Shane D. Coblin, FCIArb.

After approximately six years of delay, the Plaintiff in this putative class action sought to significantly amend its claim to expand the class definition, add new claims of negligence claiming damages for pure economic loss resulting from dangerous defects, and to add a number of new parties. Many of the claims were duplicative of other actions commenced at the instruction of the proposed representative plaintiff, and therefore the court found the amendments to be an abuse of process.  The court also went on to find that had the proposed amendments not amounted to an abuse of process, certification would have been denied because the Plaintiff had failed to show that there was any “basis in fact” to meet the requirements under sections 4(1) (b) to (e) of the Class Proceedings Act.

Shane Coblin and Milaad Hashmi successfully argued before the Court of Appeal that the act of filing a lien that the lien claimant knew or ought to have know was inflated, constitutes an abuse of process entitling an owner to damages.

In 601 Main Partnership v. Centura Building Systems (2013) Ltd., 2024 BCCA 76, the British Columbia Court of Appeal addressed the role of the tort of abuse of process in combatting inflated construction liens. The common law has restricted the application of the tort of abuse of process to circumstances where the abusive act complained of is separate from the litigation process itself.  The logic being, that abusive litigation conduct is dealt with by an award of costs within the proceeding and ought not to give rise to a separate cause of action—so as to avoid one failed action begetting another action, which may beget another action, and on and on.

To address this, the common law developed a requirement that the conduct giving rise to the claim of abuse of process be an “overt act” that is outside the normal incidents of litigation.

The Respondent argued that a Builders Lien is part of the litigation process associated with the enforcement of the lien, and therefore cannot be the type of “overt act” required to succeed on a claim for abuse of process.  After reviewing the common law relating to abuse of process and the need for an “overt act”, the Court of Appeal rejected this argument. The panel held that the filing and maintaining of a Builders Lien is an act which is outside the underlying debt or enforcement action.  In this respect, the court likened Builders Liens to Certificates of Pending Litigation, the wrongful filing of which have long been held to constitute an abuse of process.

The court also held an improper motive on the part of the lien claimant can be inferred by the court notwithstanding that the only evidence to support the claim is the deficiency in the lien claim itself.

Justice Wilcock concluded his analysis with the following words about Builders Liens and their potential misuse:

… liens are “powerful pre‑judgment weapons”. Their use should be carefully scrutinized. As noted in Guilford at 405–406: “mechanics’ liens, lis pendens and garnishing orders are sometimes, though not often, used by unscrupulous persons to achieve results which could not otherwise be obtained”.

In the end, this case provides useful guidance to all members of the construction industry that contractors that knowingly inflate their lien claims are exposed to a claim of abuse of process and may be required to pay damages to the Owner.

Congratulations to Golden Valley Mines and Royalties Ltd. (“Golden Valley”) and Abitibi Royalties Inc. (“Abitibi”) on their recent acquisition by Gold Royalty Corp.

The acquisitions were undertaken by way of two statutory plans of arrangement pursuant to section 288 of the British Columbia Business Corporations Act and section 192 of the Canada Business Corporations Act.

Shane Coblin represented Golden Valley and Abitibi in the court approval process, first obtaining the initial orders approving the calling of the necessary shareholders meetings, setting the procedures for approval of the transactions, and providing for dissent rights. Following approval by the shareholders, Shane returned to court to obtain the final orders approving the plans of arrangement as fair and reasonable.

The combination of these business was completed and announced by press release on November 5, 2021.”

Our client is the developer of a large luxury mixed-use building located in Vancouver.   For the past number of years it has been a defendant in a complex multi-party construction dispute, part of which has been proceeding as a class action.  The client had a wrap-up liability insurance policy in place for the development that required the insurer to defend any actions alleging damage to property.  The insurer denied coverage relying on an exclusion referred to as the “your work” exclusion.  Shane and Devin successfully argued that the insurer had not met its burden to demonstrate to the court that this exclusion clearly applied to oust coverage.  Justice Millman found that the duty to defend had been triggered and ordered the insurer to reimburse our client for all costs incurred to date to defend those actions and to prospectively cover all defence costs going forward as they are incurred.

Shane Coblin and Milaad Hashmi successfully defend claims of fraudulent misrepresentation and unjust enrichment made against our clients in a dispute over a failed assignment of a pre-sale condominium agreement in Vancouver. They also obtained an order that the Plaintiff had forfeited to our client the $340,188 she had paid towards the assignment and an order that the Plaintiff pay special costs.

The dispute originated from a 2017 pre-sale condominium interest acquired by the Defendant, who later offered to assign that interest to the Plaintiff. The Plaintiff made payments totaling approximately $340,188, representing the first two deposits required under the pre-sale agreement. The agreement collapsed when the Plaintiff decided not to proceed with the acquisition and demanded a refund. Our client refused and treated the Plaintiff’s words and conduct as a repudiation of the agreement entitling her to keep the amounts already paid.

The court rejected the Plaintiff’s claim of fraudulent misrepresentation, finding no evidence that the Defendant misled the Plaintiff about the nature of the transaction or the Defendant’s interest in the pre-sale unit. The court determined that an oral contract existed between the parties, and that there was sufficient evidence in the form of WeChat messages, including WeChat audio messages, videos, and pictures, that showed a meeting of the minds on all the necessary and essential terms.

The court agreed with the Defendant that when the Plaintiff told the Defendant in January of 2019, that she was not going to complete and wanted her money back, those words constituted a clear and unequivocal repudiation of the contract.  By electing to accept the repudiation and put the contract at an end, the Defendant was entitled to keep the amounts previously paid to her.  The Plaintiff was unsuccessful on her unjust enrichment claim because the payments were made pursuant to a valid and binding contract, which stood as a juridic reason for any enrichment.

The Defendant was also awarded special costs for the whole action because of what were held to be baseless allegations of fraudulent misrepresentation. In this regard, this case provides a useful reminder that allegations of fraud are taken seriously and can give rise to an order for special costs in circumstances where the alleging party had access to information sufficient to conclude that the defendant was merely negligent or had committed no wrongdoing at all. In such circumstances, the allegations themselves are seen to be reprehensible warranting an order of special costs.

Cadillac Fairview Limited and its property, Pacific Centre mall, were unsuccessful in their efforts to stop a massive redevelopment of 720 Beatty St., site of the Creative Energy steam heat plant which serves the energy needs of over 200 commercial and residential buildings throughout downtown Vancouver.  Our clients, Creative Energy and Westbank Projects Corp., are teaming up to build an architecturally novel office tower and entertainment facilities bridging Vancouver’s Yaletown district with BC Place Stadium, along with two state-of-the-art steam generation plants designed to help the City to significantly improve compliance with its greenhouse gas emissions targets.

Pacific Centre, Vancouver’s largest shopping mall, brought legal proceedings against Creative Energy, Westbank Projects and others to halt the project and to instead force Creative Energy to offer the property to Cadillac Fairview’s subsidiary at a price alleged to be more than $100 million below fair market value.   Pacific Centre claimed this right to purchase based on a 1970 covenant registered against the land.   That covenant was expressed to be triggered should Creative Energy decide to sell the whole of its property, assets, business and undertaking or such part of it as is required to generate and deliver steam to Pacific Centre mall.

The Supreme Court of British Columbia found that the main purpose of the covenant was to ensure a continuous supply of steam heat to the Pacific Centre Mall.  If Creative Energy were to decide to offer its utility assets for sale, thereby posing a threat to Pacific Centre’s security of supply, the mall would have the right to match an existing offer.   In this case, however, the Court agreed with Kornfeld litigators Dan Parlow’s and Shane Coblin’s submission that the right of purchase had not been triggered by either the proposed corporate reorganization or any element of the proposed project, the deal having been structured so that Creative Energy maintains ownership over the steam generation assets and undertaking.  Accordingly, the Court dismissed the Plaintiff’s action.

Dan and Shane were supported by litigators Devin Lucas and Susan Smith.

This exciting new Creative Energy / Westbank project at 720 Beatty Street and 701 Expo Blvd, together with the new steam plant at BC Place Stadium, have received regulatory approval from the British Columbia Utilities Commission and are the subject of a rezoning application before the City of Vancouver.

In Yegre EB Ltd. v. Seguin, 2024 BCCA 365, Shane Coblin and Milaad Hashmi were successful in having the Court of Appeal overturn a Chambers Judge's finding that a forum selection clause in a property purchase agreement conferred exclusive jurisdiction upon the courts of the province of Alberta.  This case provides guidance on the test applicable when interpreting a forum selection clause, and it clarifies that the failure to properly interpret or apply case law constitutes an extricable error of law in the contractual interpretation process.

The case involved a 2015 purchase agreement in which the appellant purchased five industrial properties in British Columbia and Ontario from the respondents. In 2022, the appellant commenced proceedings in the BC Supreme Court alleging fraudulent misrepresentation, breach of contract, and negligence in connection with the purchase of the properties. The respondents filed a jurisdictional response and then brough an application to stay the claim on the basis of the forum selection clause.

The clause stated that the parties "submit to the jurisdiction of the Alberta courts for all purposes arising in connection with this Agreement." The Chambers Judge agreed with the respondents and interpreted the clause as granting exclusive jurisdiction to Alberta. Fundamental to the Chambers Judge’s decision, was her finding that the common law draws a distinction between the words “submit” and “attorn”, and that “submit” means something more than simply attorning; it signals exclusivity.

The Court of Appeal disagreed and found the clause to be ambiguous, noting it could reasonably support both exclusive and non-exclusive interpretations. The Court held that a review of the common law does not support a distinction between words “attorn” or “submit”; and that neither word conclusively denotes exclusivity on its own. The Court clarified that the burden on a jurisdictional application rests with the party seeking to invoke a forum selection clause to show that the clause clearly and unambiguously confers exclusive jurisdiction to another forum. In this case, the language was ambiguous. As such, the Court of Appeal set aside the order of the Chambers Judge, interpreted the clause as merely conferring non-exclusive concurrent jurisdiction on Alberta, and dismissed the underlying stay application.

This decision is also notable as it represents a unique finding by the Court of Appeal: the misinterpretation of case law is an error of law extricable from the contractual interpretation process.

In the end, this case provides a useful reminder to parties drafting forum selection clauses that clear and unambiguous language is required to confer exclusive jurisdiction upon a particular forum. In this regard, the words “submit or “attorn”, on their own, do not connote exclusivity.

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.

Dan, Shane and Nils were supported by the legal research and drafting skills of Kornfeld lawyers Susan Smith and Devin Lucas.

The Plaintiff purchaser appealed the judgment to the British Columbia Court of Appeal. On January 21, 2021, the Supreme Court of Canada refused leave to appeal.

The British Columbia Court of Appeal agreed with the judge at trial that a $28.8 million contract of purchase and sale should not be enforced, being tainted by the illegality of the purchasers’ fraudulent conduct.

The Court considered the following conclusions at trial which remained unchallenged on appeal:

• That a “rent reduction schedule” and a companion “lease addendum” had been prepared as separate documents to allow the purchaser to conceal them and thereby artificially inflate the revenue for the property in the minds of lenders; and that these documents had, in fact, been deliberately withheld from lenders for this purpose;
• That the purchaser had, for fraudulent purposes, provided a false purchase and sale agreement, referencing a false deposit and a purchase price falsely inflated by $10 million, to a potential financier as well as a developer;
• That the realtor, acting on the purchaser’s instructions, proposed what the trial judge characterized as a False Deposit Scheme which was intended to mislead lenders into believing that he had contributed $8 million more in equity towards the purchase of the Brentwood property than he in fact had.   The scheme “was intended to work as follows: the Purchasers would provide a $4 million payment to the Vendors; the Vendors would provide a “receipt’ for $4 million and then return the $4 million amount to the Purchasers; using the funds they had just received back, the Purchasers would pay the Vendors another $4 million in exchange for another $4 million receipt; the Vendors would again return the $4 million back to the Purchasers; and, after the Purchasers obtained financing to purchase the Brentwood property by relying in part on the fictitious additional $8 million in equity, the Vendor would be provided with $8 million in mortgage security over other properties…” The vendor “refused to cooperate with the False Deposit Scheme”.

After considering the law of ex turpi causa,, the Court of Appeal found it unnecessary to look beyond the false “rent reduction schedule” and “lease addendum”.    The case fell into the class of contract that “may be unenforceable in circumstances where it is not per se illegal, but was entered into at least in part, with the object of committing an illegal act. Enforcement of such a contract may be so tainted with illegality that a court is entitled to refuse to enforce it.”