Executive Summary – Key Legal & Evidentiary Issues

• Legality and propriety of the chambers judge approving a $56.5M sale during foreclosure despite competing higher offers.

• Adequacy of the marketing process for the property, including reliance on Colliers' assessment of fair market value.

• Impact of Westfield’s defaults—unpaid taxes, lapsed insurance—on credibility and standing in opposing the sale.

• Consideration and rejection of late-submitted offers ($77.7M and $64.5M) due to procedural non-compliance and lack of substance.

• Allegations of misconduct by Westfield’s representative against the buyer’s principal, affecting judicial perception.

• Application and interpretation of Practice Directive 62 and whether it limited judicial discretion unfairly.

Facts of the Case

The case arises from a dispute in the context of foreclosure proceedings involving a long-vacant real estate project located in Surrey, British Columbia. The property, a four-storey unfinished commercial building, had sat idle for 26 years before it was purchased by Westfield Business Centre Ltd. and its affiliated parties (“Westfield”) in April 2022 for $55 million.

To finance the purchase, Westfield secured three layers of mortgage financing (first, second, and third), all with a one-year term. Westfield soon defaulted on its financial obligations, failed to pay property taxes, and allowed property insurance to lapse. This led the first mortgagee, GC Capital Inc. and its affiliate Kismet Capital Ltd. (“GC”), to take control of the situation.

GC, holding a first mortgage and having paid $2.3 million in taxes and insurance to prevent a tax sale, was owed approximately $42 million. After obtaining an order nisi on November 2, 2023, GC eventually took over conduct of sale from the second mortgagee and accepted a subject-free offer of $56.5 million from 1262066 B.C. Ltd. (“126”), which included a $2.5 million deposit.

Westfield opposed the sale and sought an extension of the redemption period, arguing that better offers had been received or could be secured.

Arguments and Court’s Analysis

Westfield raised three key grounds in seeking leave to appeal:

1. The judge failed to give adequate consideration to higher competing offers.

2. The judge improperly relied on Practice Directive 62 (PD-62) to reject those offers.

3. The judge misapprehended evidence regarding the buyer’s principal, Mr. Rai.

The chambers judge approved the $56.5M sale and rejected Westfield’s request to extend the redemption period. While noting the presence of higher offers (including $77.7M and $64.5M), the judge found these were procedurally deficient—missing required documents or deposits—and not sufficiently reliable to outweigh the 126 offer.

The judge emphasized the integrity of the sales process, which was conducted by Colliers International, a reputable commercial real estate firm. Colliers' VP, Bill Randall, affirmed that the $56.5M price reflected fair market value. The court found the marketing effort robust and the offer provident in the circumstances.

Westfield’s representative, Mr. Bansal, was also criticized for attempting to malign 126’s principal with unfounded allegations, which the court found undermined the owners’ credibility.

The Court of Appeal dismissed Westfield’s application for leave to appeal, finding no significant point of law or arguable error. It held that the appeal had little merit, would not advance justice, and was primarily driven by attempts to delay proceedings.

Outcome

• Application for leave to appeal was dismissed.

• The $56.5M sale to 1262066 B.C. Ltd. was upheld.

• The court concluded that the sales process was fair, the price was provident, and there was no reviewable error in the chambers judge’s decision.