Do v. Nichols et al., 2016 BCCA 128
| Judge | Kirkpatrick, Harris and Goepel, JJ.A. |
| Court | Court of Appeal (British Columbia) |
| Case Date | February 17, 2016 |
| Jurisdiction | British Columbia |
| Citations | 2016 BCCA 128;(2016), 384 B.C.A.C. 264 (CA) |
Do v. Nichols (2016), 384 B.C.A.C. 264 (CA);
663 W.A.C. 264
MLB headnote and full text
Temp. Cite: [2016] B.C.A.C. TBEd. MR.035
Nam Nha Do (appellant/plaintiff) v. Charles Larry Nichols, Linda Grace Nichols, Bank of Montreal (respondents/defendants)
(CA42943; 2016 BCCA 128)
Indexed As: Do v. Nichols et al.
British Columbia Court of Appeal
Kirkpatrick, Harris and Goepel, JJ.A.
March 18, 2016.
Summary:
The Nichols entered into an agreement to sell two blocks of waterfront property to Do for $1.7 million. The agreement required the Nichols to take steps to have the property subdivided by July 14, 2012 (subsequently extended to September 21, 2012), in accordance with a subdivision plan. Title to Lot A and to Lot B as shown in the subdivision plan were to be registered in Do's name concurrent with the deposit of the subdivision plan for registration. Title to the remaining lots were to be issued and registered in the Nichols' name. If the Nichols failed to carry out the subdivision, title to all lots were to be registered in Do's name and the Nichols were to pay Do $500,000. The agreement also required the Nichols to grant Do a $500,000 mortgage on their residential property to secure the payment. The agreement closed in September 2011. Do paid the Nichols $1.7 million for the two blocks of property, and the Nichols granted Do a $500,000 mortgage on their residential property. The Nichols failed to subdivide the property. Do demanded payment of the $500,000 on September 17, 2013. When payment was not forthcoming, Do petitioned for an order nisi of foreclosure on the mortgage, with a one-day redemption period and an immediate order for sale of the mortgaged property.
The British Columbia Supreme Court, in a decision reported at [2015] B.C.T.C. Uned. 1069, held that the contractual provision giving rise to the mortgage was a penalty clause and unconscionable. The court granted relief pursuant to s. 24 of the Law and Equity Act and held that the Nichols' obligation to pay the amount due under the mortgage was not enforceable. In the result, the court dismissed the petition and ordered the cancellation of the mortgage. Do appealed.
The British Columbia Court of Appeal allowed the appeal. It was not a breach of the contract to fail to subdivide, but rather a term specifically contemplated by the parties. There was therefore no breach of contract and the question of a penalty did not arise. Further, absent evidence that $1.2 million ($1.7 million minus the $500,000 repayment) was not a fair price for the pre-subdivision value of the property, it could not be said that the agreement was unfair, let alone substantially unfair. In the circumstances, the agreement was not unconscionable. In the result, the court declared that the mortgage was in default, and all monies secured by the mortgage and charged upon the property were now due and owing. The court remitted the matter to the trial court to make any further orders that were necessary, including determining the amounts due under the mortgage, the amounts necessary to redeem, and the length of the redemption period.
Contracts - Topic 4048
Remedies for breach - Liquidated damages and penalties - Penalty - What constitutes - See paragraphs 19 to 23.
Contracts - Topic 9204
Unconscionable transactions relief - General principles - Requirement of inequality in bargaining position plus improvident transaction - See paragraph 26.
Contracts - Topic 9350
Unconscionable transactions relief - Conditions for relief - What constitutes harsh and unconscionable - See paragraphs 24 to 32.
Contracts - Topic 9356
Unconscionable transactions relief - Conditions for relief - What constitutes an improvident or unfair agreement - See paragraphs 24 to 32.
Cases Noticed:
Ben Gay Inc. v. Pincher Creek Ranchers Ltd., 1981 ABCA 32, refd to. [para. 22].
Loychuk et al. v. Cougar Mountain Adventures Ltd. (2012), 318 B.C.A.C. 204; 541 W.A.C. 204; 2012 BCCA 122, refd to. [para. 25].
Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 53; 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 28].
Counsel:
J.S. Malik, for the appellant;
R.R. Lee, for the respondents, Charles Larry Nichols and Linda Grace Nichols.
This appeal was heard at Vancouver, British Columbia, on February 17, 2016, by Kirkpatrick, Harris and Goepel, JJ.A., of the British Columbia Court of Appeal. Goepel, J.A., delivered the following judgment for the court on March 18, 2016.
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Williams v. Amazon.com, Inc., 2020 BCSC 300
...of the weaker, which left him in the power of the stronger, and (ii) proof of substantial unfairness in the bargain: Do v. Nichols, 2016 BCCA 128 at paras. 25-26, leave to appeal ref’d [2016] S.C.C.A. No. 206. The arbitration clause in issue in Heller was found to be substantially unfair be......
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...damages, special damages and punitive damages. [78] The test for unconscionability was summarized by Goepel, J.A. in Do v. Nichols, 2016 BCCA 128: [25] The test for unconscionability was set out by this Court in Loychuck v. Cougar Mountain Adventures Ltd., 2012 BCCA [29] The language used t......
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Peterson v. 446690 B.C. Ltd. (Seymour Arm Hotel & Restaurant), 2017 BCCA 394
...“penalty” as a term of art. [26] The general law relating to penalties was summarized recently by Mr. Justice Goepel in Do v. Nichols, 2016 BCCA 128:[20] With the greatest respect, the trial judge erred in finding the mortgage provision to be a penalty. The question of penalty or liquidated......
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Im v. Sundon Enterprises Inc.,
...With respect to unconscionability, the two‑part test is well known. It was stated by the Court of Appeal in Do v. Nichols, 2016 BCCA 128 at para. [26] In order to set aside a bargain for unconscionability, a party must establish: (a) &#x......
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Williams v. Amazon.com, Inc., 2020 BCSC 300
...of the weaker, which left him in the power of the stronger, and (ii) proof of substantial unfairness in the bargain: Do v. Nichols, 2016 BCCA 128 at paras. 25-26, leave to appeal ref’d [2016] S.C.C.A. No. 206. The arbitration clause in issue in Heller was found to be substantially unfair be......
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Kim v. Choi, 2020 BCCA 98
...damages, special damages and punitive damages. [78] The test for unconscionability was summarized by Goepel, J.A. in Do v. Nichols, 2016 BCCA 128: [25] The test for unconscionability was set out by this Court in Loychuck v. Cougar Mountain Adventures Ltd., 2012 BCCA [29] The language used t......
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Peterson v. 446690 B.C. Ltd. (Seymour Arm Hotel & Restaurant), 2017 BCCA 394
...“penalty” as a term of art. [26] The general law relating to penalties was summarized recently by Mr. Justice Goepel in Do v. Nichols, 2016 BCCA 128:[20] With the greatest respect, the trial judge erred in finding the mortgage provision to be a penalty. The question of penalty or liquidated......
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Im v. Sundon Enterprises Inc., 2021 BCSC 2733
...With respect to unconscionability, the two‑part test is well known. It was stated by the Court of Appeal in Do v. Nichols, 2016 BCCA 128 at para. [26] In order to set aside a bargain for unconscionability, a party must establish: (a) &#x......
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Upholding The End Of The Bargain, And Avoiding Penalty And Unconscionable Claims Case Comment: Do v. Nichols
...March 18, 2016, the British Columbia Court of Appeal released reasons for judgment in Do v. Nichols, 2016 BCCA 128. This decision provides guidance on how to draft and enforce tough provisions in a contract that can withstand penal and unconscionability The Court of Appeal disagreed with th......