Westin Grand Hotel (Vancouver): Court to determine if Cressey and/or others misrepresented condo hotel units

The Westin Grand Condo Hotel, Vancouver, BC, Canada

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

The Owners et al. v. Homer Street Development et al.,

 

2007 BCSC 362

Date: 20070315
Docket: S76792
Registry: New Westminster

Between:

The Owners, Strata Plan LMS 3851,
Chong Ping Wong and others

Plaintiffs

And

Homer Street Developments Limited Partnership,
(formerly Cressey (Homer) Limited Partnership)
and others

Defendants

And

O’Neill Hotels & Resorts Ltd. and others

Third Parties

Before: The Honourable Mr. Justice Truscott

Ruling

Counsel for the plaintiffs:

B.W. Dixon

S.T. Warnett

 

Counsel for the defendants

Homer Street Development Ltd. Partnership

et al (The “Developers”):

 

G.N. Corson

 

Counsel for the defendant

MM&R Valuation Services, Inc.:

 

G.M. Nijman

 

Counsel for the third parties

O’Neill Hotels & Resorts Ltd.

and OHR Grand Management

Robert F. O’Neill and John C. O’Neill:

 

D.G.S. Rae, Q.C.

 

Date and Place of Trial/Hearing:

March 13, 2007

 

New Westminster, B.C.

[1]                The plaintiffs have provided to the defendants and to the court a statement of what they consider to be the issues involved in their claims for the purpose of the stage one trial.

[2]                The defendants take issue with one of the issues being involved and with the framing of some of the other issues.

[3]                The developer defendants take issue with the involvement of alleged representations in the marketing brochure and auditor’s report dated November 8, 1996 due to plaintiffs’ counsel’s concession in the past that these alleged representations were no different than the representations alleged in the disclosure statement.

[4]                Plaintiffs’ counsel says there should be no objection to including these alleged representations in the marketing brochure and auditor’s report as long as there is no involvement of any issue of who received these documents nor who relied upon these documents, as part stage one.

[5]                On this basis I agree that the alleged representations in the marketing brochure and the auditor’s report will form part of the stage one trial to the extent of determining who is responsible for those representations, who owed a duty of care with respect to them, whether they were material, whether they were false, and whether the developers, directors or OHR were fraudulent or negligent in making those representations, all as are presently alleged against these three defendants through the disclosure statement.

[6]                The collective defendants disagree with any determination that their conduct might be considered to be fraudulent or negligent in making the representations as they say that is a conclusion only and the proper question is to determine whether they breached a standard of care in making the representations.  Their concern appears to be that such a finding of negligence or fraud might involve an inference that there was reliance by one or more of the plaintiffs on this conduct when the issue of reliance has been reserved completely for a second stage trial.

[7]                Plaintiffs’ counsel points out that in framing the issues as he has he has followed the wording of the issues as used by Wedge J. in her language in Sharbern Holdings Ltd. v. Vancouver Airport Centre Ltd. et al, 2005 BCSC 896, Reasons for Judgment, June 16, 2005.  As well he points to the wording of these issues as set out in The Queen v. Cognos Inc., [1993] 1 S.C.R. 87, as well as in Seaboard Life Insurance Co. v. Bank of Montreal, [2002] B.C.J. 599, (C.A.).

[8]                In my view a finding of negligence is a conclusion from a finding of a breach of a duty of care which involves a finding of a breach of a standard of care and in my opinion all of these findings are involved in the stage one trial and none of them will involve any consideration of issues of reliance that are reserved for a stage two trial.  I am content to leave the plaintiffs’ issues in this regard as framed.

[9]                I consider that the issue outlined in the plaintiffs’ list under (a)(iii) dealing with duty of care to the investors in respect to the representations applies not only to the representations in the disclosure statement but also to the same representations in the marketing brochure and the auditor’s report in (a)(ii).

[10]            I must say that when the matter of the plaintiffs delivering a statement of issues was first discussed, I had in mind a list only of the general issues that the plaintiffs contemplated, and not a list of the necessary ingredients of each issue from the plaintiffs’ perspective.

[11]            At the hearing counsel for the developers and MM&R agreed that an issue between the two of them in third party proceedings dealing with a limit on the exposure of MMR or HVS to the developer will not go ahead at the first stage trial.  Those two parties also agree that the issue of any consultation between the developer and HVS as alleged in ¶31(h) of the Second Further Amended Statement of Claim will form part of the third party proceedings between them at stage one.

[12]            Any issue in the third party proceedings of MM&R relying upon faulty occupancy rate figures being given to it by OHR or the developers is presently a matter of discussions amongst the third parties as to whether it is intended to be part of stage one.  Plaintiffs’ counsel is to be notified of the result of those discussions.

[13]            The issue of whether the investors are deemed to have relied on the representations, pursuant to the Real Estate Act and whether that results in any liability of the developers and directors to compensate the investors will be argued at the stage one trial.

“J. Truscott, J.”
The Honourable Mr. Justice J. Truscott

Westin Grand Hotel (Vancouver): O'Neil Hotels & Resorts Ltd. must produce Whistler documents

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Strata Plan LMS 3851 et al v. Homer Street et al,

2006 BCSC 1362

Date: 20060908
Docket: S76792
Registry: New Westminster

Between:

The Owners, Strata Plan LMS 3851, Chong Ping Wong and others

Plaintiffs

And

Homer Street Developments Limited Partnership,
(formerly Cressey (Homer) Limited Partnership) and others

Defendants

And

O’Neill Hotels & Resorts Ltd. and others

Third Parties


Before: The Honourable Mr. Justice Truscott

Reasons for Judgment
In Chambers

Counsel for the plaintiffs:

B.W. Dixon
S.T. Warnett

Counsel for the defendants
Homer Street Development Ltd. Partnership et al (The “Developers”):

D.C. Harbottle

Counsel for the defendants
O’Neill Hotels & Resorts Ltd. and OHR Grand Management, Robert F. O’Neill and John C. O’Neill:

A. Borrel

Counsel for the defendant
MM&R Valuation Services, Inc.
DBA HVS Hospitality Valuation Services Canada:

H. Brownley
(Article Student)

Date and Place of Trial/Hearing:

September 1, 2006

New Westminster, B.C.

[1] The plaintiffs seek from O’Neill Hotels & Resorts Ltd. delivery of the following documents:

1. Any projections relating to the expected operational results for the Westin Resort & Spa Whistler prepared any time before April 1999, as well as any copies of any third party reports regarding the expected operational results for the Westin Resort & Spa Whistler received before the end of April 1999.

2. Any correspondence with Westin Hotel Company, related or successor corporations regarding revenue or costs expectations relating to the Westin Resort & Spa Whistler at any time before the end of April 1999.

3. Alternatively the plaintiffs seek the same orders from OHR Whistler Management Ltd., a non-party to this action.

[2] Related to these orders is another motion by the plaintiffs for an order that Mr. John O’Neill, a representative of O’Neill Hotels & Resorts Ltd., and Mr. Cressey, a personal defendant and a representative of the defendant Cressey Development Corporation, answer questions with respect to these matters.

[3] Counsel for O’Neill Hotels & Resorts Ltd. and Mr. O’Neill, as well as counsel for Mr. Cressey and his company oppose production of these documents and any questions with respect to these matters on the basis that they have no relevance to the issues in this action.

[4] This action concerns the purchase of strata units by the individual plaintiffs in the Westin Grand Hotel in downtown Vancouver, and alleged misrepresentations and non-disclosures on the part of the defendants related to financial projections for the hotel made in a disclosure statement dated November 8, 1996, for the years ending December 31, 1999 through December 31, 2003.

[5] The disclosure statement was amended on July 8, 1997 and on March 19, 1999.

[6] The hotel opened on April 1, 1999. OHR Grand Management managed the hotel for the first 13 days on behalf of the developer and thereafter entered into a management agreement with The Owners, Strata Plan LMS 3851.

[7] The plaintiffs allege that the projections included in the 1996 disclosure statement were never updated thereafter to the opening of the hotel on April 1, 1999, when the defendants knew or should have known that they no longer had any real validity, if they ever did, and should have been updated.

[8] The plaintiffs submit that the Westin Whistler documents may reveal information and knowledge in the possession of the O’Neill group that may be relevant to information and knowledge in the possession of the O’Neill group with respect to the Westin Vancouver hotel, before it opened.

[9] The evidence from Mr. John O’Neill in his affidavit of May 18, 2006 is that the Westin Whistler project originated sometime in December 1996 and came to be managed by OHR Whistler Management Ltd., a wholly owned subsidiary of O’Neill Hotels & Resorts Whistler Ltd., which in turn is a wholly owned subsidiary of O’Neill Hotels & Resorts Ltd.

[10] He goes on in his affidavit to point out a number of distinctions between the Whistler hotel and marketplace and the Vancouver hotel and marketplace at any time.

[11] He does not specifically deal with the contents of any of the documents sought by the plaintiffs.

[12] In the outline of the O’Neill group the position was taken that the proper order would be only as against OHR Whistler Management, if the documents have any relevance.

[13] However at the hearing plaintiffs’ counsel relied on authority that documents in the possession, power or control of a subsidiary is equally in the possession, power or control of the parent.

[14] Counsel for the O’Neill group at the hearing did not make any further submission on this issue.

[15] I will assume that any order that I issue by these reasons against O’Neill Hotels & Resorts Ltd. will capture those documents in the possession, power or control of OHR Whistler Management Ltd. as well.

[16] The leading authority on the production of documents is the case of Cie Financiered u Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.C. 55 (C.A.), where Brett L.J. said at p. 63:

It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may – not which must – either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words “either directly or indirectly”, because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences …

[17] Chief Justice McEachern in Boxer v. Reesor et al (1983), 43 BCLR 352, accepted that there must always be a reasonable limit to production of documents and a reconciliation between the right to full disclosure with the proper management of the trial process. Mr. Justice Myers in Desgagne v. Yuen, 2006 BCSC 955, refers to it as a matter of common sense.

[18] The way in which the plaintiffs’ application is expressed, looking for projections relating to the operational results of the Westin Whistler hotel and any correspondence regarding revenue or cost expectations relating to the Westin resort hotel before April 1999 is in my view far too broad a request. I am unable to see how any projections for occupancy rates and financial returns for the Whistler hotel could have any bearing whatsoever on occupancy rates and financial projections for the Westin Vancouver hotel.

[19] At the hearing I did refer to the possibility that one or more of these documents may contain information in a broader category dealing with the economy of British Columbia or some other financial considerations not specifically narrowed to the Westin Whistler project exclusively that may have relevance to the market conditions for the Vancouver hotel before its opening.

[20] Counsel for the O’Neill group suggested that if I order any production it should only be with respect to any information in these documents related to general market conditions in the hotel industry in British Columbia at the material time.

[21] I accept this submission.

[22] O’Neill Hotels & Resorts Ltd. will produce to plaintiffs’ counsel within seven days of this ruling any parts of the Westin Whistler documents leading up to April 1999 that offer information and opinions on the hotel industry in British Columbia apart from the Whistler project specifically.

[23] Otherwise the plaintiffs’ applications are dismissed both with respect to the documents sought of the projections on the Westin Whistler project, and the questions of Mr. O’Neill and Mr. Cressey in that regard.

“J. Truscott, J.”
The Honourable Mr. Justice J. Truscott

Westin Grand Hotel (Vancouver): Investor owners sue Cressey developers and managers

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

LMS 3851 v. Homer Street Developments et al,

2004 BCSC 1654

Date: 20041215
Docket: S76792
Registry: New Westminster

Between:

The Owners, Strata Plan LMS 3851,
Chong Ping Wong and others

Plaintiffs

And

Homer Street Developments Limited
Partnership, (formerly Cressey (Homer) Limited
Partnership) and others

Defendants

And:

O’Neill Hotels & Resorts Ltd. and others

Third Parties


Before: The Honourable Mr. Justice Truscott

Reasons for Judgment

Counsel for the plaintiffs:

B.W. Dixon

Counsel appearing for the defendants other than MM&R Valuation Services plc:

D.C. Harbottle

Counsel for the third parties:

D.G.S. Rae, Q.C.

Date and Place of Trial/Hearing:

November 19, 2004

New Westminster, B.C.

[1] The individual plaintiffs are investors in a hotel development in downtown Vancouver called the Westin Grand Hotel, and are the owners of strata lot hotel suites in the development. The Owners, Strata Plan LMS 3851 is the strata corporation whose members are the individual owners of the strata lots in the development. Hereafter the individual plaintiffs will be referred to as “the investors”.

[2] The plaintiffs sue a group of corporations and partnerships that they allege constitute the Grand Development Partnership and who managed construction and brought the project to market. In addition the plaintiffs sue the directors of the corporate entities involved. Hereafter the group of corporations and partnerships and the directors will collectively be referred to as “the developers”.

[3] The plaintiffs also claim against the hotel valuation company retained by the developers, being MM&R Valuation Services Inc., doing business as HVS Hospitality Valuation Services, Canada, referred to as “HVS”.

[4] The investors allege that the developers misrepresented the expected returns on their investments, through a disclosure statement that was provided to each of the investors under the Real Estate Act, R.S.B.C. 1996 c. 397, and through the sale agreements that the investors executed in 1996 that incorporated the disclosure statement.

[5] HVS is sued for providing an opinion about the projected returns, that also formed part of the disclosure statement.

[6] The plaintiffs now bring three applications before me for the following orders:

1. to add as defendants the existing third parties in the action, O’Neill Hotels & Resorts Ltd. and OHR Grand Management Ltd. (collectively referred to hereafter as “OHR”) and to make consequential amendments to the statement of claim;

2. to add 16 additional plaintiffs and to correct other mistakes made in the names of existing plaintiffs; and

3. to add a claim that the representations and warranties alleged in the disclosure statement were also made by agents of the developers to the investors when marketing the strata units.

[7] The developers oppose the applications to add 16 new plaintiffs and to add the claim of misrepresentation by the agents, but support the application to add OHR as defendants. The developers do not oppose the correction of mistakes made in the names of existing plaintiffs. HVS does not oppose any of the applications and did not appear at the hearing.

[8] The proposed new defendants OHR oppose their addition as defendants and I assume also oppose the addition of 16 new plaintiffs.

[9] I will deal with each of the motions in turn as I have set out above.

1. The plaintiffs seek to add as defendants the existing third parties in the action, O’Neill Hotels & Resorts Ltd. and OHR Grand Management Ltd. (collectively referred to hereafter as “OHR”) and to make consequential amendments to the statement of claim.

[10] In the present statement of claim the investors have sought to blame their losses on the misrepresentations and warranties that they allege were made to them before they took possession of their strata units. It is now sought to add these two new defendants OHR to allege that if the projections were not negligently misrepresented or warranted in the first place causing their losses, then the actual management of the hotel was negligently carried out, causing their losses, or it was a combination of the two causes.

[11] The proposed claims against OHR are the same as the claims presently made against them in the third parties proceedings brought against them by the developers.

[12] Rule 15(5)(a)(iii) of the Rules of Court states:

At any stage of a proceeding, the court on application by any person may

(iii) order that a person be added as a party where there may exist, between the person and any party to the proceeding, a question or issue relating to or connected

(A) with any relief claimed in the proceeding, or

(B) with the subject matter of the proceeding,

which in the opinion of the court it would be just and convenient to determine as between the person and that party.

[13] The plaintiffs submit that it would be just and convenient that OHR be added as defendants and the proposed claims are clearly connected. They say the misrepresentation claims made against OHR in respect of the projections are claims already made against the developers as a result of OHR’s preparation of the projections for disclosure to the investors, and the proposed claims of breach of the hotel management agreement or breach of duties arising out of OHR Grand’s role as manager of the hotel are clearly connected to the subject matter as the essence of the claim is the loss of value suffered by the investors as a result of the diversions between the actual financial results of the hotel operations and the financial results projected.

[14] The proposed defendants OHR do not oppose their addition as defendants on the basis of any limitation period having expired. The only opposition they appear to raise is that certain of the proposed amended pleadings that would be applicable to them as defendants, do not disclose a reasonable cause of action against them.

[15] Paragraph 19 of the proposed amended statement of claim states:

Since at least April of 1999, the Project has been managed and operated as a hotel by OHR Grand, a wholly owned subsidiary of OHR. At all relevant times, OHR and OHR Grand were operated as a single entity, with OHR Grand under the effective influence and control of OHR and exercising no independent discretion. As such, OHR Grand is the alter ego of OHR and OHR is liable for the acts or omissions of OHR Grand.

[16] The proposed OHR defendants submit that this is only a pleading of the legal test for a finding of “alter ego”, without any pleading of the facts that would form the basis for such a finding. Reliance is placed upon the decision of our Court of Appeal in Hunt v. T & N plc (1989), 41 B.C.L.R. (2d) 269 (C.A.), where the court gave examples of proper pleadings for an allegation of “alter ego”, from the cases of Agawam Oil Co. v. Scurry-Rainbow Oil Ltd. (1962), 32 D.L.R. (2d) 298, and Quintette Coal Ltd. v. Bow Valley Resource Services Ltd. (1986), 6 B.C.L.R. (2d) 347.

[17] The plaintiffs submit that ¶19 does meet the requirements of the court in Hunt for a pleading of “alter ego” and point to that portion of the judgment where it was stated:

Before the parent is liable in law for the acts and omissions of the subsidiary, one must show that control existed and was exercised. That would be the material fact to be pleaded and at trial proved by evidence.

[18] I have reviewed the Hunt decision and compared the proposed ¶19 to what I consider to be the ratio of that decision, and I do not see any difference between ¶19 and the ratio or the pleadings referred to in Hunt from the Agawam and Quintette cases.

[19] I find that the proposed pleading in ¶19 is a sufficient pleading of the material facts to support the claim of “alter ego”.

[20] The proposed defendants OHR also submit that the proposed amended ¶54 does not meet the requirements of Rule 19(1) which requires that a pleading must contain a statement in summary form of the material facts on which the party relies, but not the evidence by which the facts are to be proved.

[21] The proposed ¶54 states:

The Representations and Warranties, the Projections and the HVS Representations were made negligently in that:

(a) the Developers, the Directors, OHR and HVS knew or ought to have known that the Projections would not, or could not, be achieved;

(b) the Developers, the Directors, OHR and HVS knew or ought to have known that the assumptions and hypotheses on which the Projections were based were unreasonable and reflected circumstances that were not likely to exist; and,

(c) further, or alternatively, the Developers, the Directors, OHR and HVS failed to review and change the Projections before the Investors completed their purchases to reflect changes in circumstances that they knew or ought to have known made the Projections unreliable or increased the risk that they would not be achieved.

[22] The proposed defendants OHR submit that full particulars are not given in the proposed pleading because material facts, with dates and times, are not included.

[23] It is my conclusion that the proposed ¶54 provides sufficient material facts upon which the investors rely. The pleading refers to the representations, warranties and projections which have previously been identified in the statement of claim as coming out of the disclosure statement and there are sufficient particulars of the disclosure statement to make it clear to the proposed defendants OHR what the material facts are.

[24] These proposed defendants also submit that proposed ¶63 and 64 that allege a fiduciary duty against OHR Grand also do not sufficiently set out the material facts supporting the claim of fiduciary duty.

[25] Proposed ¶63 and 64 state:

[63] Alternatively, as OHR Grand’s fees are based on gross revenue while the return to Investors is based on net revenue, if actions are taken or expenses incurred to increase or maintain the gross revenues, OHR Grand benefits through its fees, even if those actions or incurred expenditures provide no incremental return to the Investors, or if they result in a decreased net revenue. In such circumstances, in incurring expenses and operating the hotel, OHR Grand must act so as to avoid a conflict of interest. The Investors say that OHR Grand owed a fiduciary duty because:

(a) OHR Grand had discretion or power with respect to the expenditures made and revenue obtained in the hotel operation;

(b) OHR Grand, in exercising its discretion, affected the economic interests of the Investors; and

(c) the Investors were vulnerable to or at the mercy of OHR Grand.

[64] In the result, OHR Grand owed a fiduciary duty:

(a) to operate the hotel in the best interests of the Investors;

(b) not to allow its own interest to conflict with its duty to Investors; and

(c) not to profit at the expense of the Investors.

[26] Again, I have concluded that these paragraphs do provide the necessary material facts to support the claim.

[27] In conclusion, as there is no limitation period to be concerned about with respect to adding OHR as defendants, I find it just and convenient to add them as defendants and for the plaintiffs to amend their statement of claim to make the allegations against those defendants as set out in the proposed amended statement of claim attached as Schedule “A” to the further amended notice of motion dated October 29, 2004 (original dated April 29, 2004).

2. The plaintiffs seek to add 16 additional plaintiffs and to correct other mistakes made in the names of existing plaintiffs.

[28] The developers and OHR do not oppose the misnomers with respect to the existing plaintiffs set out in ¶2 – 5 of the amended notice of motion dated August 19, 2004 (original dated June 23, 2004) and accordingly I grant those orders.

[29] Again, Rule 15(5)(a)(iii) is applicable to the addition of more plaintiffs. The developers and OHR oppose the addition of these individuals on the basis that it is not just that they be added because their addition would deprive the defendants of two limitation defences and because the proposed plaintiffs have no reasonable excuse for not suing from the outset when the action was commenced on November 7, 2002.

[30] The developers submit that with few exceptions the investors entered into agreements to purchase their strata units in November, 1996, and took title to the units in April, 1999. The developers submit that the limitation period to sue is six years from the date each purchaser signed their agreements to purchase or sale agreements in November, 1996 and accordingly the six years would have expired shortly after the writ of summons was filed on November 7, 2002. The developers consider it unjust to allow these 16 individuals to be added now without that limitation period applying to them.

[31] In addition, the developers submit that the statutory limitation period of a maximum of three years set out in the Securities Act, S.B.C. 1985 c. 83, has also expired before now.

[32] The plaintiffs submit that the statutory limitation period set out in the Securities Act has no application because it is only applicable to civil remedies created by that statute for misrepresentations in prospectuses or in circulars, neither of which are involved in this case.

[33] I agree with the plaintiffs that the limitation period in the Securities Act to which the developers refer is not relevant to the offering memorandum or disclosure statement in this case.

[34] The plaintiffs agree that the applicable limitation period for negligence or breach of contract is six years under s. 3(5) of the Limitation Act, R.S.B.C. 1996 c. 266. However they disagree as to when the limitation period started to run in this case.

[35] In the case of a claim in tort for negligent misrepresentation, the plaintiffs’ submission is that the cause of action did not accrue or start to run until damage was suffered and that was not until after the investors took ownership of their hotel units in 1999 and the hotel began to operate, so it has not yet expired.

[36] In the case of the claim of breach of the sale agreements entered into in November, 1996, because of the incorporation by reference of the disclosure statement into each sale agreement, the plaintiffs submit that the cause of action for breach of contract did not accrue until there was a breach of those sale agreements.

[37] I agree with the plaintiffs that the limitation period for the claims in tort did not accrue until damage was suffered after the investors took title in 1999. As a consequence the limitation period has not yet expired.

[38] With respect to the claim for breach of the sale agreements and for breaches of collateral warranties or collateral contracts, I agree that the cause of action accrued when the breaches occurred. Depending upon when the breaches are alleged to have occurred, the cause of action for breach of contract may or may not have expired by now.

[39] Accordingly, I must consider whether it is just and convenient to add these 16 new plaintiffs under Rule 15(5)(a)(iii), taking into account the possibility that the limitation period for claims of breach of contract, has expired.

[40] In Teal Cedar Products (1997) Ltd. v. Dale Intermediaries Ltd., 19 B.C.L.R. (3d) 282, our Court of Appeal considered the proper factors to be taken into account in determining whether it is just and convenient under Rule 15(5)(a)(iii) to add a party. Finch J.A. (as he then was) said:

In the exercise of a judge’s discretion, the length of delay, the reasons for delay and the expiry of the limitation period are all factors to be considered, but none of those factors should be considered in isolation. Regard must also be had for the presence or absence of prejudice, and the extent of the connection, if any, between the existing claims and the proposed new cause of action. Nor do I think that a plaintiff’s explanation for delay must necessarily exculpate him from all “fault” or “culpability” before the court may exercise its discretion in his favour.

[41] Chief Justice McEachern said:

I believe the most important considerations, not necessarily in the following order, are the length of the delay, prejudice to the respondents, and the overriding question of what is just and convenient.

[42] In Teal the plaintiff had originally made a deliberate decision not to sue its insurers on the insurance policy, relying on legal advice, and subsequently applied to amend to make that new claim after the limitation period to do so had expired. It was determined that there was no prejudice to the insurers beyond the expiry of the limitation period, the delay was not long and the new cause of action was allowed.

[43] In this case it is submitted by the developers that most of the proposed new plaintiffs were not named originally because they had not yet been retained by the plaintiffs’ law firm at the time of the original writ of summons. The evidence is that after the writ of summons was issued, from November 28, 2002 to June 22, 2004 when the notice of motion was first filed to add these plaintiffs, contact was being made with the proposed plaintiffs by the strata council and instructions received from the strata council to join them in the actions.

[44] With respect to the proposed plaintiff Dhir, it is stated that counsel always had his instructions to sue but his name was inadvertently omitted from the original writ of summons.

[45] The developers submit that these are not good enough reasons for the delay, because, except for Dhir, the reasons amount to saying no more than that the proposed plaintiffs now want to sue.

[46] The developers submit that these proposed plaintiffs should be forced to start their own separate action to which the developers will plead the limitation period in defence.

[47] The plaintiffs submit that the delay here was only slightly more than one year until counsel for the developers was informed of the intention to add these plaintiffs and the reason for any delay was the bureaucracy involved in having to deal through a volunteer strata council committee on behalf of existing plaintiffs and the staff that was assisting them, with respect to over 100 strata lots in the hotel.

[48] The plaintiffs also submit that the developers can point to no prejudice other than a possible limitations defence for breach of contract. The proposed new claims for these new plaintiffs would be identical to the claims already made and therefore would not expand any defence considerations.

[49] It is my conclusion that it is just and convenient to add these 16 new plaintiffs and to make the appropriate amendments to the style of cause to include them. The delay was not lengthy and there is no prejudice to the defendants beyond a possible limitation period for breach of contract.

[50] In my view if 4(1)(d) of the Limitation Act that allows the addition of plaintiffs after a limitation period has expired, is to have any application, it is in this context.

[51] I therefore grant the order that the 16 proposed plaintiffs be added as plaintiffs in the action and the style of cause be amended accordingly.

3. The plaintiffs propose to add a claim that the representations and warranties alleged in the disclosure statement were also made by agents of the developers to the investors when marketing the strata units.

[52] The plaintiffs propose to add a new ¶34 to the statement of claim that states:

The Representations and Warranties, including the Projections, were also made to the Investors in and by marketing brochures and newsletters distributed in 1996 and the spring of 1998 and by the Developers’ sales agents, full particulars of which will be given at or before trial.

[53] On my reading of the proposed amendment, it refers to no more than the alleged representations and warranties, including the projections, that are allegedly made in the disclosure statement, and which already form the basis of the existing claim. It is now sought to allege that these same representations and warranties, including projections, were made to the investors outside of the disclosure statement and probably beforehand, by the developer’s agents, in the marketing of the development.

[54] The developers submit that this amendment would add a new cause of action in tort beyond a limitation period and without any explanation for the delay, and where they will be prejudiced now, eight years later, by a difficulty in obtaining evidence from the agents as to what was said and provided to each of the purchasers. It is submitted that such allegations are inconsistent with the written documents.

[55] The investors submit that as the claim proposed is one in tort, the limitation period of six years cannot have accrued until damage occurred and that could not have been until 1999.

[56] In any event, the investors submit that ¶34 does not allege a new cause of action as the proposed amendment does not contain any new alleged misrepresentations but simply repeats the same misrepresentations alleged in the disclosure statement. It only alleges that the same misrepresentations came from the agents as well as from the disclosure statement and therefore the duty of care is the same, the breach is the same and the damages are the same.

[57] Teal states that an amendment allowed under Rule 24(1) must meet the just and convenient test as well.

[58] In my view, no limitation period for tort has yet expired and I do not consider this claim of agent misrepresentations to be a new cause of action, because I do not read the proposed amendment as expanding the alleged misrepresentations at all. Even if it is a new cause of action I consider it convenient to add it as I do not see any actual prejudice to the defendants.

[59] I do agree, however, that some time limit should be put on the investors to provide particulars of this alleged negligent misrepresentation by the agents, but that can be taken up in a further case management conference before me.

[60] In conclusion, my orders are as follows:

1. O’Neill Hotels & Resorts Ltd. and OHR Grand Management Ltd. will be added as defendants in this action and the statement of claim amended to raise allegations against them, as set out in the proposed amended statement of claim attached as Schedule “A” to the further amended notice of motion dated October 29, 2004 (original dated April 29, 2004).

2. The 15 individuals named in the amended Schedule “A” to the notice of motion dated August 19, 2004 (original dated June 23, 2004), together with the individual that is the subject of the motion dated November 3, 2004, will be added as plaintiffs in this action and the style of cause amended accordingly.

3. The style of cause will be amended to correct the misnomers set out in ¶2 – 5 inclusive of the notice of motion dated August 19, 2004 (original dated June 23, 2004).

4. The plaintiffs will have liberty to add ¶34 to the amended statement of claim as set out in Schedule “A” to the further amended notice of motion dated October 29, 2004 (original dated April 29, 2004).

Costs

[61] The plaintiffs are entitled to costs in the cause with respect to all applications.

“J. Truscott, J.”
The Honourable Mr. Justice J. Truscott

September 14, 2006 – Revised Judgment

On page 2, paragraph 1, second line should read:

“The individual plaintiffs are investors in a hotel development in downtown Vancouver called the Westin Grand Hotel, …”