Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd., 2019 BCSC 739
Our clients sought to rescind a $28,800,000 contract for the sale of a large redevelopment site in the heart of a Vancouver suburb. The case is exceptional as rescission was sought, and ultimately ordered by the Court, based on a rarely used legal doctrine of ex turpi causa non oritur actio (“from a dishonourable cause an action does not arise”).
The Kornfeld team of Dan Parlow, Shane Coblin and Nils Preshaw took the position that the sale was unenforceable due to various alleged wrongdoings by the purchaser, including an alleged conspiracy with the real estate agent to suppress zoning information from the vendor, as well as numerous alleged frauds perpetrated on potential lenders and joint venture partners. The trial included 78 court days, making it the second longest commercial trial in the province during that time.
The majority of the evidence of wrongdoing perpetrated by the purchaser on his own lenders, joint venture partners, appraisers and others was entirely outside the knowledge of our clients and had to be extracted from the reluctant purchaser using a wide variety of methods over years of pre-trial proceedings. The methods used included a successful but rarely-used motion to compel documents by the purchaser’s own lawyers on the ground that he had used his lawyers as unwitting pawns perpetrating frauds.
The Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd. trial was exceptional in a number of ways. The court found several witnesses to have engaged in a “festival of deceit”. The purchaser’s realtor, when confronted with unanticipated video evidence, was found to have confessed to giving false evidence on two occasions. Both the purchaser and his realtor were found to have concocted an elaborate false story to cover up the true history of a false contract they had come up with, both falsely testifying at trial that the false contract reflected a negotiation which never took place.
Ultimately, the Court ruled the contract to be unenforceable because it was conceived and used by the purchaser for illegal purposes. Our client was successful in retaining the property of which the agreed value at trial had increased to $76,000,000, or nearly $50,000,000 over the purchase price.
The Plaintiff purchaser appealed the judgment to the British Columbia Court of Appeal. The appeal was unsuccessful and our client’s judgment upheld.