It was sold as a low-risk, low-stress, self-financing real-estate investment, and involved 14 non-descript condos on a Vernon street more associated with crime than as a place to invest money.
But in the 11 years since a variety of investors bought the rental units, eight of those years have been tied up in bitter litigation fueled by antagonism and deeply entrenched positions.
Following an 18-day trial at the Vernon courthouse, Justice Elaine Adair said that fortunately, the one area of consensus between all the parties involved was that they wanted the units sold.
“Sale of the units would at least bring an end to the prolonged fighting over matters relating to the Strata Corporation and its governance, and reduce the scope of the war to one over money and the division of profits,” Justice Adair said.
Details of the case are laid out in a 101-page, 36,000-word B.C. Supreme Court decision.
According to the decision, the case dates back to 2008 when Rene Gauthier, Odin Zavier, and Thane Lanz formed SWS Marketing to start a business in real estate investment.
Zavier had purchased a marketing licence, which allowed him to take on clients and advise them on marketing plans. Lanz took one of Zavier’s classes and they became friends.
They met Gauthier and the three decided to go into real estate investment. They launched SWS Marketing and although the three were supposed to own the company equally, Gauthier held more than 50 per cent of the shares and controlled the firm.
SWS Marketing got involved in three residential real estate development projects in the Lower Mainland before finding the 14 units in Vernon in 2010.
The following year Zavier bought the 14 units, spread over two buildings for $1.6 million. It worked out at $116,000 per unit, which they thought was a good deal as the units had been appraised at $145,000 each.
The transaction was structured so that, before completion, the company entered into separate contracts of purchase and sale for the individual units with investors.
Zavier, Lanz, and Gauthier were all involved in approaching potential buyers for the units. The investors were spread across the country and they sold it as a “hands-off” deal.
“The Vernon Project was presented as one having positive cash flow, and not requiring much cash up front,” the decision reads.
Investors needed to provide $2,500 and obtain a mortgage. SWS Marketing would manage the rental building and provide the remaining roughly $30,000 for the down payment.
As part of the transaction, each of the new owners also had to sign a Joint Venture Agreement.
These agreements laid out the profit share of 50 per cent between an owner and SWS Marketing.
It’s these Joint Venture Agreements that became to focus of much of the litigation.
The agreements appeared to have gone smoothly until 2013 when things broke down.
A dispute between Gauthier and Zavier “boiled over” and Lanz sided with Zavier.
“The Fall of 2013 also marked the beginning of the duelling strata councils,” the decision reads. “The ‘Gauthier Council,’ and the ‘Zavier Council.’
Due to their dispute, both Gauthier and Zavier created their own strata councils. Condo owners then chose sides and paid their strata fees to the strata council they preferred. The opposition strata council then sent demand letters asking for payment.
Justice Adair said this created “more confusion.”
Around this time the litigation started.
SWS Marketing, which is controlled by Gauthier, sued Zavier and Lanz, along with eight other owners, the strata council, and nine John and Jane Does.
Gauthier argued that Zavier and Lanz along with the other owners had breached the Joint Venture Agreement on how the profits were divided.
The parties were regularly in and out of court.
“By 2017, some of the defendant-owners had had enough and wanted out of their investments,” the decision says.
Zavier then steered the owners towards a company owned by his wife called the Home Buying Centre.
The company promised to help people who have properties that are difficult to manage.
SWS Marketing then accused Zavier and Lanz of intentionally creating the “chaos” so the owners would give up their units to Zavier’s wife’s company.
The lengthy court documents go through the long history of disagreements between the parties as they argue about what certain contracts meant.
Both parties accuse the other of being “evasive, obstructive and dishonest” throughout the trial.
There are accusations of forged signatures and very different accounts of who paid for what.
Justice Adair agreed that Zavier and Lanz were both “argumentative and evasive” and she also felt there were concerns about the credibility and reliability of some of Gauthier’s evidence.
“Through their answers, both Mr. Zavier and Mr. Lanz demonstrated considerable antagonism toward Mr. Gauthier,” the Justice said.
The Justice said Lanz was “openly sarcastic and derisive.
“My strong impression was that Mr. Lanz has held a long-standing grudge against Mr. Gauthier, and saw the trial as an opportunity to settle scores,” the Justice said.
Ultimately, following a lengthy analysis of multiple claims and counterclaims, the Justice dismissed the action against Lanz but ruled that Zavier, along with each of the condo owners had breached the Joint Venture Agreement.
However, the court proceedings are not yet over.
The Justice ruled that neither side had put forward an argument about how the court should go about assessing the damages.
“In those circumstances, I have concluded that I cannot make a final order, and it would not be just to make such an order, without receiving further submissions,” Justice Adair said.
The Justice then ordered both sides to come back to court with submissions about how to move forward with damages.
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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
