver, B.C.

INTRODUCTION AND BACKGROUND

[1]                This action concerns the nature and effect of an agreement between the plaintiffs, Lorne Yeudall and Renate Morell and the defendant Bohumir Nedoma in relation to the purchase of a condominium at Whistler, in October of 1995.  The condominium, Units 108/109, Chateau Boulevard, Whistler [“the Property”] is registered solely in the name of Mr. Nedoma.  The present value of the Property is not the subject of precise evidence, but is in the range of $500,000.

[2]                At issue is whether the agreement entered into by the parties at the time of the purchase of the Property entitle the plaintiffs to a present interest or damages relating to the interest they would be entitled to hold, had the agreement been fulfilled. 

[3]                At the time of the purchase of the Property, Ms. Morell and Mr. Nedoma’s common-law spouse, Franziska Kaltenegger, were friends and in past were colleagues.  Dr. Yeudall had met Ms. Morell earlier in 1995 and began living with her in a common-law relationship as of August 1995.  Both couples remain in their respective common-law relationships, but Ms. Morell’s and Ms. Kaltenegger’s friendship has ended. 

[4]                The genesis of the decision and the agreement to purchase a condominium involved all four parties, and on October 7, 1995, Ms. Kaltenegger, while in the presence of Ms. Morell and Dr. Yeudall, viewed a number of prospective properties, ultimately making an offer to purchase the Property for $182,000.  Ms. Kaltenegger’s offer included a deposit of $1,000 which, although there was some controversy on the issue, I am satisfied was made by Ms. Morell, who wrote a cheque in that amount. 

[5]                The offer was subject to purchaser’s conditions which were removed on or before October 14, 1995, at which point Ms. Kaltenegger increased the deposit to $10,000, by sending an additional $9,000 to the realtor.  The completion date was set for October 23, 1995.

[6]                It was contemplated by the four parties that each would pay one-quarter of the purchase price and each would be entitled to a one-quarter interest.  As of the completion date, the plaintiffs had each advanced $10,000 towards purchase of the Property, Dr. Yeudall by cheque to Mr. Nedoma, dated October 19, 1995 and Ms. Morell by an additional $9,000 to Mr. Nedoma by cheque dated October 20, 1995.  The balance of the adjusted purchase price of $185,560.01 was paid by Mr. Nedoma when the transaction was completed on October 23, 1995.  The Property was registered in his sole name.

[7]                To date, neither Dr. Yeudall nor Ms. Morell have advanced any further funds to Mr. Nedoma on account of their share of the purchase price, although in 1996 and 1997 they made $3,183.92 in payments for expenses related to the Property and they paid in total, $8,830 in interest on the amount representing the unadvanced portion of their shares to Mr. Nedoma. 

[8]                When the Property was purchased, Ms. Morell was a financial consultant who sold insurance and mutual funds.  In 1995 she was approached by Eron Mortgage Corporation (“Eron”) to sell second mortgages and she also invested in them herself.

[9]                Dr. Yeudall was a psychologist who had been forced to retire in 1991 due to the development of neurological symptoms.  He testified that in 1995 he was receiving “a minor pension” but was waiting for a medical pension to be provided.  He testified that it was not settled until May 1996 when he received approximately $100,000 in a lump sum disability payment.  He too invested in Eron Mortgage Corporation, using his disability payment and proceeds from a line of credit. 

[10]            When Eron Mortgage Corporation collapsed in October 1997, both Dr. Yeudall and Ms. Morell lost substantial sums of money.  Ms. Kaltenegger had invested in Eron Mortgage through Ms. Morell and she too lost what she invested.  The friendship of the parties ended with the Eron collapse as did Dr. Yeudall’s and Ms. Morell’s ability to make any payments for expenses, interest or principal in relation to the Property. 

[11]            In the meantime, however, after the completion date on October 23, 1995, the parties met on November 3, 1995 to celebrate the purchase of the Property.  At that meeting, Mr. Nedoma produced and executed three documents.  The first two documents were entitled “Conditional Promisory Note” (“the CPN”).  One was made out to Ms. Morell and one to Dr. Yeudall.  The contents of the notes were the same, except for the promissee.  They read as follows:

CONDITIONAL PROMISORY NOTE

I, Bohumir Nedoma hereby declare the following:

For value received, the undersigned promises to pay Renate Morell/Lorne T. Yeudall on or after Jan 1/96 the sum of CDN $10,000 without interest conditionally, if and only if this sum of money is applied towards the option of purchasing ONE only 25% share in the property described as:

GLACIER LODGE unit 108 and 109

108/109 Chateau boulevard

VR 2266, DL 3866, Lot 21

Whistler, B.C.

In case of death or mental illness, the Last Will and testament presented at the time of signing this note takes precedence.

[12]            The third document which Mr. Nedoma produced was his Last Will and Testament which was referred to in the two conditional promissory notes.  The relevant portion of the Will reads as follows:

Named beneficiaries:

Renate Morrel 25% of cash equity in Whistler condo unconditionally

Lorne 25% of equity unc.

Franzi 50% of equity, provided

That she remains an active skier.  In case Franziska no longer skis, a further breakdown the 50% share assigned to her shall take place as follows:

25% of the equity unconditionally to F.K., the remaining

25% is to be transferred in full

towards paying off any remaining debts on the Roberts Creek property and any further funds applied to increase the value of the scholarship fund tabled below.

[13]            The evidence established that the parties shared the use of the condominium until October of 1997, when Dr. Yeudall and Ms. Morell’s fortunes sagged with the collapse of Eron Mortgage Corporation and the relationship between Ms. Morell and Ms. Kaltenegger ended. 

[14]            The evidence established that during the intervening period, the payments made by the plaintiffs were confined to some expense payments and interest on the unpaid portion of their principle payment towards their ownership in the Property.  In particular, on September 21, 1996 both Ms. Morell and Dr. Yeudall paid $1,800 in interest, on December 2, 1996 they each paid $470 in interest, on June 25, 1997 they each paid $1,645 in interest and on December 10, 1997 they each paid $500 in interest for the total of $8,830 between them.

[15]            In terms of expenses, they made payments between February 14, 1996 and September 2, 1997, totalling $3,183.92.

[16]            There is controversy as to why the interest payments were paid and what they represented.  It is the contention of the plaintiffs that the interest payments were part of an agreement reached between the plaintiffs and Mr. Nedoma under which Mr. Nedoma agreed to loan to each of the plaintiffs an amount representing the balance of their share of the purchase price and the plaintiffs agreed to pay the defendant 8% interest on the outstanding amount of the loan.  They contend that by entering into the loan agreement with Mr. Nedoma they have paid their share of the purchase price and are accordingly entitled to an equitable interest in the Property subject to a set-off for the outstanding principal, interest, and expenses ensuing from their cessation of payments since December 1997.

[17]            The defendant contends that his payment of the plaintiff’s share of the purchase price was dictated by the plaintiff’s failure to provide the necessary funds for completion on or before October 23, 1995, not by any loan agreement entered into.  He further contends that the payment of interest was volunteered by the plaintiffs after, and in response to the fact that he had presented the purchase of the Property by advancing the balance of the purchase price and thus was similarly not the product of a loan agreement.

[18]            The counter vailing positions of the parties emerges from their recollection of their past dealings and the contemporaneous documents used to identify the financial state of affairs surrounding and following the purchase of the Property.

II.         THE PLAINTIFFS’ EVIDENCE

1.         Dr. Yeudall

[19]            Dr. Yeudall is 69.  He retired in 1995 because of the neurological symptoms he developed, and he then moved to Vancouver.  He began cohabiting with Ms. Morell in August 1995, having met her some months earlier.  He was at the time waiting for a disability pension and a lump sum payment.  He confirmed that he invested the funds he received for his lump sum disability payment in Eron and also invested some funds he received by establishing a line of credit. 

[20]            Dr. Yeudall testified that Ms. Kaltenegger was a long time friend of Ms. Morell and had invited her up to Whistler on the weekend of October 7, 1995.  Dr. Yeudall testified he went along and they looked at various properties with a view to buying one as an investment and eventually at the end of the day looked at the Property on Chateau Boulevard.  They went back to the realtor’s office and Ms. Kaltenegger asked them if they would like to get involved in the purchase.  Dr. Yeudall said they agreed to become involved and at that point Ms. Kaltenegger called Mr. Nedoma as a result of which she relayed to them that Mr. Nedoma “would be interested provided the purchase was in his name.”  Dr. Yeudall said he understood the terms would be that each party would pay one quarter of the purchase price and it would operate as a partnership.  He testified that Ms. Kaltenegger signed an offer for the Property and Ms. Morell put down the $1,000 deposit.

[21]            Dr. Yeudall didn’t recall being involved in any negotiations concerning the Property.  He identified the October 7th, 1995 contract of purchase and sale as being signed by Ms. Kaltenegger and the October 23, 1995 purchaser’s statement of adjustments as being handled by Mr. Nedoma.  He was asked what happened between October 7 and October 23 and he said the only clear thing in his recollection was that he was requested to make a deposit of $10,000 and he wrote a cheque to Mr. Nedoma in that amount.  He identified his cheque dated October 19, 1995 and indicated it was cashed.  He was asked what else was discussed and he said there was discussion about he and Ms. Morell going to the bank for a loan to pay off the remaining balance.  He recalled that Ms. Morell also wrote another cheque in the amount of $9,000 to bring her deposit to $10,000.  Dr. Yeudall said the plan was that he and Ms. Morell would request a loan from the bank to pay the balance of their share of the purchase price and that they were confident they would be able to obtain the money.  He testified, however, that that did not happen, explaining that Mr. Nedoma agreed to carry the balance of the purchase price at 8% interest per year.  He was asked when that agreement was struck; he said he couldn’t really remember.  He recalled saying at discovery that it was either before or after the closing and he recalled saying several times it was before the closing, but he couldn’t really remember.  He testified it was around the closing date, but he was uncertain whether it was before or after.  He testified that as of the closing date he still had not received a disability cheque, it was still “caught up in the bureaucracy.” 

[22]            He said his understanding of the amount of the loan which Mr. Nedoma agreed to make to him was the balance of his one-quarter of the purchase price after deduction of the $10,000 paid as a deposit plus 8% interest.  He testified that he made his first interest payment in September of 1996 along with Ms. Morell when they paid $1,800 each to Mr. Nedoma.  He said the cheque for the interest was made when Mr. Nedoma presented him and Ms. Morell with documents regarding the expenses owing and the interest owing.  He acknowledged the interest payments on September 20, 1996, November 26, 1996, June 25, 1997 and September of 1997.

[23]            Dr. Yeudall was shown Tab 22 of Exhibit 1 which was a document titled “Lorne’s Mortgage Statement 1/1/96 – 12/31/97”.  The document also bore the date 8/30/97 over the words “Whistler – Yeudall”.  It showed an outstanding balance of -$36,390 as of December 31, 1995 and itemized the interest payments of $1,800 (September 21, 1996), $470 (December 2, 1996), and $1,645 (July 3, 1997).  It did not show the interest payment of $500 in December 1997.

[24]            Dr. Yeudall agreed the sum of $36,390 represented the outstanding balance of his share for a one-quarter interest in the Property and that the document accurately recorded the payments of interest which he made.  He confirmed that the statement identified $2,911 as the interest owing for the first year “retroactive and in the future” from October 15/95 to October 15/96.  He testified the sum of $470 paid on December 2, 1996 was in response to a request for payment at that time and he described the $1,645 payment as a payment against interest on July 3, 1997.  He confirmed that the document identified $3,000 as interest owing for year two (October 15, 1996 to October 15, 1997) and the sums of $255.91, $257.61 and $130 represented interest owed from October 15, 1997 to November 15, 1997, November 15, 1997 to December 15, 1997, and December 15 to December 31, 1997 respectively, which he said were not paid.  He agreed the statement showed interest owing as of the end of 1997 of $2,639.72, but testified he paid $500 on December 10, 1997 to lessen the total interest owing to $2,139.72.

[25]            Dr. Yeudall testified that after the collapse of Eron he lost about $200,000 which he had invested and as well, Ms. Morell lost a substantial sum of money.  He testified he was present when the defendant signed the CPN on November 3, 1995 but said the only thing he recalled about that was that the $10,000 referred to in CPN was what he and Ms. Morell were applying towards their one-quarter share of the Property and the CPN was a protection for them in case of the defendant’s death or mental illness, it was to confirm they were one-quarter owners and each had contributed $10,000 towards that ownership.

[26]            Dr. Yeudall said he recalled no discussion about an option referred to in the CPN’s.  He said there was no debatable issue about whether they “were going in on a one-quarter interest”.  He recalled no discussion about whether or under what conditions they would get their money back.  Dr. Yeudall testified the Last Will and Testament was to the same effect “to protect us in our one-quarter ownership”. 

[27]            As far as the expenses were concerned, Dr. Yeudall said they would be paid when the defendants supplied them with a statement showing how much was expended and that he and Ms. Morell would each pay their one-quarter share.  He said the expenses were handled by an account opened by the defendant and Ms. Morell on February 14, 1996.  They rented the Property under Powder Resorts Corporation, but they found it was not getting sufficient revenue, so the defendant organized a website and hired a manager to manage the rentals instead.

[28]            Dr. Yeudall identified a document titled “Cost Sharing Report 1/1/96 through 12/31/97” as being prepared by the defendant, showing a reconciliation of the expenses for the Property, accounting records showing the profits/loss for the Property and a transaction report reflecting the expenses paid by each party.

[29]            Dr. Yeudall testified that neither he nor Ms. Morell paid any interest, expenses or principal after the end of 1997 nor did they use the Property.  He testified they decided to pay their indebtedness to the bank and had no money to put towards the Property.  He said that the interest payments which they had made were treated as an investment in the Property for tax purposes. 

[30]            Dr. Yeudall testified that he did not directly discuss what he did with his lump sum payment which he received in May 1996 with Mr. Nedoma, although he testified that during a walk with Renate Morell, Franzisca Kaltenegger and the defendant, he “probably brought up that he invested in Eron”.

[31]            In cross-examination Dr. Yeudall agreed that if he did not pay his quarter share, he was not entitled to be an owner of the Property and he also agreed that before the completion of the sale, he told the defendant that he could get the money at the bank before the completion date.  He also agreed he told the defendant he was expecting a disability settlement in a manner of months and he agreed he couldn’t remember if the agreement for the defendant to fund the purchase price was made before or after the closing.  What he recalled was saying to the defendant that he would go to the bank to get the money and that the defendant intervened and said he would carry their portion.  He agreed that he planned to use his disability lump-sum payment to put into a high yield investment and anticipated paying off the condo purchase price in a year.  He agreed he concluded that Eron would yield more money than the Whistler investment.

[32]            He said he didn’t tell the defendant directly of his plan, but he recalled while on walks with the defendant and the others, discussing investing in Eron and he knew that Ms. Kaltenegger had done the same thing.  He agreed that he didn’t tell Mr. Nedoma when he received the disability settlement funds in May of 1996.  He agreed that he could have gone to the bank in October of 1995 to get the balance of his share of the payment and that in fact he did borrow $45,000 for investment in Eron. 

[33]            He said the arrangement with regard to interest was simply that they would pay interest when they were presented with a statement by Mr. Nedoma.  He agreed that the $1,800 interest payment paid in September of 1996 did not represent the full interest amount owing as of that date.  It was his recollection that he was presented with the mortgage statement at Tab 22 of Exhibit 1 in August of 1997, not in December. 

[34]            Dr. Yeudall said although he could not recall any specific meeting with the defendant prior to the completion date, he did recall giving him a cheque for $10,000.  He agreed that he invested over $200,000 in Eron after October 1995 and that Ms. Morell had invested a similar amount and they both believed they could get very generous returns on those investments.

[35]            He said he had no recollection about when the loan would be repaid and did not recall if that was discussed.  He said the sequence as he remembered it was that the defendant said he was going to take the Property in his name, then he and Ms. Morell gave $10,000 each to the defendant and then they were going to the bank to get the balance, but because the defendant offered to carry them they had no need to get the money to the lawyer.  He didn’t recall any discussion with the defendant between October 19th when he paid the $10,000 and the 23rd.  He indicated that it may still have been their intention to go to the bank when they put up the $10,000, he simply didn’t recall that meeting.

[36]            He testified that the defendant wanted the Property in his name from the beginning, which meant he would be paying the purchase price.  He said it was the defendant’s condition for being in the partnership that the Property would be in his name.  He was asked whether at the meeting of November 3rd, 1995 he told the defendant that he still intended to borrow money from the bank and he said he did not recall that.  However, in his examination for discovery when he was asked whether he was still expecting that he would pay his share via a bank loan at that time, he said yes.  He was asked whether in light of that evidence he agreed with the suggestion that as of November 3rd, there was no agreement that the defendant would loan the money for the plaintiffs’ share of the purchase price.  He said his memory was that the loan agreement was arrived at just before or just after the completion date.  He agreed however that in November of 1995 he still expected to pay the balance of the purchase price within a short period of time based on when he believed his disability payment would be coming.

[37]            He did not recall the reason why he was asked to pay the deposit and whether it was to match what Ms. Kaltenegger had put down.  He said he didn’t recall having thoughts about the deposit being non-refundable. 

[38]            He said the clear arrangement with the defendant was that they would start paying him when he presented the requisite documentation.  He denied agreeing in his examination for discovery that the $10,000 would be credited to the purchase price only if the balance were paid.  He answered yes, in his examination for discovery, mistaking the intention of the question.  He did not agree that the date of January 1st, 1996 on the CPN was selected because it was a date by which he expected to receive his pension and pay off the balance of his share of the purchase price.  He said he didn’t ask the defendant why he made January 1, 1996 the operative date in the CPN and he did not know why that date was chosen.  He denied that the $10,000 would be paid to him or on his credit, only if he paid the balance of the purchase price.  He said his understanding was that the defendant was going to grant a mortgage to the plaintiffs and they would get a mortgage statement from him.

[39]            He denied that the reason there was no time line for repayment was because he kept telling the defendant that he would pay when he got his disability payment, although he said “I told him that once or twice”.

[40]            With respect to the mortgage statement, he had no real recollection of the date he received it, but assumed it was in August of 1997.  When it was put to him that the document was originally created in August 1997, but was updated as time went on, he answered “it may be, I cannot say, well no, it was on the 30th as dated”.  He testified they didn’t go to Whistler in December of 1997.  He agreed that it was his understanding from the beginning that the defendant would pay a purchase price and get his name on the title and they would not get their name on the title until they paid their share.  He didn’t recall telling the defendant that they would clear up their indebtedness by the end of 1995.  He agreed that his and Ms. Morell’s strategy with the disability payment was to invest it in Eron, make some money fairly quickly and then pay off the defendant and still have some capital left over.  He said they anticipated the Eron investment lasting a year and a half.  He agreed he didn’t recall what he told the defendant at that point other than he said he was sure that the defendant was aware they had invested money in Eron.  He said he had no recollection of any meeting with Ms. Kaltenegger or the defendant in December of 1997.  He said he recalled one conversation with the defendant in December in which the defendant asked for an interest deposit.  He said he deposited a cheque for $1,000 reflecting $500 from each plaintiff, but there was no meeting.  He was asked whether there was any discussion of conditions to allow the defendant to find a way for the plaintiffs to finance their share, he said he could not recall any such discussion.  It was put to him that the defendant suggested that they each pay $500, that they make up the shortfall in interest, that they make regular payments into the future and that they commit to a specific date to pay off their share of the purchase price.  Dr. Yeudall said he didn’t recall that discussion. 

2.         Renate Morell

[41]            Ms. Morell is 64.  She originally came to know Ms. Kaltenegger in 1976 when they worked together for about 6 years.  She eventually began working in the financial services industry.  She was a chartered life underwriter and a chartered financial consultant.  She was approached by Eron to sell their “products” in 1995.  Initially she invested about $30,000 of her own money in Eron and Ms. Kaltenegger invested through her as well in the summer of 1995.  She considered her relationship with Ms. Kaltenegger to be a long term good friendship.  She began her relationship with Lorne Yeudall in March 1995 and they began cohabiting in August of that year.

[42]            They received a call from Franzisca Kaltenegger before the October 7th weekend, from Whistler, and they went up there to join her, to look at potential properties to purchase.  They were eventually shown the Property by a realtor and they made an offer, which included a $1,000 deposit which Ms. Morell paid with a cheque.  She said that on October 7, 1995 she and Ms. Kaltenegger and Dr. Yeudall discussed the Property after Ms. Kaltenegger asked them if they would be interested in “coming in on it”.  She said that Ms. Kaltenegger then talked to the defendant by telephone and at the conclusion of the conversation told them that he was willing to become involved in the partnership but would like to be the person on title.  Ms. Morell testified that the defendant said he would handle the financial transaction and somewhat later told her and Dr. Yeudall when they said they would go to the bank, to obtain their share of the purchase price, that he would carry them.  She testified the understanding was that each of them would be a one-quarter owner; they would jointly look after the upkeep of the Property, would use it and rent it out and would be free to use it when it was not being rented.  They would pay all expenses, one-quarter each.  Ms. Morell provided a cheque for $9,000 on October 20, 1995.  She testified she provided those funds because the defendant requested it to indicate they were serious about coming into the Property purchase.  She said there was no doubt that it was for the condominium purchase and she said she did not subsequently go to the bank to get funds because the defendant offered to carry them, to simplify the transaction.  Ms. Morell said she could not recall when the defendant made that offer, that it was either just before or just after the closing.  She said that there was an agreement that they would pay 8% annual interest, but she recalled no specific time span being discussed.  She testified that she paid 8% interest on the remaining one-quarter share after deduction of the $10,000 which she had already paid towards the Property.  She said the interest was calculated from October 15, 1995 and she testified that interest was paid “on receipt of a statement that the defendant prepared”.  She agreed that she and Dr. Yeudall paid $1,800 interest on September 20, 1996.  She identified Exhibit 1, Tab 21 as a document entitled “Renate’s Mortgage Statement prepared by the defendant.  She could not recall when she got it, but noted it was dated August 30, 1997.  She agreed that the interest for “year 1”, was October 15, 1995 to October 15, 1996 - $2,900.  She was asked why she didn’t pay regular interest, and testified that it was because of the defendant’s suggestion that he would prepare a statement and provide the statement to the plaintiffs and then they would pay.  She said that Dr. Yeudall developed a plan to invest in Eron, but “not as of October 15, 1995”.  It was the end of spring or early summer in 1996 and that is when he did his investing.  Ms. Morell testified she recalled going on walks with Dr. Yeudall and the defendant and Ms. Kaltenegger but couldn’t be specific about remembering the discussion Dr. Yeudall testified to about his investing in Eron. 

[43]            Ms. Morell testified she believed she could have obtained a loan in late 1995 and throughout 1996 and in the first half of 1997 to pay out her share of the purchase price.  She denied being involved in any discussion around December of 1997 about modifying the agreement by which the Property was to be purchased.  Her financial position at that time was “disastrous” and she could not have obtained funds to invest in the Property.

[44]            Ms. Morell confirmed that the Eron collapse resulted in the demise of her relationship with Ms. Kaltenegger and the end of the plaintiffs’ use of the Property.  She testified that there was no loan or mortgage agreement with the defendant “per se”, and she could not recall having discussions about finalizing such an agreement although she assumed there were some such discussions.  She took no steps to prepare anything further because of the “long and trusting relationship” that she had with Ms. Kaltenegger. 

[45]            So far as the conditional promissory notes are concerned, she described her understanding of them as a receipt from the defendant for the $10,000 they each gave him towards their 25% share in the Property.  She was never told the money was non-refundable.  She recalled the Will as providing for the plaintiff’s 25% share of the Property in the event something happened to the defendant.  She recalled no discussion of the term “unconditionally” used in the Will or the phrase “towards the option” used in the CPN.  She could recall no discussion about what would happen if the balance of the purchase price was not paid or the defendant ever saying that the plaintiffs would not get the $10,000 back in that eventuality.  She could recall no discussion about there being any conditions to getting the $10,000 back. 

[46]            Ms. Morell recalled no discussion about what would happen if she did not pay the balance of the purchase price.  She testified that she paid 8% interest until 1997, plus expenses and that she had a key and use of the Property.  After the fall of Eron, she and Dr. Yeudall could not go up to use the Property and made no further payments towards it.

[47]            In cross-examination, Ms. Morell agreed she had experience in lending money for mortgages and in selling mortgages for Eron.  She agreed after she began selling the mortgages in the summer of 1995 she received significant commission cheques from $15,000 up to $29,000 on a regular basis.  She agreed that when the Property was purchased in the fall of 1995 the money for her share was “only a phone call away” and she told Ms. Kaltenegger that.  She testified she had about $200,000 invested in Eron at the time of its collapse and that as of October of 1995 she had about $50,000 invested.  She agreed therefore in the ensuing period she invested a further $150,000.  She also agreed that she and Dr. Yeudall had a plan to invest in Eron to take advantage of its high yields, and at some later point they anticipated paying off the Property.  She couldn’t say exactly when it was they agreed on the plan, but she testified they had talked about it before the November 3, 1995 meeting.

[48]            Ms. Morell said that it was her understanding that if she did not pay her one-quarter share, she would nevertheless be entitled to whatever percentage of the Property she contributed towards its purchase.  She agreed that was never discussed, that “it was a casual financial understanding between friends” and there was no formal discussion or documentation.

[49]            Ms. Morell’s explanation of the CPN was not that there was a condition under which the defendant would pay the $10,000 back; it was that there was a condition that he would pay it without interest “if the monies applied towards the option of financing one 25% share in the Property.”  She relied on the Will as evidence there was agreement that they already owned their 25% share “unconditionally”. 

[50]            She testified Mr. Nedoma’s payment of the balance of the purchase price and the registration of the Property in his name simplified the transaction.  However, she agreed it would have been even simpler if everyone simply paid their share of the purchase price by the closing date and she also agreed that she could have had the money.  She ventured that it may have been more complicated and hence more expensive to put four names on title instead of one, but said that it was the defendant’s suggestion that it would be simpler to do it with him paying the purchase price and taking the Property in his name.

[51]            Ms. Morell remembered nothing of the conversation in which the defendant offered to finance their share of the Property.

[52]       &

Westin Hotel Resort and Spa, (Whistler): Condo hotel owners unhappy with investment in Cressey development

 

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Daley, Kero, Morgan and Wong. v. OHR Whistler Management Ltd.,

 

2007 BCSC 383

Date: 20070321
Docket: S065765
Registry: Vancouver

Between:

Helen Daley, Reynold Kero, David Morgan
 and James Wong

Petitioners

And:

OHR Whistler Management Ltd.

Respondent


Before: The Honourable Mr. Justice Curtis

Reasons for Judgment

Counsel for the Petitioners

Robert W. Grant

Counsel for the Respondent

W. Stanley Martin

Date and Place of Hearing:

January 18, 2007

 

Vancouver, B.C.

[1]                The petitioners are owners of strata lot suites in the Whistler Westin Resort and Spa at 4090 Whistler Way, Whistler, B.C.  They seek a declaration that all funds deposited by OHR Whistler Management Limited, the hotel manager into the hotel bank accounts are held in trust for, and are the sole property of the suite owners.  There is no outstanding dispute at the moment as to any particular fund of money – what is sought is an interpretation of the contract.

[2]                The Westin Hotel Resort and Spa is an all-suite, full service conference hotel and spa developed by Cressey Whistler Resort Corporation.  The hotel has 419 strata suites, conference facilities, a restaurant, lounge and spa, a parking garage and retail stores.  Whisky Jack Resorts Ltd. own 19 of the suites which it operates as a time share.  The other 400 suites are individually owned.  The conference facilities and the premises of the Aubergine restaurant are separate strata lots owned by Cressey and leased to the Strata Corporation with subleases to OHR Management.  The Fire Rock lounge is a strata lot owned by Cressey but not subleased.  The Avello Spa and Health Club uses a strata lot owned by Cressey and managed by another company.  The parking lot facilities are on premises owned by Cressey, as are the retail stores.  In order to run the hotel as a coherent business, parking, restaurant, spa and lounge charges can all be charged to customers’ rooms.  The distribution of funds to appropriate parties is managed by OHR Whistler Management which deposits the monies into the hotel bank accounts.

[3]                The property on which the hotel is located is subject to a statutory covenant described as “Rental Pool Covenant – Phase II” in favour of the municipality of Whistler, which requires the suites to be offered to the public for rental residential use in accordance with an approved rental booking system.

[4]                The 400 suites in the hotel that are individually owned by the petitioners and others were sold by the developer Cressey Whistler Resorts Corporation.  Each purchaser was required to sign two agreements with OHR Whistler Management: a Hotel Management and Rental Pool Agreement and a Sales and Marketing Services Agreement.  Each of these agreements is a separate agreement between the suite owner and OHR Whistler Management.  In 1997 before the individual suites had been developed and sold, Cressey had entered an agreement with O’Neill Hotels and Resorts Ltd., whereby O’Neill Hotels and Resorts Ltd. secured the right to manage the proposed resort for a 20-year term.  The management of the hotel was subsequently contracted for by OHR Whistler Management of which John O’Neill is the President and Chief Executive Officer.  The terms of the agreements to be signed subsequently by the purchasers of the suites were negotiated between Cressey, O’Neill Hotels and OHR long before any of the individual owners became involved.

[5]                Any person willing to purchase a suite in the hotel was required to sign the agreements as prepared between the developer and the hotel manager.  The agreements represent a sophisticated financial and contractual arrangement developed by Cressey in order to create a specific bundle of rights to be marketed.

[6]                The Hotel Management and Rental Pool Agreement each suite owner is required to sign is a contract between the suite owner and OHR Management Ltd.  OHR Management agrees to manage the hotel business, including room rentals for a base fee of 3.5% of the gross revenue, plus an incentive fee if certain objectives are met.  Each suite owner is entitled to a share in the hotel profits in defined circumstances.  The hotel opened for business March 17, 2000.  In order for the hotel to open, OHR Management Ltd. was required to invest $2,235,000 which it has since received from revenues.  In 2005, the hotel had gross revenues of approximately $20,000,000.  Over the years since the opening, there have been some small payments from profits to suite owners.  At the time of hearing, the owners collectively had a $1.9 million deficit and nothing was owing for profit sharing.

Delta Hotel, Whistler: Court of Appeal confirms damage award favoring limited partners

Citation: Village Gate Resorts Ltd. v. Moore et al

Date: 19991022

  1999 BCCA 626

Docket:

CA025509

Registry: Vancouver

COURT OF APPEAL FOR BRITISH COLUMBIA

ORAL REASONS FOR JUDGMENT
Before:
The Honourable Mr. Justice Lambert

October 22, 1999

The Honourable Madam Justice Rowles  
The Honourable Mr. Justice Braidwood

Vancouver, B.C.

   
 
BETWEEN:

VILLAGE GATE RESORTS LTD.

PLAINTIFF
(APPELLANT)

AND:

ANDREW MOORE, THOMAS MORRISON, ROLF GILLARDON, FRANCIS CHANG, SAITOH HOLDINGS LTD., DONALD J. EGGERTSON, MR. AND MRS. R. LEMP, TUDOR SALES LTD., PATRICK ROBINSON, NORTHSHORE CREDIT UNION, AUSTERVILLE PROPERTIES LTD., WILLIAM ROBINSON, AMELIA MAINARDI, DOUGLAS ALLEN, JACK RIDLEY, PETER R. KEARNEY, TERRY LAMB, EDWARD G. BYRD, MRS. ROY CARROLL, DONALD CARR, BORDON UGGLA, DAVID DANSKIN, ALICE-MARIE MAUGHAN, ARTHUR GRIFFITHS, FRANK MOSER, MR. AND MRS. MAURICE LE GALLAIS, DAVID CHAN, IVY CHAN, CALVIN EDWARDH, JAMES PERKINS, LYNDA BURROUGH, GERALD TRODDEN, ORVILLE WRIGHT, DORIS BURROUGH, HARRY NATAROS, DOUGLAS BRAWN, HELEN JENKINS, JOHN FLEMING, SQUAMISH MUSIC LTD., KATRIN ANN TURU, NORMA LOUGHEED, CHARLES B. STEWART, EDDISON SINANAN, JAMES BULLARD, ALLAN TONE, WILLIAM LOUGHEED, DESMOND COCKROFT, IAN ELLIOTT, MR. AND MRS. DONALD STEWART, KENNETH STEVENSON, GEOFFREY G. COLESHILL, FRANK KAPLAN, DAVID SPICER, HECTOR G.N. FRITH, JOHN ROSS, GRAHAM C. MORLEY, DAVID WILLIAMS, UTA WILLIAMS, THOMAS BRENEMAN, PHILLIP KUEBER, LOUIS METZNER, B. JUSTICE, ZALICK PERLER, ROBERT SIMMNS, DAVID GALPIN, HOWARD FENSTER, CLARK MACDONALD, ROBERT L. WAY, ANGELYN CHAN, JEFFREY WERRY, ROBERT F. EDWARDS, CYRIL CHAN, NIZARALI DAMJI, REG G. HUMPHREYS, WALTER R. LAYZELL, BARRY DOWNS, ALISTAIR I. MUNRO, AVCO FINANCIAL SERVICES, RICHARD ARCHAMBAULT, B.P.Y.A. 138 HOLDINGS LTD., carrying on business as WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP, and the said Partnership WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP

DEFENDANTS
(RESPONDENTS)

 

W.B. McAllister, Q.C.

appearing for the Appellant

D.G. Rae and A.D. Borrell

appearing for the Respondents

[1] BRAIDWOOD J.A.: This appeal involves the proper principles to be applied when calculating the damages suffered by a party by reason of the wrongful granting of an injunction. In this case, the appellant Village Gate Resorts Ltd. was granted injunctions on 24 May 1989 and 12 July 1995 to prevent the respondents from dissolving a limited partnership. At each application for an injunction, the appellant gave an undertaking as to damages. When the litigation between the two parties concluded in 1997, it was determined that the granting of the injunctions was inappropriate.

[2] The issue before this Court is whether the trial judge properly assessed the damages incurred by the respondents by reason of the injunctions.

FACTS

[3] An entity known as Whistler Mountain Inn Limited Partnership was formed in 1980 as part of a financing package to build and operate Phase 1 of what is now known as the Delta Whistler Resort. Phase 1 is comprised of 163 guest rooms that are registered in the Land Title Office as strata lots. The original developer leased those rooms to the general partner, Village Gate Resources Ltd., the appellant in this case. The lots, together with the limited partnership interest, were then marketed. A purchaser obtained a fee simple in a hotel room subject to a long-term lease in favour of the general partner. A purchaser also obtained as an interest in the limited partnership through which the profits of operating the hotel were distributed. The limited partnership agreement provided for management fees to be paid to the general partner.

[4] Less than half the strata lots were sold and the developer continued to hold the rest. In 1988, Phase 2 was constructed and contained 126 rooms. The two phases are operated as one hotel although Phase 2 was not a partnership asset.

[5] In 1989, B.P.Y.A. 138 Holdings Ltd. acquired the interests of the developer in the hotel. That company thereupon became the owner of all of the rooms in Phase 2, approximately 55 percent of the rooms in Phase 1, certain retail and other space in the hotel complex, and the shares of the appellant Village Gate Resorts Ltd.

[6] Upon acquisition of the hotel by B.P.Y.A. 138 Holdings Ltd., the limited partners convened a meeting for the purpose of winding up the partnership. The appellant then commenced Action No. C891212 seeking inter alia a finding that the general partner was not in breach under the Limited Partnership Agreement as well as an interlocutory injunction restraining the limited partners from proceeding with the meeting. An injunction was granted by the Supreme Court of British Columbia on 24 May 1989.

[7] From the time of its taking over ownership of the hotel, B.P.Y.A. 138 Holdings Ltd. continued a practice that had already been put into place by the previous owner. That practice was to deposit all revenues from Phases 1 and 2 of the hotel into bank accounts and to pay all expenses of the hotel from those bank accounts. Subsequently, financial statements were produced that determined the respective interests of the partnership and the Phase 2 holdings of B.P.Y.A. 138 Holdings Ltd. in the monies in the accounts.

[8] The Partnership Agreement provided that the assets of the partnership were to be held by Village Gate Resorts Ltd. in trust. However, given that the hotel was operated as a single entity, the appellant did not attempt to maintain the partnership funds in a separate trust account. Ultimately, this practice was found to be a material breach of the Limited Partnership Agreement. The Chambers judge, hearing this matter in 1995, did not order dissolution of the partnership but vacated the injunction.

[9] The respondent limited partners immediately requisitioned another meeting for the purpose of dissolving the limited partnership. The appellant then devised a method of separating partnership funds from the funds of the hotel and maintaining them in a separate account. It put this system into operation and then applied for another injunction to prevent the second meeting from proceeding. The Chambers judge granted that injunction on 12 July 1995.

[10] Ultimately, both judgments were appealed to the Court of Appeal. This Court found, in essence, that the breach of trust committed by the appellant could not be cured and discharged the second injunction: Village Gate Resorts Ltd. v. Moore (1997), 47 B.C.L.R. (3d) 153 (C.A.). The limited partners thereupon convened a meeting and on 16 November 1997 voted to dissolve the limited partnership.

[11] A hearing was then held to determine the damages suffered by the respondents because of the injunctions.

PROPER APPROACH TO MEASURING DAMAGES

[12] I am of the opinion that the trial judge correctly stated the principles to be applied. I agree with the reasons for judgment found in paragraphs 6 and 7 which read as follows:

The principle to be applied in the assessment of damages for an injunction mistakenly granted is as stated by the defendant. As described in textbooks, the damages are limited to those losses which are the natural consequence of the injunction of which the party obtaining the injunction has notice at the time (Halsbury's Laws of England, 4th ed.(reissue), v. 24 (London: Butterworths, 1991) at para. 987; Kerr & Paterson, Kerr on Injunctions, 6th ed. (London: Sweet & Maxwell, 1927) at 667). These principles are fixed and clear according to Lord Diplock who said in Hoffmann-La Roche v. Secretary of State for Trade & Industry, [1975] A.C. 295 at 361(H.L.):

... if the undertaking is enforced the measure of the damages payable under it is not discretionary. It is assessed on an inquiry into damages at which principles to be applied are fixed and clear. The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v. Day (1982) 21 Ch.D. 421, per Brett L.J., at p. 427.

The few cases on this point were carefully considered by Spencer, J. in Fletton Ltd. v. Peat Marwick Ltd., supra. at 310-312. He cited the following passage from Smith v. Day (1882), 21 Ch.D. 421 at 428 (C.A.):

If damages are granted at all, I think the Court would never go beyond what would be given if there were an analogous contract with or duty to the opposite party. The rules as to damages are shewn in Hadley v. Baxendale [9 Ex. 341]. If the injunction had been obtained fraudulently or maliciously, the Court, I think, would act by analogy to the rule in the case of fraudulent or malicious breach of contract, and not confine itself to proximate damages, but give exemplary damages. In the present case there is no ground for alleging fraud or malice. The case then is to be governed by analogy to the ordinary breach of a contract or duty, and in such a case the damages to be allowed are the proximate and natural damages arising from such a breach, unless as in Hadley v. Baxendale, notice had been given to the opposite party, of there being some particular contract which would be affected by the breach.

 

In Fletton Ltd. v. Peat Marwick Ltd., supra., the court awarded as damages the continuing costs of preserving certain washer units because of the injunction, costs that would not otherwise have been incurred if the injunction had not been given and if the defendants had been allowed to go ahead with plans to destroy the units. These included storage, insurance, and lost interest costs.

 

I also refer to the judgment of Spencer J. in Fletton Ltd. v. Peat Marwick Ltd.(1986), 7 B.C.L.R. (2d) 307 (S.C.), mentioned by the trial judge as well as the English Court of Appeal decision in Cheltenham & Gloucester Building Society v. Ricketts, [1993] 4 All E.R. 276. I also agree that since the proceeding is of an equitable nature, the principle adopted must be fair and reasonable in all of the circumstances rather than a slavish application of the rule to be applied: Air Express Ltd. v. Ansett Transport Industries (Operations) Pty. Ltd. (1979-1981), 146 C.L.R. 249 at 261 (Aust.H.C.).

[13] The appellant argued at paragraph 19 of its factum that the learned trial judge erred as follows:

It is submitted that the profit earned by the Plaintiff from the management fees which would not have been paid had the partnership been dissolved is not the proper measure of damages. The proper measure of damages is the amount lost by the Defendants as a result of the injunction, not the amount gained by the Plaintiff. The two are not the same. The changed circumstances following the dissolution of partnership must be taken into account. [Emphasis in original]

 

In other words, the appellant argues that the learned trial judge assessed damages according to the law of restitution, not the law of contract. Paragraph 22 of the appellant's factum states as follows:

It is submitted that in order to determine the damage or loss suffered by the Defendants as a result of the continuation of the limited partnership, the Court must compare the circumstances as they would have existed had the limited partnership been dissolved with the circumstances which actually existed as a result of its continuation.

 

[14] I am of the opinion, in the very peculiar circumstances of this case, that the learned trial judge did not make the error stated in the appellant's factum.

 (More)

Delta Hotel, Whistler: Court awards limited partners $3,385,000 in damages from breach of trust

 The Delta Hotel and Village Suites, Whistler, BC

                                                Date:  19990125
Docket: C953819
Registry: Vancouver



IN THE SUPREME COURT OF BRITISH COLUMBIA




BETWEEN:


VILLAGE GATE RESORTS LTD.


PLAINTIFF
AND:


ANDREW MOORE, THOMAS MORRISON, ROLF GILLARDON,
FRANCIS CHANG, SAITOH HOLDINGS LTD., DONALD J. EGGERTSON,
MR. AND MRS. R. LEMP, TUDOR SALES LTD., PATRICK ROBINSON,
NORTHSHORE CREDIT UNION, AUSTERVILLE PROPERTIES LTD.,
WILLIAM ROBINSON, AMELIA MAINARDI, DOUGLAS ALLEN,
JACK RIDLEY, PETER R. KEARNEY, TERRY LAMB, EDWARD G. BYRD,
MRS. ROY CARROLL, DONALD CARR, GORDON UGGLA, DAVID DANSKIN,
ALICE-MARIE MAUGHAN, ARTHUR GRIFFITHS, FRANK MOSER,
MR. AND MRS. MAURICE LE GALLAIS, DAVID CHAN, IVY CHAN,
CALVIN EDWARDH, JAMES PERKINS, LYNDA BURROUGH,
GERALD TRODDEN, ORVILLE WRIGHT, DORIS BURROUGH,
HARRY NATAROS, DOUGLAS BRAWN, HELEN JENKINS, JOHN FLEMING,
SQUAMISH MUSIC LTD., KATRIN ANN TURU, NORMA LOUGHEED,
CHARLES B. STEWART, EDDISON SINANAN, JAMES BULLARD,
ALLAN TONE, WILLIAM LOUGHEED, DESMOND COCKROFT,
IAN ELLIOTT, MR. AND MRS. DONALD STEWART, KENNETH STEVENSON,
GEOFFREY G. COLESHILL, FRANK KAPLAN, DAVID SPICER,
HECTOR G.N. FRITH, JOHN ROSS, GRAHAM C. MORLEY,
DAVID WILLIAMS, UTA WILLIAMS, THOMAS BRENEMAN,
LOUIS METZNER, B. JUSTICE, ZALICK PERLER, ROBERT SIMMONS,
DAVID GALPIN, HOWARD FENSTER, CLARK MACDONALD,
ROBERT L. WAY, ANGELYN CHAN, JEFFREY WERRY,
ROBERT F. EDWARDS, CYRIL CHAN, NIZARALI DAMJI,
WALTER R. LAYZELL, BARRY DOWNS, ALISTAIR I. MUNRO,
RICHARD ARCHAMBAULT, B.P.Y.A. 138 HOLDINGS LTD.,
AVON HOLDINGS LTD., ANDREW McLAREN, NINA MOSER,
KEICHIRO OISHI, JANE ROBINSON, carrying on business
as WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP, and
the said Partnership WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP

DEFENDANTS
Docket: C891212
Registry: Vancouver
BETWEEN:
VILLAGE GATE RESORTS LTD.

PLAINTIFF
AND:
ANDREW MOORE, THOMAS MORRISON, ROLF GILLARDON,
FRANCIS CHANG, SAITOH HOLDINGS LTD., DONALD J. EGGERTSON,
MR. AND MRS. R. LEMP, TUDOR SALES LTD., PATRICK ROBINSON,
NORTHSHORE CREDIT UNION, AUSTERVILLE PROPERTIES LTD.,
WILLIAM ROBINSON, AMELIA MAINARDI, DOUGLAS ALLEN,
JACK RIDLEY, PETER R. KEARNEY, TERRY LAMB, EDWARD G. BYRD,
MRS. ROY CARROLL, DONALD CARR, GORDON UGGLA, DAVID DANSKIN,
ALICE-MARIE MAUGHAN, ARTHUR GRIFFITHS, FRANK MOSER,
MR. AND MRS. MAURICE LE GALLAIS, DAVID CHAN, IVY CHAN,
CALVIN EDWARDH, JAMES PERKINS, LYNDA BURROUGH,
GERALD TRODDEN, ORVILLE WRIGHT, DORIS BURROUGH,
HARRY NATAROS, DOUGLAS BRAWN, HELEN JENKINS, JOHN FLEMING,
SQUAMISH MUSIC LTD., KATRIN ANN TURU, NORMA LOUGHEED,
CHARLES B. STEWART, EDDISON SINANAN, JAMES BULLARD,
ALLAN TONE, WILLIAM LOUGHEED, DESMOND COCKROFT,
IAN ELLIOTT, MR. AND MRS. DONALD STEWART, KENNETH STEVENSON,
GEOFFREY G. COLESHILL, FRANK KAPLAN, DAVID SPICER,
HECTOR G.N. FRITH, JOHN ROSS, GRAHAM C. MORLEY,
DAVID WILLIAMS, UTA WILLIAMS, THOMAS BRENEMAN, PHILIP KUEBER
LOUIS METZNER, B. JUSTICE, ZALICK PERLER, ROBERT SIMMONS,
DAVID GALPIN, HOWARD FENSTER, CLARK MACDONALD,
ROBERT L. WAY, ANGELYN CHAN, JEFFREY WERRY,
ROBERT F. EDWARDS, CYRIL CHAN, NIZARALI DAMJI,
REG G. HUMPHREYS, WALTER R. LAYZELL, BARRY DOWNS,
ALISTAIR I. MUNRO, AVCO FINANCIAL SERVICES,
RICHARD ARCHAMBAULT, B.P.Y.A. 138 HOLDINGS LTD., carrying on
business as WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP, and
the said Partnership WHISTLER MOUNTAIN INN, LIMITED PARTNERSHIP

DEFENDANTS
AND:

BARBICAN PROPERTIES INC., AVON HOLDINGS LTD., ANDREW
MCLAREN, NINA MOSER, KEICHIRO OISHI and JANE ROBINSON

DEFENDANTS BY COUNTERCLAIM


REASONS FOR JUDGMENT

OF THE

HONOURABLE MADAM JUSTICE DILLON



Counsel for the Plaintiff:
and BPYA 138 Holdings Ltd. W.B. McAllister, Q.C.

Counsel for certain
defendant limited partners: D. Rae, Q.C.

Counsel for certain
defendant limited partners: A. Borrell


Place and Dates of Hearing: Vancouver, B.C.
October 19, 1998
November 30, 1998


[1] This is an inquiry into whether the defendant limited
partners have sustained any damage and, if so, the amount of
such damage, by reason of the injunctions granted and the
undertakings given by the plaintiff on May 24, 1989 and July
12, 1995. The inquiry was ordered on March 13, 1998 following
lengthy proceedings at trial in 1995 and an appeal in 1997.

Factual Background

[2] The inquiry arises from injunctions that were granted to
prevent certain limited partners from holding an extraordinary
meeting of the partnership to consider a resolution for
dissolution of the partnership. The plaintiff obtained an
interim injunction to prevent dissolution of the partnership on
March 16, 1989, which became an interlocutory injunction on May
24, 1989. Following a lengthy trial in 1995, the British
Columbia Supreme Court ordered the first injunction to be set
aside, amongst other decisions made. When certain limited
partners again attempted to hold an extraordinary meeting to
dissolve the partnership, the plaintiffs obtained a second
injunction to restrain dissolution of the partnership. The
matter went to appeal. The British Columbia Court of Appeal
found the plaintiff to be in breach of trust by co-mingling
partnership trust revenues with plaintiff's funds, to be in
default of duty in the effective borrowing of partnership funds
for the plaintiff's benefit and the benefit of its operating
group, and to be in default of duty in the granting of a
floating charge over partnership assets as security for loans
made by the plaintiff's affiliated companies (Village Gate
Resorts Ltd. v. Moore (1997), 47 B.C.L.R. (3d) 153 at 173
(B.C.C.A.)). The Court of Appeal also set aside the second
injunction which then allowed the limited partners to proceed
with the extraordinary general meeting. In November 1997, the
partners resolved to dissolve the partnership and place it in
receivership.

The Measure of Damage at Law

[3] The plaintiff and the defendant disagreed on the
appropriate measure of damage pursuant to an undertaking for
damages given in support of an injunction. The plaintiff said
that the measure of damage was as in tort so that the
defendants would be entitled to be placed in the position that
they would have been if the injunction had not been granted.
This principle arises in the law of negligence so that the pre-
negligence situation is restored. The plaintiff argued that
since the effect of the injunction here was to retain the
status quo, what would have happened was a change of
circumstance, particularly, the partnership would have been
dissolved at an extraordinary meeting. It said that the
defendants had the burden of proving what the changed
circumstance would have been, what their changed financial
circumstance would likely have been, and what their financial
circumstance actually was. The damages was the assessment of
the difference between their actual and likely financial
situations. The plaintiff went on to say that there was no
such evidence before the court so that the defendants failed to
prove any damage. No authority was cited for the application
of this principle to the measurement of damage following an
undertaking for damages on an injunction.

[4] The defendants submitted that the measure of damage was
such loss as was the natural consequence of the injunction or
such damages as naturally flowed from the injunction based upon
an analogy with contract law (Islands Trust v. Pinchin Holdings
Ltd. (1980), 25 B.C.L.R. 150 (B.C.S.C.); Fletton Ltd. v. Peat
Marwick Ltd. (1986), 7 B.C.L.R.(2d) 307 (B.C.S.C.)). The
natural consequence of the injunction was the continued payment
of management fees to the plaintiff pursuant to the partnership
agreement in an amount that exceeded the cost of providing
those services. The converse consideration would be: what
would be the measure of damage if the partnership was found to
have been improperly dissolved. The plaintiff would then have
been entitled to the management fees that it would have earned
minus expenses to earn those fees. While it appeared at first
that the defendant also argued that the measure of damage could
be determined by assessment based upon the breach of trust,
this was clarified to be useful by analogy only.

[5] I have not been asked and I am not assessing damages for
breach of trust or default of duty under the partnership
agreement as these are damages flowing from the litigation
itself. My sole task is the assessment of damages arising from
the injunctions. The equitable nature of this remedy is,
however, readily apparent (see Air Express Ltd. v. Ansett
Transport Industries (Operations) Pty. Ltd., [1979-1981] 146
C.L.R. 249 at 261 (Aust.H.C.)).

 

 (More)

Bryce Rositch, leaky condo architect responsible for the quality of Whistler Village, introduced to the Legislature

1998 Legislative Session: 3rd Session, 36th Parliament
HANSARD


The following electronic version is for informational purposes only.
The printed version remains the official version.


Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

 


TUESDAY, APRIL 7, 1998

Morning

Volume 8, Number 11

 


 

[ Page 6781 ]

The House met at 10:03 a.m.

Prayers.

...

T. Nebbeling: I see in the gallery a friend and co-worker from my Whistler days. Bryce Rositch is an architect who is very much responsible for the quality of the face of Whistler Village as it is today, through his participation on various boards. May the House make him welcome.

END OF EXCERPT

Mr. Nebbling failed to mention that many leaky rotten condos in Whistler were sold to unsuspecting purchasers. 

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