Source: http://blog.myleakycondo.com/index.php?op=Default&Date=199910&blogId=1060
Timestamp: 2019-04-20 22:57:38+00:00

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BRAIDWOOD J.A.: This appeal involves the proper principles to be applied when calculating the damages suffered by a party by reason of the wrongful granting of an injunction. In this case, the appellant Village Gate Resorts Ltd. was granted injunctions on 24 May 1989 and 12 July 1995 to prevent the respondents from dissolving a limited partnership. At each application for an injunction, the appellant gave an undertaking as to damages. When the litigation between the two parties concluded in 1997, it was determined that the granting of the injunctions was inappropriate.
 The issue before this Court is whether the trial judge properly assessed the damages incurred by the respondents by reason of the injunctions.
 An entity known as Whistler Mountain Inn Limited Partnership was formed in 1980 as part of a financing package to build and operate Phase 1 of what is now known as the Delta Whistler Resort. Phase 1 is comprised of 163 guest rooms that are registered in the Land Title Office as strata lots. The original developer leased those rooms to the general partner, Village Gate Resources Ltd., the appellant in this case. The lots, together with the limited partnership interest, were then marketed. A purchaser obtained a fee simple in a hotel room subject to a long-term lease in favour of the general partner. A purchaser also obtained as an interest in the limited partnership through which the profits of operating the hotel were distributed. The limited partnership agreement provided for management fees to be paid to the general partner.
 Less than half the strata lots were sold and the developer continued to hold the rest. In 1988, Phase 2 was constructed and contained 126 rooms. The two phases are operated as one hotel although Phase 2 was not a partnership asset.
 In 1989, B.P.Y.A. 138 Holdings Ltd. acquired the interests of the developer in the hotel. That company thereupon became the owner of all of the rooms in Phase 2, approximately 55 percent of the rooms in Phase 1, certain retail and other space in the hotel complex, and the shares of the appellant Village Gate Resorts Ltd.
 Upon acquisition of the hotel by B.P.Y.A. 138 Holdings Ltd., the limited partners convened a meeting for the purpose of winding up the partnership. The appellant then commenced Action No. C891212 seeking inter alia a finding that the general partner was not in breach under the Limited Partnership Agreement as well as an interlocutory injunction restraining the limited partners from proceeding with the meeting. An injunction was granted by the Supreme Court of British Columbia on 24 May 1989.
 From the time of its taking over ownership of the hotel, B.P.Y.A. 138 Holdings Ltd. continued a practice that had already been put into place by the previous owner. That practice was to deposit all revenues from Phases 1 and 2 of the hotel into bank accounts and to pay all expenses of the hotel from those bank accounts. Subsequently, financial statements were produced that determined the respective interests of the partnership and the Phase 2 holdings of B.P.Y.A. 138 Holdings Ltd. in the monies in the accounts.
 The Partnership Agreement provided that the assets of the partnership were to be held by Village Gate Resorts Ltd. in trust. However, given that the hotel was operated as a single entity, the appellant did not attempt to maintain the partnership funds in a separate trust account. Ultimately, this practice was found to be a material breach of the Limited Partnership Agreement. The Chambers judge, hearing this matter in 1995, did not order dissolution of the partnership but vacated the injunction.
 The respondent limited partners immediately requisitioned another meeting for the purpose of dissolving the limited partnership. The appellant then devised a method of separating partnership funds from the funds of the hotel and maintaining them in a separate account. It put this system into operation and then applied for another injunction to prevent the second meeting from proceeding. The Chambers judge granted that injunction on 12 July 1995.
 Ultimately, both judgments were appealed to the Court of Appeal. This Court found, in essence, that the breach of trust committed by the appellant could not be cured and discharged the second injunction: Village Gate Resorts Ltd. v. Moore (1997), 47 B.C.L.R. (3d) 153 (C.A.). The limited partners thereupon convened a meeting and on 16 November 1997 voted to dissolve the limited partnership.
 A hearing was then held to determine the damages suffered by the respondents because of the injunctions.
... if the undertaking is enforced the measure of the damages payable under it is not discretionary. It is assessed on an inquiry into damages at which principles to be applied are fixed and clear. The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v. Day (1982) 21 Ch.D. 421, per Brett L.J., at p. 427.
If damages are granted at all, I think the Court would never go beyond what would be given if there were an analogous contract with or duty to the opposite party. The rules as to damages are shewn in Hadley v. Baxendale [9 Ex. 341]. If the injunction had been obtained fraudulently or maliciously, the Court, I think, would act by analogy to the rule in the case of fraudulent or malicious breach of contract, and not confine itself to proximate damages, but give exemplary damages. In the present case there is no ground for alleging fraud or malice. The case then is to be governed by analogy to the ordinary breach of a contract or duty, and in such a case the damages to be allowed are the proximate and natural damages arising from such a breach, unless as in Hadley v. Baxendale, notice had been given to the opposite party, of there being some particular contract which would be affected by the breach.
In Fletton Ltd. v. Peat Marwick Ltd., supra., the court awarded as damages the continuing costs of preserving certain washer units because of the injunction, costs that would not otherwise have been incurred if the injunction had not been given and if the defendants had been allowed to go ahead with plans to destroy the units. These included storage, insurance, and lost interest costs.
I also refer to the judgment of Spencer J. in Fletton Ltd. v. Peat Marwick Ltd.(1986), 7 B.C.L.R. (2d) 307 (S.C.), mentioned by the trial judge as well as the English Court of Appeal decision in Cheltenham & Gloucester Building Society v. Ricketts,  4 All E.R. 276. I also agree that since the proceeding is of an equitable nature, the principle adopted must be fair and reasonable in all of the circumstances rather than a slavish application of the rule to be applied: Air Express Ltd. v. Ansett Transport Industries (Operations) Pty. Ltd. (1979-1981), 146 C.L.R. 249 at 261 (Aust.H.C.).
It is submitted that in order to determine the damage or loss suffered by the Defendants as a result of the continuation of the limited partnership, the Court must compare the circumstances as they would have existed had the limited partnership been dissolved with the circumstances which actually existed as a result of its continuation.
 I am of the opinion, in the very peculiar circumstances of this case, that the learned trial judge did not make the error stated in the appellant's factum.
THE HONOURABLE MR. JUSTICE MACKENZIE            Vancouver, B.C.
THADDEUS YOUNG, GORDON SPRATT & ASSOCIATES LTD.
Gordon Spratt & Associates Ltd.
construction.  The architects were the overall designers.
provisions set out in s. 6(4) of the Limitations Act.
particularly the provision regarding their means of knowledge.
discretion conferred upon her by the plain words of Rule 18A.
and that there is no basis upon which this Court can interfere.
would have advised against joining the architect and engineer.
Marine Ltd. v. Washington Iron Works et al (1973), 40 D.L.R.
but is part of the picture.
  I would therefore dismiss the appeal and the cross-appeal.
"The Honourable Mr. Justice Esson"

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