The sellers of an Abbotsford care home are entitled to keep the $300,000 deposit that they were previously ordered to pay back to a potential buyer, the B.C. Court of Appeal has ruled.
The decision, made Jan. 14, overturned a previous ruling from February 2020 which stated that vendors Sutter Hill Management Corporation and Sweet Investments Ltd. owed the deposit to purchasers Mpire Capital Corporation.
According to court documents, Mpire – an Ontario company – had agreed to purchase certain assets of the vendors. The primary asset was the 138-room Bevan Village care home in Abbotsford and its associated real estate.
Also included were shares and various assisted-living and residential-care funding contracts and related licences issued by the Fraser Health Authority (FHA).
The matter at issue in the summary trial and the subsequent appeal was a portion of the agreement stating that Mpire obtain the necessary approvals from FHA using “commercially reasonable best efforts to satisfy the condition precedent … as soon as possible.”
The original purchase agreement was signed Jan. 14, 2016, with an amended and restated agreement signed July 31, 2017.
The court documents state that on Nov. 8 of that year, FHA forwarded three agreements to Mpire for review and comment. On Nov. 20, Mpire’s lawyer in Toronto stated he lacked the expertise to provide advice about the agreement and suggested that Mpire find someone else to check them over. Mpire then hired a Vancouver lawyer.
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The court documents state that by Nov. 27, the agreements had not been commented on or returned to FHA, resulting in Sutter Hill and Sweet Investments serving a notice of default to Mpire and demanding that Mpire submit a completed application to FHA before Dec. 12.
“Further discussions proved fruitless” between the two sides, the court documents state. The vendors demanded payment from trust of the $300,000 deposit on Dec. 14, 2017.
The matter then went to summary trial, where the judge ruled that Mpire was not responsible for the delays resulting from its lawyer’s inability to review the agreements, and the vendors were ordered to return the deposit.
But the vendors appealed the decision, saying the trial judge erred in determining that Mpire was not responsible for the delays.
“The vendors established a significant period of delay between November 8 and December 14, 2017. The purchaser offered no evidence to explain the delay, or to support the proposition that it was reasonably necessary, other than attributing it to its solicitor, and arguing that it was not responsible,” said Justice Christopher Grauer in his appeal ruling.
Grauer said Mpire did not meet its obligation “to do everything it reasonably could to obtain the necessary approvals as soon as possible” by leaving the agreements “to sit on a desk” for nearly two weeks and delaying the process further by retaining additional counsel “very late in the progress of the transaction.”
The vendors also stated that the judge “misapprehended” the evidence concerning Mpire’s “true motivation” for delaying the FHA approval process: “the respondent had not yet secured financing.”
Grauer said Sutter Hill and Sweet Investments were entitled to terminate the agreement and to keep the deposit. The two other B.C. Court of Appeal judges for the the case were in agreement with Grauer’s ruling.
Bevan Village is now owned and operated by Trillium Care Services Ltd.
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