IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Concord Pacific Acquisitions Inc. v. Oei,

 

2018 BCSC 1368

Date: 20180814

Docket: S158989

Registry: Vancouver

Between:

Concord Pacific Acquisitions Inc.

Plaintiff

And

Hong Leong Oei, Hong Kong Expo Holdings Ltd. and

Canadian Metropolitan Properties Corporation

Defendants

 

Corrected Judgment: The front page was amended on August 16, 2018

Before: The Honourable Mr. Justice Voith

 

Reasons for Judgment

Counsel for the Plaintiff:

J. K. McEwan, Q.C.

E. Patel

Counsel for the Defendants:

I. Nathanson, Q.C.
C. Ohama-Darcus

Place and Date of Hearing:

Vancouver, B.C.

August 7, 2018

Place and Date of Judgment:

Vancouver, B.C.

August 14, 2018

 

[1]             The Plaintiff, Concord Pacific Acquisitions Inc., seeks to conduct a further examination for discovery of the Defendant Mr. Oei pursuant to Rules, R. 7-2(2) of the Supreme Court Civil Rules, B.C. Reg. 168/2009.

[2]             This action arises out of a significant commercial dispute in which the Plaintiff claims that the parties entered into an agreement to develop and sell a part of the Expo lands, owned by the Defendants, that are located on the waterfront in Vancouver. It is common ground that the lands in question have very significant value.

[3]             The Plaintiff seeks to justify this additional or further discovery of Mr. Oei primarily on the basis of the most recent amendments to its pleadings.

Background to the Dispute and Relevant Context

[4]             The Plaintiff’s claim was first filed on December 18, 2015. The Plaintiff has since amended that claim four times. The most recent amendment was filed on May 8, 2018 (the Fourth Amended Claim). A six-week trial is scheduled to commence on October 9, 2018. I have case managed this action for the past two years.

[5]             Mr. Oei was examined for discovery for six days in 2016. Those examinations took place on June 27-29, 2016 and August 17- 19, 2016. Following the final day of discovery, now two years ago, the following exchange took place between counsel:

MR. POULUS: So on the record. Subject to objections, information requests and anything that may arise from my discussion with my client about the Aquilini documents or any other documents that may yet be produced, that concludes my discovery.

Thank you.

…

MR. NATHANSON: … On the records I consider subject to outstanding requests and objections this examination is concluded. He will not return for any other discovery for any other purpose.

Thank you.

MR. POULUS: We will determine that as if and when and at the appropriate place.

[6]             Mr. Oei was also cross-examined, for a half day, in connection with the affidavits that he had sworn and that had been filed by the Defendants in an application, brought by the Defendants, for summary dismissal of the Plaintiff’s claim. That summary trial application was heard in December, 2016. I dismissed the application in Reasons for Judgement that are indexed at 2017 BCSC 236.

[7]             Mr. Chu, a senior executive of the corporate Defendant Canadian Metropolitan Properties Corporation, was also examined for discovery for five days in June, July and August 2016, and he too was cross-examined, for a half day prior to the summary trial application.

[8]             The Plaintiff’s claim has, for some time, rested on various alternate theories that would support either an award of specific performance or, alternatively, damages. Those theories include, inter alia, that the parties entered into an enforceable contract on May 14, 2015 and that the parties assumed various obligations of good faith. The Plaintiff’s Fourth Amended Claim now includes, inter alia, the following additional amendments:

[31] Express or implied terms of the 14 May Agreement included:

a)     that Concord Acquisitions would pay $10 million (the “$10 Million”) three days after the Heads was signed;

b)     that Concord Acquisitions and Oei would enter into further formal agreements related to the transaction contemplated in the Heads; and

c)     that Concord Acquisitions and Oei would negotiate in good faith further formal agreements related to the transaction contemplated in the Heads.

[32] The agreement to negotiate in good faith that was a term of the 14 May Agreement included commitments by the parties:

a)     to make genuine efforts to reach agreement within the parameters established by the Heads, as set out at paragraph 29 above; and

b)     to conduct themselves as follows:

                                               i.          to proceed with reasonable dispatch;

                                              ii.          to keep the 14 May Agreement confidential; and

                                             iii.          not to enter into negotiations with third parties regarding the Lands.

….

[36] On or about 14 July 2015, Hui and Ju met Oei and Chu in Hong Kong to attend a meeting with a representative of Deutsche Bank. The meeting was arranged by Oei, to discuss Deutsche Bank providing the C$250 million loan to CMPC that was to be distributed to Oei as past of the purchase price. Under the Heads, it was Oei’s obligation to arrange this financing. The loan was arranged between Oei and Deutsche Bank, particulars of which arrangement are known to Oei and not to the plaintiff. The Deutsche Bank Loan contained commercially unacceptable terms to Concord, including the requirement of a personal guarantee from Terry Hui acceptable to Concord. Oei knew that the loan would be unacceptable to Concord, and arranged it in breach of his obligation under the 14 May Contract, or, in the alternative, the 14 May Agreement.

 

[9]             It is relevant that the Plaintiff thereafter provided the following additional particular of its amended pleadings:

Particulars of the breach of the term that the parties would negotiate in good faith are set out in the pleading, and also include the failure by Oei or Chu to disclose to Concord the true estimated cost of Community Amenity Contributions required by the City of Vancouver, as communicated to CMPC.

 

[10]         That particular was, as I understand it, recently further supplemented to make clear that “community amenity contributions” also include social housing contributions or requirements.

[11]         The Plaintiff’s Notice of Application summarizes aspects of these pleadings and states:

[2] The Fourth Amended Notice of Civil Claim pleads that Oei breached this agreement by:

(a)             resiling from agreements already made;

(b)             disclosing the agreement with Concord to third parties;

(c)             failing to engage in good faith and with reasonable dispatch the further formal agreements referred to in the Heads;

(d)             engaging in discussion with third parties to sell the lands subject to the agreement with Concord;

(e)             purporting to arrange a loan with Detsche Bank to fulfil Oei’s obligation under the 14 May Agreement to obtain financing for the transaction on terms he knew would be commercially unacceptable to Concord;

(f)               by failing to disclose to Concord the true estimated costs of the benefits required by the City of Vancouver, including community amenity contributions and social housing requirements, in order to obtain the rezoning required for the anticipated development.

[12]         The Plaintiff now seeks to further examine Mr. Oei in relation to items (d), (e) and (f) from this synopsis.

The Relevant Legal Framework and Analysis

[13]         Two broad, but generally separate, legal principles are relevant:

[14]         First, where an examination for discovery has concluded, there is no automatic right to further discovery: Allarco Broadcasting Ltd. v. Duke (1981) B.C.L.R 7 (S.C.). In that decision, McEachern C.J.S.C. said at para. 36, “[o]ne cannot always obtain further discovery – even on the subject of an amendment – just because he obtains leave to amend.”

[15]         Second, the question on an application for further discovery is whether the complexion of the case has changed since the last discovery: Sutherland (Public Trustee of) v. Lucas (1996), 5 C.P.C. (4th) 169 (S.C). Referring to an earlier judgment of Finch J. (as he then was), Master Chamberlist (as he then was) said:

[21]      Once the examination for discovery of a party has been concluded there is then a heavy onus on the applicant to justify a further examination for discovery, as only one examination is contemplated. Such a request must show that the examinee has failed to give the examiner the discovery to which he is entitled to. This is what Finch J., as he then was, is alluding to in Westcoast Transmission Company Limited v. Interprovincial Steel and Pipe Corporation Ltd. et al [(1984), 59 B.C.L.R. 43 (S.C.)]. In my view, if he cannot meet this test then he must either demonstrate that the complexion of the case has materially changed either as a result of passage of time, new heads of damages being advanced or intervening events having occurred since the last discovery which would materially alter either the prosecution of the case or the defence of it. Alternatively, a party could produce evidence to show that full and frank disclosure was not made at the first discovery.

[Emphasis added.]

[16]         The proposition that a party who seeks a further discovery bears a “heavy onus” or faces a “significant hurdle” has been confirmed in numerous decisions: see Lewis v. Lewis, 2010 BCSC 1925 at para. 10; Terasen Gas Inc. v. Alpha Manufacturing Inc., 2008 BCSC 141 at para. 17; Hogg v. Hansen, 2007 BCSC 958 at para. 9; and Bergen v. Gaetz, 2015 BCSC 476 at para. 21.

[17]         The Plaintiff grounds its application to examine Mr. Oei, as I have said, primarily on the basis of some of the amendments to its Fourth Amended Claim. It does so, to a lesser extent, on the basis of the recent receipt of some further documents from the Defendants.

[18]         The analysis on an application for further discovery based on an amendment to pleadings and the analysis on an application based on static or existing pleadings often engage different considerations. However, there is both a principled and a practical relationship between these two sets of circumstances.

[19]         An amendment to a pleading is often the product, for example, of further document disclosure or unanticipated answers provided at an examination for discovery that then lead to an additional or different legal theory not yet captured in a party’s existing pleadings.

[20]         Alternatively, such amendments can simply be the product of additional thought or reflection by counsel and the recognition that the client’s pleadings are lacking in some respect and should be amended or supplemented.

[21]         In the former circumstance, an application for additional discovery, based on the amended pleading, is more persuasive and generally more appropriate. This is because the facts giving rise to the amendment were simply unknown or unavailable to the amending party, at the time of the initial examination for discovery.

[22]         The same is not true in the latter circumstance. In circumstances where relevant or material facts are known to a party and that party then chooses, on reflection, to rely on those same facts in a different way, leading to a different legal theory, the question of whether a further discovery should ensue is both less clear and less persuasive.

[23]         It is fundamentally this second set of circumstances that is relevant in this case. None of the amendments that I identified above, which the Plaintiff now relies on to justify a further examination of Mr. Oei, were based on further document production from the Defendants or answers or issues that arose during Mr. Oei’s or Mr. Chu’s earlier examinations. Instead, all three amendments, and all three areas of proposed examination, arise from the Plaintiff’s ongoing refinement and/or evolution of its claim.

[24]         The following chart, captured in the Defendants’ Response to Application, shows how fully developed the Plaintiff’s legal theory, based on a breach of an obligation or duty of good faith, was in its earlier pleadings and how closely that theory is mirrored in its Fourth Amended Claim:

Pleading before the Fourth Amended Claim

New pleading in the Fourth Amended Claim

[29(h)]: “The material terms of the 14 May Contract [included that the parties]… would deal with one another in good faith.”

[31(c)]: “Express or implied terms of the 14 May Agreement included: (c) … that Concord Acquisitions and Oei would negotiate in good faith further formal agreements related to the transaction contemplated in the Heads.”

[29(h)(i)]: “In particular: (i) they would not resile from agreements already made;”

[32(a)]: “The agreements to negotiate in good faith that was a term of the 14 May Agreement included commitments by the parties: (a) to make genuine efforts to reach agreement within the parameters established by the Heads, as set out at paragraph 29 …”

[29(h)(ii)]: “Oei would not seek to sell a direct or indirect interest in the Lands to another party;”

[32(b)(iii)]: “(iii) not to enter into negotiations with third parties regarding the Lands;”

[29(h)(iii)]: “they would negotiate in good faith and with reasonable dispatch the remaining terms of a shareholder agreement.”

[32(b)(i)]: “(i) to proceed with reasonable dispatch”

[29(i)]: “The parties would maintain the confidentiality of their negotiations and the terms to which they had agreed.”

[32(b)(ii)]: “(ii) to keep the 14 May Agreement confidential”

 

[25]         The pleadings in the first column were added by the Plaintiff through its Amended Amended Notice of Civil Claim filed on September 27, 2016, more than three months before the summary trial and also before Mr. Oei’s cross-examination by the Plaintiff’s former counsel.

[26]         Furthermore, matters pertaining to the Plaintiff’s pleading of good faith, including its pleadings of “confidentiality”, “exclusivity”, “reasonable dispatch” and the alleged commitment not to “resile from agreements already made” were, I was told, canvassed on Mr. Oei’s examination for discovery in June and August 2016. The matter of “exclusivity” was also canvassed by the Plaintiff’s former counsel in his cross-examination of Mr. Oei in November 2016.

[27]         The plea of “not negotiating with third parties”, one of the three subject areas about which the Plaintiff seeks to further examine Mr. Oei, warrants special mention. This is a subject or topic that has surfaced in this litigation at different times. It appears to be the potential outstanding topic that the Plaintiff’s former counsel alluded to when the Defendants’ counsel sought to ensure that Mr. Oei’s examination was completed and that I referred to at para. 5 of these Reasons for Judgement. It is expressly addressed in an affidavit of Mr. Hui, filed on behalf of the Plaintiff, dated October 3, 2016. It is a topic that the Plaintiff’s former counsel expressly addressed during the summary trial application that I heard, as well as at other times.

[28]         Thus, this issue is not new, and has not, for practical purposes, been refined or recast. Instead, it appears to be precisely the same issue that the Plaintiff has raised at different times and in different contexts that the Plaintiff now seeks to examine Mr. Oei about further.

[29]         I was also advised that the Plaintiff is seeking to obtain documents in the possession of one of the third parties contemplated by the pleadings and that these additional documents may be a topic about which the Plaintiff seeks to examine Mr. Oei.

[30]         The second potential area of Mr. Oei’s proposed further examination for discovery relates to a potential $250 million loan from the Deutsche Bank that the parties discussed and that is captured in para. 36 of the Plaintiff’s Fourth Amended Claim, referenced above.

[31]         Again, the issue of the $250 million Deutsche Bank loan, and the unacceptability of that loan to the Plaintiff, are issues that have earlier surfaced at different times and in different ways in this litigation. The discussions between the parties in relation to that loan, and why that loan was unacceptable to the Plainitff, was squarely raised, at length, in the affidavits of Mr. Hui and Mr. Ju, a Vice President of the Plaintiff. Both affidavits were dated October 3, 2016. It was also an issue that Mr. Oei was asked about, as I understand it, in his earlier examination for discovery. Still further, the issue was identified and addressed, for some pages, in the written submissions of the Plaintiff prepared for the summary trial application.

[32]         The facts relating to a potential Deutsche Bank loan, and that the loan was  unacceptable to the Plaintiff, are examples of facts that have been known to the Plaintiff for some considerable time and that the Plaintiff has chosen to recast, or to rely on in a different way, in its Fourth Amended Claim. It has now pleaded that the Defendants, in breach of their obligations of good faith, secured or proffered a commercial loan on terms that they knew would be unacceptable to the Plaintiff. This amended pleading has caused the Defendants to produce two further documents, though likely those documents should have been produced earlier, on which the Plaintiff also seeks to examine Mr. Oei. Further, the Plaintiff is now seeking to obtain relevant documents from the Deutsche Bank, with the Plaintiff’s consent, about which it might also examine Mr. Oei.

[33]         The third area that the Plaintiff seeks to examine Mr. Oei about are the discussions that the Defendants had with the City of Vancouver in relation to community amenity and social housing contributions. This issue has had, to my recollection, no prominence or profile until recently. It is not an issue that is expressly identified in the Fourth Amended Claim. Rather it was identified, as I have said, in one or more particulars that the Plaintiff recently delivered to the Defendants.

[34]         Once again, however, this is not an issue that surfaced as a result of any disclosure or other conduct by the Defendants. Instead, it is a further example of a refinement to the Plaintiff’s pleadings, and of a further particular or example of alleged bath faith in breach of contractual obligations, on the part of the Defendants. In response to this particular, the Defendants have again produced further documents.

Conclusion

[35]         Ultimately, I do not consider that the Plaintiff should be permitted to conduct a further examination for discovery of Mr. Oei. This is so for several reasons.

[36]         On a principled basis, I do not consider that any of the areas that the Plaintiff seeks to examine Mr. Oei about, and that arise from its Fourth Amended Claim or further particulars, have “materially changed the complexion of the case”. All three areas of intended discovery are based on facts or issues that have been known to the Plaintiff for some time. Certainly none of the amendments in the Fourth Amended Claim were the product of late disclosure or other conduct by the Defendants. Furthermore, two of the three areas of intended discovery have been expressly addressed by the parties, in different forms, nearly two years ago. In saying this, I recognize that the Plaintiff seeks to revisit the issue of the Deutsche Bank loan through a different legal lens.

[37]         This conclusion is supplemented by other pragmatic concerns. The Plaintiff changed counsel in early 2017. As was appropriate, new counsel sought to understand the issues in the litigation and to review the significant volumes of material that had been assembled or generated. Not surprisingly that gave rise to a somewhat different view of the case and to various further amendments to the pleadings.

[38]         Having said this, and without wishing to be critical, the reality is that nearly 18 months have elapsed since new counsel was appointed. An unfiled copy of the Fourth Amended Claim was first delivered to the Defendants in December 2017, more than eight months ago. The Plaintiff is only now seeking to secure documents from the third party with whom the Defendants are alleged to have improperly negotiated and from the Deutsche Bank.

[39]         The trial of this complex action, which was commenced more than two and a half years ago, is now less than two months away.

[40]         Other considerations are relevant. It is not clear, from the modest volume of documents that I was presented with, that Mr. Oei is the most knowledgeable or appropriate representative of the Defendants in relation to the issues on which the Plaintiff wishes to examine him. Certainly, in relation to the Deutsche Bank issue, it appears that a Ms. Li may be more appropriate. In relation to the community amenity contributions or social housing issues, it appears that Mr. Chu may be more appropriate.

[41]         I also consider that it is inappropriate for the Defendants’ preparation for trial to be interfered with, at this relatively late stage, by the need for Mr. Oei to prepare himself for discovery, by his further discovery, and by the need to then address and respond to the inevitable outstanding requests for information that will ensue from Mr. Oei’s discovery.

[42]         Based on the foregoing considerations I consider that the Plaintiff’s application should be dismissed. The Defendants are to have the costs of this application.

“Voith J.”