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.

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

Maple Place Towers: Walls come tumbling, Burnaby Now


Siding ripped off during wind storm

Dan Hilborn, staff reporter, Burnaby Now

Tenants of a problem-plagued residential highrise in North Burnaby are seeking answers after large portions of an outside wall of their building blew away during the massive windstorm that swept through the Lower Mainland on Feb. 4.

"I want to know is it even safe to live in here?" asked Cathy Aoyama, a new resident in the Maple Place Towers, located on Halifax Street near the Burnaby Mountain golf course. "No one will give us any answers."

The building, which is owned by Cressey Development and managed by Nacel Properties, currently has work crews covering up the gaping holes that left the bedrooms in at least nine suites open to the elements.

"I can see right into the suites," said Aoyama, who is thankful her own apartment was spared the worst of the damage.

A tenant meeting was organized for last night, and several tenants are considering plans to file for arbitration with the Residential Tenancy Office in an attempt to resolve a string of complaints with the building.

Aoyama, who said she is hoping to get out of her lease, said the problems may not have occurred if Burnaby had a building standards and maintenance bylaw similar to those in New Westminster and Vancouver.

Kris Anderson, a spokesperson for the non-profit Tenant's Rights Advocacy Coalition, said the ongoing problems at Maple Place are compounded by the fact that the provincial legislation regulating the landlord-tenant relationship are weighted in favour of the building owners.

While it might be possible for angry tenants to simply move out of the building and argue their case after the fact, tenants could just as easily be left on the hook for breaking the lease without authorization, he said.

"It's pretty difficult to break a lease in B.C.," Anderson said. "The problem here is that there is a pretty immediate need, and the Residential Tenancy Office doesn't move quick enough for the resolution that the tenants want.

"A tenant could break the agreement, but there is no guarantee the landlord can't go after them for rent for the remaining term of the lease.

"The other side is municipal responsibility," he said. "There is a definite need for a standard of maintenance bylaw in Burnaby. There's a lot of older buildings in the city, especially around Metrotown, and a lot are not being adequately maintained. I think the city could certainly be doing more."

Aoyama said she has been in contact with about half a dozen tenants who have a variety of complaints about the building, including their treatment both before and after the siding blew off the building this month.

A female tenant in one of the worst affected suites said she's afraid to sleep in her two-bedroom apartment, which now has one bedroom completely sealed off while workers replace the outside cladding on the walls.

The woman, who asked to remain anonymous, said the management company offered her a "pitiful compensation package" - a $200 reduction in her $1,200 monthly rent.

George Humphrey, the chief building inspector for the City of Burnaby, said there is little his office can do except to oversee the repair work that is now underway.

"This is really not that different from the leaky condo issue," Humphrey said. "We don't have regulations in Burnaby dealing with the maintenance of buildings, but the code does kick in when structural repairs are necessary, and that's what happened here."

Humphrey said the city is now ensuring that the repairs are being done properly and that the safety of tenants is being looked after.

Meanwhile, Mayor Derek Corrigan said the city is reluctant to bring in a standards of maintenance bylaw for rental buildings because of the conflicting jurisdictions involved and the possible added costs it could bring to the city.

"There has been some hesitation to jump in because it's a pretty complicated issue," said Corrigan, who noted that the landlord-tenant relationship is already covered by provincial Residential Tenancy Act. "We're hesitant to take on new responsibilities because there's always a cost attached and nobody likes tax increases."

Aoyama, meanwhile, said the siding problems are not her only complaint with the building. She said she and other residents have experienced rent increases that appear to be greater than those allowed under the provincial regulations, mould, broken elevators and a lack security at the buildings.

Anderson, the tenants' advocacy spokesperson, said renters can take their complaints to the province's Residential Tenancy Office, but they will only win their case if they provide meticulous documentation of all their problems.

Attempts to contact Nacel Properties for comment were unsuccessful.

published on 02/22/2006 by Burnaby Now

http://www.burnabynow.com/issues06/024106/news/024106nn4.html


 


Maple Place Towers (Burnaby) - wind storm damage

 

(Click on any photo to enlarge)


Maple Place Towers is a rental complex located at 7351 and 7361 Halifax St., Burnaby. This two tower complex was developed in the early 1980s by Cressey Developments. The towers were constructed by Cressey Construction. Construction was completed in 1985. The towers have been operated and "maintained" by Nacel Properties Ltd., a Cressey corporation which manages the rental side of the Cressey Group.



Maple Place Towers is currently undergoing significant restoration due to damage caused to the walls during the February 2006 windstorm. Residents of 7351 Halifax were shocked to be woken at 3 a.m. to the sound of portions of the exterior South wall panels being ripped off and crashing to the ground. The building was immediately evacuated for fear of complete structural failure.

(Some of the debris from the exterior wall collapse)

The following picture shows the prominent "shadow effect" on the same face of the wall which experienced the windstorm damage - this shadowing appears on the West corner of the South wall, while the panel damage occured on the East corner of the South wall:


What this type of shadow pattern - which is the outline of the studs behind the stucco - indicates is the very real potential for the same catastrophic damage to occur with the panels at the West corner of the building as had happened with the panels at the East corner.

Restoration work is currently underway at 7351 Halifax:

These photos show the placement of new Densglass (yellow panels) on the new steel studs. The old studs and attaching screws had to be removed and replaced because of loss of strength due to leaks and rust.

The following photo clearly shows the extent of the windstorm damage to the East corner of the South wall, as well as the shadow effect on the West portion of the South wall extending from the ground to the top of the tower:



The building permit for the building envelope repairs is dated February 15, 2006. The permit was applied for by Cressey and the professional in charge is Mark Lawton, P.Eng., of Morrison Hershfield. Morrison Hershfield Managers Inc. is included on the Homeowner Protection Office's (HPO) registry of licensed renovators; however, the company in charge of the actual reconstruction - ConPact Systems (2004) Ltd. - is not.

The other tower in this complex, 7361 Halifax, while not experiencing the same catastrophic damage in the windstorm, is undergoing the same type of restoration work as a preventative measure:

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