Edgewater Casino Inc. (Re) Property Tax Issue

Edgewater Casino Inc. (Re) Property Tax Issue

Clause 3.05 is enforceable and must be interpreted by reference to BCAA assessments; Edgewater's liability is confined to the portion of tax increase solely attributable to increases in the assessed value for "buildings" caused by the Tenant's improvements (not increases in land value); the 2005 and 2006...

Source-derived case information.

Citation
2008 BCSC 280
Parties
Petitioner: Edgewater Casino Inc.; Petitioner: Edgewater Management Inc.; Claimant/creditor/respondent: Canadian Metropolitan Properties Corp.; Original Shareholder/interested Party: Libin Holdings Inc.; Original Shareholder/interested Party: Gary Jackson Holdings Ltd.; Original Shareholder/interested Party: Phoebe Holdings Inc.; New Shareholder/assignee: Paragon Gaming Inc.; New Shareholder/assignee: Paragon BCULC
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
5 March 2008
Procedural Posture
CCAA Restructuring With Disputed Proof of Claim Regarding Lease Property Tax Reimbursement and Related Tort and Quantum Meruit Claims / Reasons for Judgment (in Chambers) Resolving Interpretation of Lease Clause 3.05, Misrepresentation/set Off Claim and Consultant Fee Claims
Outcome
CMPC's claim partially allowed to the extent of taxes attributable to increase in assessed building values caused by Edgewater's improvements; misrepresentation/set off dismissed; claim for Deloitte/consultant fees against Edgewater dismissed; Old Shareholders entitled to residual trust funds after CMPC payment...
Legal Topics
Set Off Under CCAA, Contract Interpretation, Entire Agreement Clause, Appeal of Assessment, Calculation of Tax Apportionment, Unjust Enrichment, Juristic Reason
Source Language
english
Insolvency (ccaa) Contract Law Property Tax/assessment Law Tort Negligent Misrepresentation Restitution/quantum Meruit Set Off Under CCAA Contract Interpretation Entire Agreement Clause +4 more

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Parties

Edgewater Casino Inc.

Petitioner

Edgewater Management Inc.

Petitioner

Canadian Metropolitan Properties Corp.

Claimant/creditor/respondent

Libin Holdings Inc.

Original Shareholder/interested Party

Gary Jackson Holdings Ltd.

Original Shareholder/interested Party

Phoebe Holdings Inc.

Original Shareholder/interested Party

Paragon Gaming Inc.

New Shareholder/assignee

Paragon BCULC

New Shareholder/assignee

Procedural Posture

CCAA Restructuring With Disputed Proof of Claim Regarding Lease Property Tax Reimbursement and Related Tort and Quantum Meruit Claims / Reasons for Judgment (in Chambers) Resolving Interpretation of Lease Clause 3.05, Misrepresentation/set Off Claim and Consultant Fee Claims

Legal Issues

  1. 1 Is lease clause 3.05 void for uncertainty or how is it to be interpreted?
  2. 2 What amount, if any, is payable by Edgewater under clause 3.05 for 2005/2006 property taxes?
  3. 3 Are Deloitte fees or consultant contingency fees recoverable from Edgewater (contract, quantum meruit or unjust enrichment)?

Ratio Decidendi

Clause 3.05 is enforceable and must be interpreted by reference to BCAA assessments; Edgewater's liability is confined to the portion of tax increase solely attributable to increases in the assessed value for "buildings" caused by the Tenant's improvements (not increases in land value); the 2005 and 2006 reimbursements are to be calculated from the increase in buildings assessment (2004 baseline 1,200,000 to 1,326,000 in 2005 and 5,455,000 in 2006) applying applicable tax rates with 2006 prorated to May 2, 2006; negligent misrepresentation/set off fails (no special relationship, representations were not as alleged and no damages shown); Deloitte/consultant fees are not recoverable from...

Court Disposition

CMPC's claim partially allowed to the extent of taxes attributable to increase in assessed building values caused by Edgewater's improvements; misrepresentation/set off dismissed; claim for Deloitte/consultant fees against Edgewater dismissed; Old Shareholders entitled to residual trust funds after CMPC payment...

Orders

  • Clause 3.05 construed to require Edgewater to reimburse CMPC for the tax increase attributable solely to increases in the assessed value for 'buildings' (increase from $1,200,000 in 2004 to $1,326,000 in 2005 and to $5,455,000 in 2006) using BCAA principles and applicable tax rates
  • 2006 amount to be prorated by days (divide annual amount by 365 and multiply by 122 days to May 2, 2006)