Background:
1247249 B.C. Ltd. ("124") and 1098212 B.C. Ltd. ("109") entered into a 2020 sale agreement for the purchase of development lands ("Lotus Lands") in Nanaimo, B.C., with a vendor take-back (VTB) mortgage. Disputes arose, leading to litigation and a 2022 court ruling awarding 124 specific performance.

Dispute:
124 defaulted on a June 2024 payment under the VTB mortgage. 109 sent a demand letter, triggering foreclosure proceedings. 124 argued that the 30-day default cure period was not respected and sought relief through cross-examination of 109’s principal. 124 also challenged 109’s refusal to consent to an assignment of the VTB mortgage.

109's Security for Costs Application:
109 applied for $35,000 in security for costs, arguing that 124 had insufficient assets to cover costs in case of defeat. 124’s only asset was the Lotus Lands, heavily encumbered by multiple mortgages and certificates of pending litigation (CPLs). 124 opposed the application, claiming that 109’s actions devalued its property and stifled a legitimate claim.

Rulings:
The court dismissed 124’s application to cross-examine 109’s principal and convert the foreclosure petition to an action. It granted 109’s application for security for costs, ordering 124 to post $15,000. The case was stayed pending payment of the security.

Costs:
109 was awarded costs at Scale B, with total potential costs calculated at $13,132.70. If the case proceeds to trial, costs could rise by $5,500 for a three-day trial.