Pacific Playground v. Endeavour Develop. et al.

Pacific Playground v. Endeavour Develop. et al.

The court held the 24% default interest clause was a penalty that contravened s.8 of the Interest Act and struck it down (rate set at 7% both pre- and post-default); pre-contract statements that defendant 'expected no problem' with water were puffery and not actionable misrepresentations nor fraudulent (no mens rea); nonetheless Pacific Playground and Watutco breached their contractual obligation to supply a continuous and adequate water supply but the breach gave rise only to recoverable mitigation/expense claims (not loss of profits) because other regulatory and market factors would have prevented project success; foreclosure order nisi granted in favour of Pacific Playground but...

Citation
2002 BCSC 126
Parties
Petitioner / Defendant: Pacific Playground Holdings Ltd.; Respondent / Plaintiff: Endeavour Developments Ltd.; Plaintiff / Assignee: Midtown Development Co. (1981) Ltd.; Defendant / Representative of Pacific Playground/watutco: P. Axel Robert Nissen; Defendant / Water Utility: Watutco Enterprises Ltd.; Respondent / Subsequent Mortgagee (in Receivership): Eron Mortgage Corporation; Respondent / Subsequent Mortgagee: 493461 B.C. Ltd.; Respondent / Subsequent Mortgagee: 490160 B.C. Ltd.; Respondent / Builders' Lien Claimant: Michael Roger Saunier (MDC Contracting); Respondent / Builders' Lien Claimant: V. Roberts & Associates Ltd.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
31 January 2002
Procedural Posture
Combined Foreclosure and Damages Action (real Estate Development Dispute) / Phase One Trial on Liability (damages Reserved for Phase Two)
Outcome
Partial success for both sides: Pacific Playground granted order nisi of foreclosure; 24% default interest clause struck as contravening Interest Act s.8; misrepresentation claims dismissed; finding of breach of contract re water by Pacific Playground and Watutco limited to recoverable mitigation/expense damages;...
Legal Topics
Misrepresentation, Negligent and Fraudulent Misrepresentation, Breach of Contract, Promissory Estoppel, Foreclosure, Interest Act S.8 (usurious/default Interest), Unjust Enrichment, Corporate Veil, Damages, Construction/interpretation of Contracts, Water Supply/regulatory Approvals
Source Language
English
Contract Tort Property Law Equity Statutory Interpretation Administrative / Regulatory (water Rights) Misrepresentation Negligent and Fraudulent Misrepresentation +9 more

Case Brief

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Parties

Pacific Playground Holdings Ltd.

Petitioner / Defendant

Endeavour Developments Ltd.

Respondent / Plaintiff

Midtown Development Co. (1981) Ltd.

Plaintiff / Assignee

P. Axel Robert Nissen

Defendant / Representative of Pacific Playground/watutco

Watutco Enterprises Ltd.

Defendant / Water Utility

Eron Mortgage Corporation

Respondent / Subsequent Mortgagee (in Receivership)

493461 B.C. Ltd.

Respondent / Subsequent Mortgagee

490160 B.C. Ltd.

Respondent / Subsequent Mortgagee

Michael Roger Saunier (MDC Contracting)

Respondent / Builders' Lien Claimant

V. Roberts & Associates Ltd.

Respondent / Builders' Lien Claimant

Procedural Posture

Combined Foreclosure and Damages Action (real Estate Development Dispute) / Phase One Trial on Liability (damages Reserved for Phase Two)

Legal Issues

  1. 1 Whether pre-contract statements about water were actionable misrepresentations (innocent, negligent or fraudulent)
  2. 2 Whether silence or non-disclosure about cancelled water licence amounted to fraud or misrepresentation
  3. 3 Whether Watutco/Pacific Playground breached contractual obligation to supply a continuous and adequate water supply

Ratio Decidendi

The court held the 24% default interest clause was a penalty that contravened s.8 of the Interest Act and struck it down (rate set at 7% both pre- and post-default); pre-contract statements that defendant 'expected no problem' with water were puffery and not actionable misrepresentations nor fraudulent (no mens rea); nonetheless Pacific Playground and Watutco breached their contractual obligation to supply a continuous and adequate water supply but the breach gave rise only to recoverable mitigation/expense claims (not loss of profits) because other regulatory and market factors would have prevented project success; foreclosure order nisi granted in favour of Pacific Playground but...

Court Disposition

Partial success for both sides: Pacific Playground granted order nisi of foreclosure; 24% default interest clause struck as contravening Interest Act s.8; misrepresentation claims dismissed; finding of breach of contract re water by Pacific Playground and Watutco limited to recoverable mitigation/expense damages;...

Orders

  • Declaration that the Indenture of Mortgage dated September 24, 1993 (registered Sept 28, 1993, EG126470) is a valid mortgage charging the described lands (PID: 003 887 651, Lot A Block 29 Comox District Plan 3865 etc.).
  • Declaration that Endeavour Developments Ltd. defaulted and amount due under the Mortgage is $896,580.48 as at November 30, 2001 with interest at 7% per annum (per diem $169.57).