Coal Harbour Properties Partnership v. Liu et al., 2006 BCCA 385

• Judge: Hall, Saunders and Lowry, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: June 09, 2006
• Jurisdiction: British Columbia
• Citations: 2006 BCCA 385;(2006), 230 B.C.A.C. 78 (CA)

Coal Harbour Prop. v. Liu (2006), 230 B.C.A.C. 78 (CA);

      380 W.A.C. 78

MLB headnote and full text

Temp. Cite: [2006] B.C.A.C. TBEd. SE.001

Wei Wei Liu and James Sheng Liu (appellants/defendants) v. Coal Harbour Properties Partnership (respondent/plaintiff)

(CA033164; 2006 BCCA 385)

Indexed As: Coal Harbour Properties Partnership v. Liu et al.

British Columbia Court of Appeal

Hall, Saunders and Lowry, JJ.A.

August 30, 2006.

Summary:

The defendant purchasers failed to complete a real estate transaction. The trial judge held that the plaintiff vendor could retain the $391,000 deposit paid by the purchasers. The purchasers appealed.

The British Columbia Court of Appeal dismissed the appeal.

Editor's note: for prior decisions in these proceedings, see [2004] B.C.T.C. 15 and 199 B.C.A.C. 185; 326 W.A.C. 185.

Contracts - Topic 3944

Performance or breach - Relief from forfeiture - When available - [See Sale of Land - Topic 7741 ].

Contracts - Topic 4047

Performance or breach - Liquidated damages and penalties - Penalty - Return of - [See Sale of Land - Topic 7741 ].

Contracts - Topic 4051

Performance or breach - Liquidated damages and penalties - Forfeiture of deposit - General - [See Sale of Land - Topic 7741 ].

Contracts - Topic 4053

Performance or breach - Liquidated damages and penalties - Forfeiture of deposit - Relief - [See Sale of Land - Topic 7741 and Sale of Land - Topic 7744 ].

Equity - Topic 1065

Equitable relief - Relief from forfeiture - Penalties - Contractual - [See Sale of Land - Topic 7741 and Sale of Land - Topic 7744 ].

Sale of Land - Topic 7741

Remedies of vendor - Forfeiture of deposit - General - A trial judge formulated the following analysis for determining whether a deposit for the purchase of property should be forfeited: "... where the issue is whether a contractual clause is for liquidated damages, or is a penalty: 1. The question 'penalty' or 'liquidated damages' is to be answered as at the date of the making of the agreement; 2. If the answer is 'liquidated damages', that is the end of the matter, but, if the answer is 'penalty'; then, 3. There arises the next question should relief be granted against the penalty? 4. The answer to that question depends upon whether to enforce the penalty would be unconscionable, and that unconscionability has to be determined at the date of the invocation of the clause. 5. Sec. 21 of The Law and Equity Act only applies if and when stage 3 has been reached." - The British Columbia Court of Appeal assessed the analysis as "generally correct with perhaps the addition that the question of penalty has to be as well considered as of the time set for performance." - See paragraph 24.

Sale of Land - Topic 7744

Remedies of vendor - Forfeiture of deposit - Circumstances resulting in forfeiture - The defendant purchasers failed to complete a real estate transaction - The purchase price was $1,955,000 - The trial judge held that the plaintiff vendor could retain the $391,000 deposit ("earnest money") paid by the purchasers under the contract, holding that it was not in the nature of a penalty but was a genuine pre-estimate of damages - The purchasers appealed, alleging unconscionability - The British Columbia Court of Appeal dismissed the appeal - The trial judge found nothing oppressive in the circumstances at the time the contract was entered into or in the vendor's conduct at the time fixed for completion - It was the purchasers who, for their own reasons, refused to close the transaction - Their conduct was deliberate and considered and they took their decision after access to appropriate professional advice - It was not easy to perceive on what basis they ought to be able to invoke equity as a shield against the forfeiture of the sum paid as a deposit at the inception of the transaction.

Cases Noticed:

Stockloser v. Johnson, [1954] 1 Q.B. 476; [1954] 1 All E.R. 630 (C.A.), dist. [para. 6].

Else (1982) Ltd. v. Parkland Holdings Ltd., [1994] 1 B.C.L.C. 130 (C.A.), refd to. [para. 6].

Peachtree II Associates - Dallas L.P. et al. v. 857486 Ontario Ltd. et al. (2005), 200 O.A.C. 159; 76 O.R.(3d) 362; 256 D.L.R.(4th) 490 (C.A.), refd to. [para. 6].

Collins v. Stimson (1883), 11 Q.B.D. 142, refd to. [para. 8].

Howe v. Smith (1884), 27 Ch. D. 89 (C.A.), refd to. [para. 9].

Kemble v. Farren (1829), 6 Bing. 141; 130 E.R. 1234, refd to. [para. 10].

Dunlop Pneumatic Tyre Co. v. New Garage & Motor Co., [1915] A.C. 79; [1914-15] All E.R. Rep. 739 (H.L.), refd to. [para. 10].

Collins (J.G.) Insurance Agencies Ltd. v. Elsley's Estate, [1978] 2 S.C.R. 916; 20 N.R. 1; 83 D.L.R.(3d) 1, refd to. [para. 10].

Thermidaire Corp. v. Clarke (H.F.) Ltd., [1976] 1 S.C.R. 319; 3 N.R. 133, refd to. [para. 10].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 11].

Tanus Developments Ltd. v. Vanguard Properties Ltd. et al., [1990] B.C.T.C. Uned. 250 (S.C.), dist. [para. 12].

British Columbia Development Corp. v. Nab Holdings Ltd. (1986), 6 B.C.L.R.(2d) 145; 30 D.L.R.(4th) 560 (C.A.), dist. [para. 12].

Blackcomb Skiing Enterprises Limited Partnership v. Schneider, [2000] B.C.T.C. Uned. 219; 2000 BCSC 720, refd to. [para. 13].

Lam v. Ernest & Twins Ventures (PP) Ltd. et al., [2001] B.C.T.C. 710; 42 R.P.R.(3d) 173; 2001 BCSC 710, refd to. [para. 14].

Dojap Investments Ltd. v. Workers' Trust & Merchant Bank Ltd., [1993] A.C. 573; [1993] 2 All E.R. 370; 150 N.R. 151 (P.C.), dist. [para. 15].

Steedman v. Drinkle, [1916] 1 A.C. 275; [1914-1915] All E.R. Rep. 298 (P.C.), refd to. [para. 17].

Kilmer v. British Columbia Orchard Lands Ltd., [1913] A.C. 819; 10 D.L.R. 172 (P.C.), refd to. [para. 18].

Dagenham (Thames) Dock Co., Re; Ex parte Hulse (1873), L.R. 8 Ch. 1022; 43 L.J. Ch. 136 (C.A.), refd to. [para. 20].

Hughes v. Lukuvka (1970), 14 D.L.R.(3d) 110; 75 W.W.R.(N.S.) 464 (B.C.C.A.), refd to. [para. 22].

Lee v. Skalbania (1987), 47 R.P.R. 162 (B.C.S.C.), affd. (1989), 4 R.P.R.(2d) xxxiii (B.C.C.A.), refd to. [para. 23].

Counsel:

A.E. Farber, for the appellants;

J.C. McKechnie, for the respondent.

This appeal was heard on June 9, 2006, by Hall, Saunders and Lowry, JJ.A., of the British Columbia Court of Appeal. Hall, J.A., delivered the following decision for the court on August 30, 2006.