Strata Plan LMS 3851 v. Homer Street Development

Strata Plan LMS 3851 v. Homer Street Development

Court held the Developers and their directors liable under the Real Estate Act (s.59/s.75) for specific material false statements in the Disclosure Statement (the comparative occupancy language in Note 2(a) and the misattribution that "tourism is the number one growth industry in Vancouver"); HVS (MM&R) owed a duty of care to prospective investors and breached it by negligently formulating and endorsing unreasonably high occupancy projections for 1999‑2003 (overstated occupancies and penetration not supported by analysis); the Developer and OHR by the language of s.1.4 and the auditors' report made an implied representation of objective reasonableness of the projections and therefore are...

Citation
2008 BCSC 1160
Parties
Plaintiffs: The Owners, Strata Plan LMS 3851, and others; Defendants (developers): Homer Street Development Limited Partnership and related entities (The Grand Development Partnership); Defendants (directors/partners): Cressey Development Corporation; Norman Cressey; Joan Cressey; Trilogy Robson Development Limited Partnership; 455322 British Columbia Ltd.; named Directors; Defendant / Third Party (expert Consultant): MM&R Valuation Services, Inc. dba HVS Hospitality Valuation Services Canada; Defendants / Third Parties (manager Entities): O'Neill Hotels & Resorts Ltd. (OHR) and OHR Grand Management Ltd.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
26 August 2008
Procedural Posture
Civil: Statutory Disclosure, Misrepresentation, Professional Negligence, Contract / Trial Concluded; Reasons for Judgment Delivered (liability Findings); Quantum Reserved for Further Proceedings
Outcome
Findings for plaintiffs on multiple liability issues: Developers and named directors liable under s.59 for specified material false statements; HVS negligent in its 1996 opinion on projections; Developer and OHR liable for negligent misrepresentation of objective reasonableness; OHR liable for OHR Grand (alter ego)....
Legal Topics
Disclosure Statement Obligations, Statutory Liability (real Estate Act S.59/s.75), Misrepresentation, Reasonableness of Financial Projections, Duty of Care of Consultants, Auditor and Expert Attribution, Amendments to Disclosure, Alter Ego/parent Company Liability
Source Language
English
Real Estate Law Securities/disclosure Law Contract Law Tort Negligence Professional Negligence Disclosure Statement Obligations Statutory Liability (real Estate Act S.59/s.75) Misrepresentation +5 more

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Parties

The Owners, Strata Plan LMS 3851, and others

Plaintiffs

Homer Street Development Limited Partnership and related entities (The Grand Development Partnership)

Defendants (developers)

Cressey Development Corporation; Norman Cressey; Joan Cressey; Trilogy Robson Development Limited Partnership; 455322 British Columbia Ltd.; named Directors

Defendants (directors/partners)

MM&R Valuation Services, Inc. dba HVS Hospitality Valuation Services Canada

Defendant / Third Party (expert Consultant)

O'Neill Hotels & Resorts Ltd. (OHR) and OHR Grand Management Ltd.

Defendants / Third Parties (manager Entities)

Procedural Posture

Civil: Statutory Disclosure, Misrepresentation, Professional Negligence, Contract / Trial Concluded; Reasons for Judgment Delivered (liability Findings); Quantum Reserved for Further Proceedings

Legal Issues

  1. 1 Whether material false statements existed in the Disclosure Statement (including Note 2(a) and s.6.7)
  2. 2 Whether Developers and directors are liable under s.59 of the Real Estate Act (1979 s.59 / 1996 s.75)
  3. 3 Whether HVS (MM&R) owed and breached a duty of care in opining the projections were reasonable

Ratio Decidendi

Court held the Developers and their directors liable under the Real Estate Act (s.59/s.75) for specific material false statements in the Disclosure Statement (the comparative occupancy language in Note 2(a) and the misattribution that "tourism is the number one growth industry in Vancouver"); HVS (MM&R) owed a duty of care to prospective investors and breached it by negligently formulating and endorsing unreasonably high occupancy projections for 1999‑2003 (overstated occupancies and penetration not supported by analysis); the Developer and OHR by the language of s.1.4 and the auditors' report made an implied representation of objective reasonableness of the projections and therefore are...

Court Disposition

Findings for plaintiffs on multiple liability issues: Developers and named directors liable under s.59 for specified material false statements; HVS negligent in its 1996 opinion on projections; Developer and OHR liable for negligent misrepresentation of objective reasonableness; OHR liable for OHR Grand (alter ego)....

Orders

  • Finding: Developers and directors liable under s.59 for material false statements in Note 2(a) and for misattribution in s.6.7 ('tourism is the number one growth industry')
  • Finding: HVS (MM&R) owed a duty of care to prospective purchasers and was negligent in opining that the occupancy projections (1999‑2003) were reasonable and achievable