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.