EVO Properties Ltd. v. 637934 B.C. Ltd.,

2004 BCSC 1203 EVO Properties Ltd. v. 637934 B.C. Ltd. IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: EVO Properties Ltd. v. 637934 B.C. Ltd., 2004 BCSC 1203 Date: 20040914 Docket: S043409 Registry: Vancouver Between: EVO Properties Ltd. Plaintiff And 637934 B.C. Ltd. and 552552 B.C. Ltd. Amalgamated to 637934 B.C. Ltd. Defendants Before: The Honourable Mr. Justice Sigurdson Reasons for Judgment Counsel for the Plaintiff: E.N. Kornfeld H.S. Silber Counsel for the Defendants: H. Shapray, Q.C. S. Fitterman Date and Place of Trial/Hearing: August 30 & 31, and September 3, 2004 Vancouver, B.C. INTRODUCTION [1] The defendant (the owner) applies under Rules 18A and 18 for a summary dismissal of this specific performance action and seeks removal of a certificate of pending litigation on the ground that there was no concluded agreement or, alternatively, that damages are an adequate remedy. [2] Alternatively, if the certificate remains, the owner applies, under the Land Title Act, R.S.B.C. 1996, c. 250 for the imposition of an undertaking as to damages supported by substantial security. [3] The plaintiff (purchaser) says that the owner's summary judgment applications are premature as there has been incomplete document disclosure and no examinations for discovery and it says there is a triable issue. It opposes the removal of the certificate of pending litigation, but accepts that an undertaking would be appropriate as long as no security were ordered. OUTLINE OF THE FACTS AND ISSUES The Parties and the Land [4] EVO Properties Ltd. alleges it contracted with 552552 B.C. Ltd. to purchase 138 - 160 West 1st Avenue, Vancouver, British Columbia for $9 million, $1 million of which is payable pursuant to a management agreement. [5] The vendor is 552552 B.C. Ltd., the registered owner of the land. 637934 B.C. Ltd. amalgamated with 552552 B.C. Ltd. on June 9, 2004. [6] The parties disagree over whether the nine page document (with a schedule), called an offer to purchase, constitutes a binding contract. [7] A $50,000 deposit was placed with Mr. Ed Ferreira of CB Richard Ellis Limited. There is a dispute as to whose agent he was. [8] The vendor's principal is Sam Hanson and the purchaser's principal is William Lin. Mr. Lin signed on behalf of EVO and the offer was presented to the vendor and signed on May 31, 2004 by Mr. Hanson as authorized signatory for 552552 B.C. Ltd. Vendor's Condition [9] Clause 5 of the documents reads: The Vendor shall have five business days following acceptance of this offer to obtain from its board of directors approval of this transaction. If the Vendor fails to remove this condition then the Purchase and Sale Agreement shall be null and void and all deposit monies returned to the Purchaser. [10] The vendor's condition was extended in writing to June 9, 2004. [11] The owner did not expressly remove this clause and the specific performance action and the certificate of pending litigation were filed on June 18, 2004. [12] Mr. Shapray says that as the vendor's condition was not removed there was never a binding contract and the action must be dismissed. [13] The purchaser's position is that the clause was waived because Mr. Hanson, unbeknownst to the purchaser, was the sole director and, by his signing the contract, the owner should be taken to have accepted the offer and waived the clause. The purchaser argues that written notice of the director's approval is not required and that the owner is estopped from denying the sole director's acceptance of the agreement. [14] Alternatively, the purchaser argues that the document signed by both parties purports to be a binding contract. The contract reads: the owner "agrees to duly complete the sale of the Lands subject to the terms and conditions " The purchaser says that the owner had an obligation to act in good faith and to use all reasonable efforts to satisfy the condition. [15] Mr. Shapray, for the owner, says that Mr. Kornfeld's suggested interpretation of clause 5 gives it no meaning; even if Mr. Hanson was the authorized signatory and only director of the vendor, he signed the offer wearing one hat and, wearing another, had an unfettered discretion as director whether to approve the transaction or not under clause 5. [16] The owner's affidavit material indicates that Mr. Hanson could not obtain the consent of his partners (something the purchaser wishes to dispute). The purchaser says that the clause does not refer to approval of anyone else, particularly partners. [17] This illustrates, the purchaser says, why the application under Rule 18A is premature. The purchaser says that it requires production of documents and examination for discovery that relate to the existence of partners and the efforts on the part of the vendor to obtain partner approval. Although the vendor has offered Mr. Hanson for discovery, the purchaser has declined on the basis that it first requires full discovery of documents. Those documents relate to whether Mr. Hanson had partners, who they were, whether there were communications relating to the subject property, what efforts were made to obtain the partners' approval, as well as documents relating to the legal or beneficial ownership of the property and documents tending to show whose agent Mr. Ferreira was. [18] There is a dispute about the admissibility of some of this extrinsic evidence. It was suggested that it may be relevant to the factual matrix and that it may be admissible if there is an ambiguity in the language of the clause. It may also be relevant if clause 5, properly interpreted, imposes an obligation on the owner to act in good faith and use its best efforts to obtain the partners' approval of the sale. Purchaser's Condition [19] The owner says clause 4, the purchaser's condition, supports its position that there was no binding agreement and that either party could withdraw before the vendor's and purchaser's conditions were satisfied. Clause 4 reads in part as follows: The agreement arising on acceptance of this Offer to Purchase is subject to and conditional upon the following: (a) The Purchaser shall have conducted whatever searches, reviews and investigations the Purchaser, in its sole and absolute discretion, deems advisable of and with respect to the Lands including without limitation, the feasibility of the Purchaser purchasing the Lands, state of title to the Lands, the zoning for the Lands, physical and engineering inspections of the Lands, compliance with all applicable laws and regulations, any agreements with third parties affecting the Lands or any improvements thereon, environmental audits, soil tests, any permitted encumbrances, all of the deliveries referenced in Section 4 hereof, the feasibility of successfully developing the Lands in the manner desired by the Purchaser and any other matters of interest to the Purchaser with respect to the Lands and shall have been satisfied, in its sole discretion, with the results of all such searches, reviews and investigations; (b) (c) These conditions (the "Conditions Precedent") are for the sole benefit of the Purchaser and may be waived in whole or in part by the Purchaser by notice in writing given to the Vendor on or before 34 days following removal of Vendor's condition noted in clause 5. If the Purchaser has failed to give notice or waive these Conditions Precedent within the time period specified above, the agreement arising on acceptance of this Offer to Purchase shall be null and void and neither party shall have any further legal obligations to the other thereafter under this agreement, and all deposits paid pursuant to this Offer to Purchase. [20] The owner says that the purchaser's condition (clause 4), like the vendor's condition (clause 5), means that there was never a contract, that either party could simply back out and that there was no controlling obligation to act reasonably or in good faith or do what was necessary to satisfy the condition. [21] The purchaser says that there is a binding contract and clause 4(a) is a condition precedent, objectively measurable, and subject to a good faith obligation. In any event, the purchaser says that once the vendor's condition was satisfied (as the purchaser says occurred here when the sole director signed) the purchaser had 34 days to waive its clause. Even if the purchaser had absolute discretion whether to agree to buy, it was a binding contract in the nature of an option for which the owner received consideration: The Purchaser hereby pays to the Vendor the sum of Twenty Five Dollars ($25.00), the receipt and sufficiency of which is by the Vendor hereby acknowledged, in consideration of the Purchaser's rights under this agreement and in consideration for the Vendor's obligations hereunder being unconditional and irrevocable. (clause 1) [22] If the purchaser's condition amounts to an option, the owner says that it must be strictly complied with and has not been satisfied by waiving clause 4(a) in writing or by increasing the deposit by $450,000. [23] The purchaser says that waiver of the purchaser's condition, if required, occurred by virtue of the writ of summons and that, in any event, upon repudiation by the vendor, strict compliance by the purchaser was not required. Mr. Shapray argues that the vendor's statement (that there was no binding contract upon not removing its condition) was not a repudiation relieving the purchaser of its obligation to satisfy the terms of the option strictly. He says that the law of repudiation has no application to options, something Mr. Kornfeld disputes. [24] In any event, Mr. Kornfeld describes the payment of the increased deposit of $450,000 as a contractual obligation, not a step required to exercise the option. [25] Mr. Kornfeld argues that the time required to either exercise the option or pay the increased deposit has not arrived because the time of the essence clause was waived by the alleged failure of the vendor to deliver certain documents, including such things as building and occupancy permits, within three business days following acceptance of the offer to purchase. (These issues have not yet been pleaded and are the subject of incomplete or no evidence.) [26] The vendor relies on other clauses that it says are relevant to the issues of whether there was a binding contract. Clause 17 - Alleged Share Purchase Agreement [27] The owner says that clause 17 makes it clear that any agreement is not a land purchase but is a share transaction: hence, the purchaser is not entitled to file a certificate of pending litigation because it is not entitled to an interest in land. In any event, the owner says that the parties failed to agree on a formal share purchase agreement and there is, therefore, no binding deal. [28] Clause 17 of the Offer to Purchase reads as follows: The Purchaser agrees to purchase the Lands by way of a share purchase and the Vendor agrees to provide, or cause the owner of the shares to provide, all reasonable representations, warranties and indemnities requested by the Purchaser. Should the Purchaser exercise the aforementioned right, the provision of any reasonably requested representations, warranties and indemnities shall be a condition of closing for the benefit of the Purchaser. The Vendor and Purchaser agree a formal share purchase agreement will be agreed to by June 30th, 2004. The Purchaser will provide the form of share purchase agreement for the Vendor's review and approval. [29] The purchaser says that the agreement as a whole reveals that the transaction is a land purchase. Clause 17 simply gives the purchaser an option to do a share transaction, to avoid payment of Property Purchase Tax. Moreover, it says that the purchaser's obligation to provide a form of share purchase for the vendor's review was suspended by the owner's alleged repudiation. Clause 3 - Management Contract [30] The vendor says that the agreement required a management agreement to be entered into, this condition precedent was never satisfied and there was no binding agreement. [31] Clause 3 provides: The Vendor and Purchaser agree that during the due diligence period, a management contract between the Purchaser and South Street Development Managers Ltd. will be entered into upon terms and conditions to be agreed upon within five (5) business days following the acceptance of this offer. During the term, South Street Development Managers Ltd. will assist the Purchaser with rezoning, development permit application and any other activities related to the redevelopment of the property. The parties agree that unless the management agreement contemplated herein is concluded within the time frame, then the agreement of purchase and sale shall be null and void and all deposits shall be refunded. [32] The purchaser says that this was a tax reduced way of dealing with $1 million of the consideration and that the transaction was really for $9.7 million. The purchaser says that when the agreement was signed by the plaintiff, it did not have any of the terms of the management contract appended but when it was returned, Mr. Hanson, for the owner, had appended a schedule headed "Management Contract" and made some other hand-written changes which were initialled and accepted by Mr. Lin for the purchaser, settling the issue. APPROPRIATENESS OF RULE 18A AT THIS TIME [33] The first question is whether it is appropriate to consider this application under Rule 18A before there has been further production of documents and examinations for discovery of the parties. Is this application, as the purchaser contends, premature? [34] The interpretation of clause 5 may be determinative of the owner's liability in this case. Mr. Shapray argues that there is no need for extrinsic evidence. However, the owner has filed affidavit evidence - which the purchaser wishes to try to challenge - that there were co-investors, who were referred to as partners, who would have to agree to the transaction. Mr. Hanson deposed that he had hoped to obtain such approval, but as yet had been not been able to do so. [35] Mr. Shapray says that he has tendered his client for discovery, but the plaintiff refused. That refusal, however, was in the context of a more restricted production of documents than I think is appropriate given the issues between the parties, including the apparent complexity of the issue involving the removal of the vendor's condition. [36] In Phillips Paul v. Malak Holdings Ltd., [2002] B.C.J. No. 1869, 2002 BCSC 1191, Burnyeat J. held that it may be premature to proceed with a Rule 18A application where discovery of documents is not complete. [37] It seems to me that many of the documents that the purchaser seeks production of prior to examinations for discovery may be relevant and should be produced. These include the share registers with information as to who the shareholders or limited partners were, communications with the so-called partners, Mr. Hanson's diary or notes and his telephone records. Those documents possibly relate to the proper meaning of clause 5 and, although not yet pleaded, may relate to whether the defendant was in breach of what the purchaser alleges is an obligation on the part of the vendor to act in good faith and use its best efforts to satisfy clause 5. [38] It appears to me that the purchaser, in seeking fuller document production before discovery, is not delaying this litigation for an improper purpose. It has been prepared to move promptly with the owner's application for removal of the certificate of pending litigation. [39] Although it may turn out that much of the documentary evidence surrounding clause 5, which may be developed through documentary production and discovery, is not admissible on the issue of the proper interpretation of clause 5 or on the issue of whether any obligation the owner had under clause 5 was satisfied, I think that it is premature to attempt to determine this case under Rule 18A until there has been further discovery of documents and examinations for discovery. [40] I also think that the application under Rule 18A is premature in that many of the alternate positions argued on the application that may have to be considered were either not pleaded or were the subject of little or incomplete evidence. To decide the proper interpretation of clauses 4 and 5 in isolation without proper discovery of documents and examinations for discovery could be potentially unfair and prejudicial. [41] Mr. Shapray argues that the suitability of the remedy of specific performance, or whether damages are an adequate remedy, is nevertheless an issue that can be determined under Rule 18A. I will discuss this argument below when I deal with the application under the Land Title Act. RULE 18 APPLICATION [42] It appears on the material before me that there is a bona fide triable issue as to whether or not there is a binding contract for the purchase and sale of land and I adjourn this application until there have been full production of documents and examinations for discoveries. CERTIFICATE OF PENDING LITIGATION [43] The applicant seeks removal of the certificate of pending litigation. Applicable Law [44] Section 215(1) of the Land Title Act sets out the circumstances under which a certificate of pending litigation may by registered: A person who has commenced or is a party to a proceeding, and who is (a) claiming an estate or interest in land, or (b) may register a certificate of pending litigation against the land [45] Section 256 of the Land Title Act sets out the grounds upon which a certificate of pending litigation may be cancelled or set aside: (1) A person who is the registered owner of or claims to be entitled to an estate or interest in land against which a certificate of pending litigation has been registered may, on setting out in an affidavit (a) particulars of the registration of the certificate of pending litigation, (b) that hardship and inconvenience are experienced or are likely to be experienced by the registration, and (c) the grounds for those statements, apply for an order that the registration of the certificate be cancelled. [46] Section 257 of the Land Title Act sets out the court's powers on such a hearing: (1) On the hearing of the application referred to in section 256(1), the court (a) may order the cancellation of the registration of the certificate of pending litigation either in whole or in part, on (i) being satisfied that an order requiring security to be given is proper in the circumstances and that damages will provide adequate relief to the party in whose name the certificate of pending litigation has been registered, and (ii) the applicant giving to the party the security so ordered in an amount satisfactory to the court, or (b) may refuse to order the cancellation of the registration, and in that case may order the party (i) to enter into an undertaking to abide by any order that the court may make as to damages properly payable to the owner as a result of the registration of the certificate of pending litigation, and (ii) to give security in an amount satisfactory to the court and conditioned on the fulfilment of the undertaking and compliance with further terms and conditions, if any, the court may consider proper. (2) The form of the undertaking must be settled by the registrar of the court. (3) In setting the amount of the security to be given, the court may take into consideration the probability of the party's success in the action in respect of which the certificate of pending litigation was registered. Interest in Land [47] The owner says that the plaintiff was not entitled to file a certificate of pending litigation because it does not have a claim to an interest in land. [48] The offer to purchase appears to contemplate a land transaction. The possession clause is an example of this. It is at least arguable that the share purchase provision was an option available to the purchaser and that the basic structure of the agreement was a land purchase. The plaintiff has claimed an interest in land and the certificate should not be struck out on this basis. Hardship and Inconvenience [49] The purchaser says that the applicant has not demonstrated hardship and inconvenience, preconditions to the exercise of the Court's jurisdiction. [50] The purchaser says that vendor has only presented vague, unsupported statements about potential third parties being interested in the property. It says that the mere fact of a certificate of pending litigation affecting dealing with the property absent specifics of an emergent necessity is inadequate. Mr. Kornfeld says that the offer from Wall Financial Corporation is not a binding deal and may contain unacceptable terms. [51] In my view, the vendor has demonstrated hardship and inconvenience. The certificate of pending litigation is frustrating its ongoing legitimate business activities with the property. With this impediment on title, it cannot sell to anyone or enter a joint venture for the property, in spite of what appears to be, according to Mr. Hanson's affidavit, "extreme and unusual development interest in the property". Adequacy of Damages and the Suitability of Specific Performance [52] Mr. Shapray argues that, notwithstanding a ruling that the Rule 18A application is premature, the certificate of pending litigation should be struck because damages for the plaintiff's claim are an adequate remedy. [53] He says the right to file the certificate is akin to prejudgment execution. Mr. Shapray pointed to Canwest Pacific Television Inc. v. 147250 Canada Ltd. (1988), 27 B.C.L.R. (2d) 268, [1988] B.C.J. No. 915 (C.A.), as authority for the proposition that orders which have the effect of impounding assets prior to trial require a strong prima facie case. By analogy, therefore, the right to file a certificate of pending litigation against land should be restrictively interpreted. [54] Mr. Kornfeld says that specific performance should not be denied on an application to remove the certificate of pending litigation unless there is a frivolous case or one without any real merit. [55] In Park & Tilford Canada Inc. v. Festival Markets Inc. (1986), 6 B.C.L.R. (2d) 160, 30 D.L.R. (4th) 220 (S.C.), Gibbs J., as he then was, spoke of the denial of specific performance on an interlocutory application at pp. 163-64: The court has jurisdiction under s. 236(1)(a) of the Act to order the cancellation of the lis pendens. However, relying upon Towne v. Brighouse (1898), 6 B.C.R. 225 (S.C.), and Mercedes-Benz of Can. Ltd. v. SAS Properties Ltd. (1975), 10 B.C.L.R. 19, affirming 10 B.C.L.R. at 20 (C.A.), counsel for the Festival group advanced the principle that the right to sue for specific performance should not be denied on an interlocutory application. The principle cannot be that baldly stated. In the former case Irving J. said, at p. 226: "In my opinion the powers conferred by these sections should be exercised with very great caution indeed, when the granting of relief would amount to a hearing of the case on the merits ..." In the Mercedes-Benz case, Anderson J. and the Court of Appeal adopted that conclusion. In more recent years trial judges have held that some preliminary assessment of merits is appropriate during the course of disposing of a cancellation application. That was the course followed by the Chief Justice of the Supreme Court in Kamil v. Transtide Indust. Ltd. (1980), 23 B.C.L.R. 344 (S.C.), and by Gansner L.J.S.C. in Zukowski v. Thyer, Nelson No. SC 090/1981, 1981 (unreported). The lis pendens was cancelled in each of those cases because there was little, if any, merit in the specific performance action. It is also appropriate to recognize the evolution regarding the right to the full panoply of a trial which has occurred in this jurisdiction since Mercedes-Benz was decided, an evolution which is exemplified in R. 18A of the Rules of Court. Under that rule a party may apply for judgment upon affidavit evidence and the court may grant judgment unless it [subr. 3(a)] "is unable on the whole of the evidence ... to find the facts necessary to decide the issues of fact or law", or unless [subr. 3(b)] "the court is of the opinion that it would be unjust to decide the issues on the application". Cases involving complex questions of law and involving large sums in specie or in property are now decided summarily under R. 18A. The rule represents a practical adaptation of the process to the imperatives of industry and commerce and the market place. It would be anachronistic to decline to dispose of a case which could be disposed of on the merits under R. 18A merely because it is land that is in issue. Although it may only be open to the Court of Appeal to qualify or relax the Mercedes-Benz principle, it would appear to be consistent with the "absence of merit" course followed in Kamil and Zukowski to recognize the evolution earlier referred to and go beyond the "nuisance value" test of Kamil where appropriate. [56] As I understood Mr. Shapray's submission, the question of whether it is appropriate to determine under Rule 18A, or under the Land Title Act application, whether damages are an adequate remedy ought to be considered in light of the developing law of specific performance for land since Semelhago v. Paramadevan, [1996] 2 S.C.R. 415, 136 D.L.R. (4th) 1, where Sopinka J. said at ¶22: Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available. The guideline proposed by Estey J. in Baud Corp., N.V. v. Brook with respect to contracts involving chattels is equally applicable to real property. At p. 668, Estey J. stated: Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing to procure alternate property in mitigation of his losses, some fair, real and substantial justification for his claim to performance must be found. [57] Let me describe the evidence on the nature and value of the property and its suggested uniqueness. I will also discuss the evidence on the damages that may be suffered by the plaintiff if the certificate is removed, or by the owner if the certificate remains on title. [58] Mr. Lin deposed that the purchaser intends to develop a mixed-use residential and commercial development. [59] In his view, there are no other properties in the southeast False Creek area that would be comparable. Mr. Lin deposed that Mr. Hanson told Mr. Ferreira that he believed the purchase price was about $3 million below market value, something Mr. Hanson denies saying, but Mr. Lin deposed that he agrees with such a valuation. The plaintiff says that based on a density of 3.5, his projected profit is $12 million and if the density is increased by a non-profit theatre being included, the proposed profit would be $22 million. [60] In terms of available alternate properties, Mr. Hanson disputes Mr. Lin's knowledge or characterization of purchase opportunities. He deposes that there are reasonable alternative properties available that could be purchased by the plaintiff. He says that there are eight or nine separate properties along West 1st Avenue suitable for development, and while none are currently listed for sale, they may nonetheless be available. He believes at least two other property owners along West 1st Avenue would be currently prepared to entertain offers. He disputes that the opportunity for increased density exists and says that this alleged opportunity does not render the property as unique as Mr. Lin suggests. [61] Mr. Shapray says that this issue can be determined under Rule 18A and that the burden is on the purchaser to show that damages are not an adequate remedy. He referred to a number of authorities that held that damages were an adequate remedy but all were cases where the court first decided the issue of liability. [62] Mr. Kornfeld says that this issue is also premature, that the facts cannot be found on this evidence and that the remedy of specific performance should not be decided as a preliminary issue. [63] I am mindful that the cases decided following Semelhago and the comments of Gibbs J. in Park & Tilford suggest the court might assess at an early stage whether damages are an adequate remedy. Based on the evidence before me, which appears incomplete, substantially in conflict and not of high quality insofar as this issue is concerned, I find that I am unable to find the facts to justly decide the issue of whether damages, not specific performance, is the appropriate remedy. [64] Therefore, I decline to dismiss the certificate of pending litigation at this time. [65] I turn to the issue of the undertaking. Undertaking [66] Where an applicant has demonstrated hardship and inconvenience, as here, an undertaking should generally be granted as a matter of course, much like the requirement for an undertaking in support of a common law injunction. Without the undertaking, the applicant can only recover damages for loss if it is able to demonstrate an abuse of process. [67] I direct that the plaintiff deliver an undertaking. The real issue here is whether there should be security and, if so, in what amount. [68] The owner submits that the purchaser should deposit cash or cash-like security in the amount of $9.7 million plus an additional $2 million to cover damages (including carrying costs on a $3.5 million mortgage and loss of profit arising from the joint venture opportunity provided by Wall Financial Corporation). [69] The defendant's position is that, considering the merits of its claim, no security should be ordered. It describes its likelihood of success as strong and says that the plaintiff is an operating company, not a shell. [70] What factors should I consider in determining whether there should be security and, if so, the appropriate amount? [71] In Park & Tilford, Gibbs J. referred to several of the factors at pp. 167-68: The amount of the Park & Tilford damages, if the Festival group is unsuccessful at trial, cannot be estimated at this time. The most that can be said is that they are likely to be substantial, ranging anywhere from several hundreds of thousands to several millions of dollars. And included in those damages will be the annual carrying costs by way of property taxes, utilities charges and the like, pending final judgment. In addition to the normal annual carrying charges, there is an unusual ongoing cost arising out of the Park & Tilford covenant in cl. 11 of the sale agreement to "maintain the basic facilities of the garden in good working and physical conditions, although not up to public viewing standards" until closing. Although a plaintiff is not required, in every case, to post security equal to the estimated damages, as Anderson J. pointed out, that is not to say that the potential for substantial damages is not a factor to be taken into account, with others, in fixing the amount of the security. Another factor is the likelihood of the plaintiffs being in a financial position to perform under an undertaking for damages, if called upon to do so. See Macdonald J. in Van Wollen v. Barnard; Barnard v. Van Wollen, [1986] B.C.W.L.D. 3226, S.C., Vancouver Nos. C860859 and C861477, 18th April 1986 (not yet reported). Here there is no evidence of the financial worth of any of the Festival group. Indeed, it would appear that Festival is merely a "shell company" which owns the former Unger interest in the sale agreement, and that Fleur de Lease may be similarly a "shell company" holding the former Parsons and McCarthy interests. Taking all of the relevant factors into account, including the value of the properties involved, the potential damages to Park & Tilford, the annual carrying charges, the probable lead time to trial, and the absence of evidence of the financial worth of the members of the Festival group, the sum of $300,000 would appear to be an appropriate amount of security. [72] In Mercedes-Benz, Anderson J., as he then was, said at 24: The amount of the security is not to be considered in any manner whatsoever as the measure of damages, which cannot be estimated or forecast by me. I also doubt that the plaintiff must be required, in every case, to post security equal to the estimated damages, even if they could be forecast with some degree of accuracy. (See also 140 Developments Ltd. v. Steveston Meat & Frozen Food Lockers (1973) Ltd. (1975), 59 D.L.R. (3d) 470 and 654973 B.C. Ltd. v. 621437 B.C. Ltd., 2003 BCSC 1770 at ¶5.) [73] I think that there should be security in support of the undertaking. The question is the appropriate amount that is just and equitable to both parties. It is not a measurement or pre-estimation of damages. I may take into consideration the value of the property, the apparent carrying costs, the possibility of lost profits from the property being tied up, the apparent ability of the holder of the certificate to pay damages and the time until trial. I am also entitled to take into account the likelihood of success of the plaintiff's claim, but I recognize that the matter is at a preliminary stage. While the plaintiff on the material before me has an arguable case, its claim may well fail. [74] In 341434 B.C. Ltd. v. Oakmont Development Corp., [1994] B.C.J. No. 1102 (S.C.), Blair J. noted the volatile lower mainland market at that time, that the plaintiff apparently had few assets, and that the "property's value under the agreement [was] approximately $2.2 million, a considerable sum of money attracting both annual carrying charges in the form of taxes and lost opportunity, all to be borne by the defendant pending trial" (at ¶34). He ordered security of $300,000 over and above the deposit of $100,000. [75] Here the purchaser was incorporated in 1991 and has been involved in the acquisition, development, and management of diverse residential and commercial properties primarily in Yaletown, the projects having ranged up to $30 million in value. The purchaser, however, acknowledges that it has no property registered in British Columbia. It describes itself as an operating company that earns management fees from other projects. The evidence does not indicate that the plaintiff company has any substantial assets to pay on an undertaking if the action is dismissed and the vendor suffers loss by reason of the filing of the certificate of pending litigation. [76] The purchaser argues that the vendor will still have the property if the action is dismissed. That is true and the evidence suggests that demand may be strong, but there is, of course, always a possibility that the market will change and that the value of the property will drop. There is no evidence of the likelihood of such a loss but a change in any real estate market is a realistic possibility. Based on the purchase price, a swing of 10 percent is just under $1 million. This possible loss to the owner is hard to assess. A factor would be the length of time to trial. [77] The owner could be delayed in obtaining a return on its investment. The owner might lose the profit of another possible transaction (such as the Wall deal). The property is subject to a $3.5 million dollar mortgage and the owner has the usual carrying costs. [78] The amount of damages may be significantly affected by the time until trial. An early trial date is appropriate. Subject to further submissions from counsel, I direct that this action go to trial in January 2004. I expect that this trial can be completed in less than two weeks and I direct counsel to speak to Ms. Smolen to fix the specific date. The Chief Justice, I understand, will appoint a case management judge to ensure that this case is ready for trial. The owner will have liberty to bring a further Rule 18A application after discoveries. [79] What is the appropriate amount of security? [80] The contract provides for payment of a deposit upon the purchaser's condition being waived. The purchaser asserts that it is ready, willing and able to complete. As part of the security I direct that the increased deposit of $450,000 be posted in court or in trust, as may be agreed between counsel. That makes total deposits of $500,000. In addition the plaintiff will also post $400,000 so that the total security including the deposits will be $900,000. Considering all the relevant factors, I have determined that $900,000 is a just and equitable amount for security. [81] The security apart from the deposits may be posted by way of a letter of credit and must be posted within ten days of this judgment, otherwise the certificate of pending litigation will be cancelled. [82] Cost of this application will be in the cause. "D.I. Brenner, C.J.S.C. per J.S. Sigurdson, J." The Honourable Chief Justice D.I. Brenner per The Honourable Mr. Justice J.S. Sigurdson