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Appeals Court Agrees $28.8M Contract Tainted with ‘Illegality’

Appeal, Brentwood Lanes, Rev's Bowling by Brentwood station, Burnaby

Photo by Burnaby Now, Cornelia Naylor

Kornfeld LLP congratulates client Brentwood Lanes Canada Ltd. for its recent victory in the British Columbia Court of Appeal in Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd., 2020 BCCA 130 (CanLII). The Kornfeld team of Dan Parlow, Shane Coblin and Nils Preshaw appeared both at the trial and appeal hearings.

The case involved two real estate contracts entered into in 2012 for $32 million. Our client, Brentwood Lanes, was successful after a lengthy 77-day trial. The trial judge decided that the contracts should not be enforced since the main contract was tainted by the illegality of the Plaintiffs’ conduct having both the purpose and effect of deceiving the Plaintiffs’ prospective lenders, joint venture partners and others.

The Plaintiffs appealed, arguing that despite the Plaintiffs’ conduct specific performance of the contracts should still be ordered because the contracts themselves were not inherently illegal.

On May 8, 2020 the BCCA dismissed the appeal, and a companion cross-appeal, noting that a contract may be unenforceable in circumstances where it is not illegal on its face, but rather was entered into with the object of committing an illegal act. In such cases a court is entitled to refuse to enforce a contract where it is tainted by illegality.

When asked about the case after the Court of Appeal’s decision, the principal of Brentwood Lanes, Mr. Jeong Lee, said he was grateful for the efforts of the Kornfeld legal team and that he was very relieved. “I feel like it’s the final result of my 20 years of hard work in Canada.”

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