Punitive damages awarded in “exceptionally rare commercial case”

CLEBC Staff/August 25, 2010

Two $100,000 punitive damages awards were part of a BCSC judgment given Monday, August 23, 2010, in an action forming part of a protracted strata property dispute.

“Since 2002 [Le Soleil] Hotel has been at the centre of a storm of litigation,” said Dickson J. in Le Soleil Hospitality Inc. v. Louie, 2010 BCSC 1183. “The focus of the various court proceedings, in the main, has been a battle between competing factions for control of strata lots and leases required for effective operation of the Hotel.”

Le Soleil Hotel in downtown Vancouver, operated by joint venture Le Soleil Hospitality Inc. (“Hospitality”), includes (in a rental pool) most, but not all, of the residential strata lots and the common areas in the strata corporation registered as The Owners, Strata Plan LMS 3837.

The August 23 judgment determined a range of issues in the joint trial of two actions, one with a counterclaim, as well as orders for compensatory, punitive, and special costs.

The court made several findings on credibility of the principal witnesses, giving no weight to the testimony of one defendant who admitted mid-trial to perjury and apologized. The court called his testimony “a long, strange soliloquy”, a “remarkable performance”, and “an attempt at damage control”.

Another defendant to whose testimony the court gave no weight “spoke many words but they did not congeal into meaningful sentences”.

More than 30 of the 74 pages of reasons are devoted to reciting the facts. The court ordered specific performance of Hospitality’s option to purchase contained in a letter of intent (“LOI”) with the defendants; declared the purchase price of the strata lots to be $4,915,012.66; ordered specific performance of a lease modification agreement contained in the LOI in a form agreed to by the parties, with liberty to apply to settle the terms; awarded compensatory damages and costs in favour of Hospitality, to be set off against the purchase price; found fraud, the tort of inducing breach of contract, and civil conspiracy on the part of the defendants/counterclaimants in the second action; and held this to be “one of the exceptionally rare commercial cases in which punitive damages are appropriate”.

The court also ordered special costs against the defendants/counterclaimants in the second action on a full indemnity basis, with joint and several liability, for “reprehensible misconduct”.

The court granted leave to Hospitality to seek an order of costs payable by a third party whom the evidence established to be “an active, conscious participant in secretive funding of litigation contrary to Hospitality’s interests, in breach of the LOI”.