Judge rules Vancouver West End condo assembly can be sold off despite holdout owners' protests
A judge has ruled that the sale of a Vancouver West End assembly can proceed despite two holdout owners who believed the sale price was too low and that they were not kept informed during the sale process.
Barclay Terrace is a 36-unit concrete complex built in 1992 and located at 1075 Barclay St. in Vancouver’s West End.
Of the 36 units in the building, 34 belong to two corporations, Barclay Thurlow Property Inc. (BTPI) and Shepstone Investments Inc., referred to as the majority owners. The units had been gradually purchased by the companies from individual owners with the goal of winding up the strata corporation and selling the property for redevelopment.
According to B.C. strata bylaws, owners can force a sale if 80 per cent agree; with 34 of the 36 units in hand, BTPI and Shepstone owned 94 per cent of the strata vote.
An adjacent complex of four two-storey townhomes was also bought by Shepstone to be sold as part of the assembly.
The remaining two units at Barclay Terrace belong to Grace and Lisa Francescato and Ramin Malekmohammadi Nouri, referred to as the minority owners in court documents.
The Francescatos had been in discussions to sell their suite to the majority owners in 2016 for $1.9 million, but the sale fell through after the Francescatos raised their price to $2.1 million and then changed their minds.
Nouri had been contacted by the majority owners in 2015 and 2016 to sell his unit but he refused on both occasions. In early 2017, BTPI offered Nouri $3.5 million to sell and said they were “prepared to offer more.”
“According to … the realtor engaged by BTPI to negotiate with Mr. Nouri, Mr. Nouri said his price was $10 million,” read court documents. When told the “figure was absurd” but that a counteroffer would be entertained, Nouri lowered his price to $9.75 million. The negotiations ceased.
After a purchase offer for the complex was made by Grand World Holdings Ltd. in June 2017 for a price of $105 million, the majority owners applied to the court to confirm its resolution to wind down the strata and proceed with the sale. They also notified the holdout owners of the deal struck, and informed the Francescatos they would receive $2.7 million and Nouri $2.2 million as part of the sale.
The minority owners, however, opposed the application based on their beliefs that they weren’t adequately consulted during the sale process and that the sale price is too low.
In his decision dated March 13, 2018, Justice Warren B. Milman ruled that the minority owners were as informed as could be since the majority owners were required to keep the details of the sale agreement confidential. Milman also said the holdout owners had fair warning as to what the future was likely to hold for Barclay Terrace.
“The minority owners were not taken by surprise by what occurred,” wrote Milman. “They were able to see the writing on the wall by late 2015 or early 2016, when the majority owners sought and then acquired a controlling block in pursuit of their patent agenda to redevelop the property.
“At that point, a dissolution and sale of Barclay Terrace was all but inevitable (and, in the case of the Francescatos at least, initially welcomed).”
As for the sale price, the judge noted that the assessed value – which the minority owners suggest is closer to $150 million – is based on the assumption that all 36 units and the adjacent townhomes are sold as a controlling block under one owner. He also rejected the notion that the minority owners were being unfairly treated or that the sale price was prejudiced against them.
“In the end, the minority owners are to receive enormous premiums over the 2017 assessed values of their units as a result of the efforts of the majority owners in marshalling the combined properties for sale as an assemblage,” he wrote.
“The Francescatos are to receive $2,677,500 for a unit assessed at $793,000 and Mr. Nouri is to receive $2.2 million for a unit assessed at $672,000.”
Milman then granted the majority owners’ application to wind down the strata and sell off the property.