A B.C. Supreme Court judge has ruled on a case she describes as a “bizarre mess” in a decision issued earlier this week.
At issue before Justice Carla L. Forth was the question of who is the rightful owner of a duplex on East 41st Avenue in Vancouver, which is the subject of three separate and – in some ways – competing foreclosure proceedings.
The property in question was built in 2015, according to BC Assessment. It is a two-storey duplex with a total of four bedrooms and four bathrooms across the two units.
Its value as of July 1, 2023, is listed as $2,567,000.
The original owner of the property is 1022724 B.C. Ltd., a numbered company directed by Rajvir Singh Parmar.
The company – referred to throughout Forth’s decision as “1022” – remains the registered owner of the property, but the decision makes clear that the property should have been transferred to a different owner back in 2021.
At that time, the decision indicates, the court granted a “vesting order,” which stipulated that the property would be sold to Madan Joshi for $2,238,000.
The first foreclosure
The first foreclosure
The vesting order was the culmination of the first foreclosure proceeding involving the property, which was initiated by Samra Enterprises Inc. and Colossal Fortune Holdings Ltd., who held the first mortgage on the property.
The court granted Samra and Colossal an order for possession of the building in March 2019, with a six-month “redemption period” during which 1022 and Parmar could pay off the mortgage and avoid a sale of the property.
When that period expired without the property being redeemed, the court granted Samra and Colossal “exclusive conduct” of the property’s sale, according to Forth’s decision.
Joshi signed a contract of purchase and sale with Samra and Colossal in January 2021, and the court approved the vesting order for the sale in March of that year.
The vesting order called for the sale to be completed on April 7, but allowed the parties to extend the completion date by 14 days if they agreed to do so.
Forth’s decision indicates they did just that, quoting from an email sent by Samra and Colossal’s lawyer to Joshi’s lawyer indicating that the completion date had been extended to April 21.
However, despite the extension apparently being agreed to, when 1022 and Parmar contacted the lenders about paying off the mortgage on April 15, the lenders processed the payment and discharged their certificate of pending litigation from the property’s title.
Parmar and 1022 financed the repayment of the Samra and Colossal mortgage by securing two other mortgages against the property. The owners have since defaulted on those two mortgages as well, and additional foreclosure proceedings are underway.
Order must be set aside
Order must be set aside
The problem, according to Forth’s decision, is that Parmar and 1022 should never have been able to get those mortgages in the first place, because their right to redeem the first mortgage was, legally speaking, extinguished when the vesting order was granted.
Despite this, the vesting order has never been fulfilled, and Parmar and 1022 remain the owners, three and a half years after the duplex should have been transferred to Joshi.
Given this reality, Forth framed her decision as one regarding what to do with the vesting order.
“Ultimately, the issue I must address is whether there are extraordinary circumstances or, in the alternative, if it is in the interests of justice, for the court to exercise its equitable discretion to set aside the vesting order,” the judge’s decision reads.
“This is a difficult decision because any decision I make will cause prejudice to at least one innocent party.”
Forth began her analysis of that question by noting that “the facts in this case are unique” and “no analogous case could be located.”
She concluded that the vesting order must be set aside.
“The completion date has long passed and the sale of the property never completed, as a result of the Samra/Colossal mortgage being discharged,” the decision reads. “The current terms of the vesting order are not enforceable.”
Setting the vesting order aside allows the redemption of the first mortgage to stand, which means the lenders of the second and third mortgages can proceed with their foreclosures on the property.
“I accept that Mr. Joshi will suffer a loss if the vesting order is set aside,” Forth’s decision reads.
“However, in my view, Mr. Joshi has a claim in damages that he can bring against Samra, Colossal, and likely (their lawyer) Mr. Richards, for his losses. In addition, if Mr. Joshi still wants to purchase the property, he can make an offer in the second and third foreclosure proceedings to purchase it. Mr. Joshi will likely have to pay a higher price for the property, but doing so will support his claim for damages against Samra, Colossal, and likely Mr. Richards for their alleged wrongdoing.”
