Executive Summary: Key Legal and Evidentiary Issues

• 617436 B.C. Ltd. assigned the same property purchase rights to two different parties, leading to a contractual dispute.

• 1261682 B.C. Ltd. paid a $500,000 deposit under an assignment agreement it believed was exclusive.

• The key legal issue was whether 617’s misrepresentations about its authority to assign were fundamental breaches.

• The court analyzed whether 126 affirmed or repudiated the agreement after discovering the competing assignment.

• 617 claimed 126 breached the contract by attaching conditions to a second payment and paying through a lawyer.

• The court held 126 was misled, did not repudiate the agreement, and was entitled to the return of the deposit with interest and costs.

Facts and outcome of the case

In this case, the plaintiff, 1261682 B.C. Ltd. ("126"), sought the return of a $500,000 deposit paid to 617436 B.C. Ltd. ("617") under an assignment agreement for the purchase of a commercial property in Surrey, British Columbia. Unbeknownst to 126 at the time of contracting, 617 had already assigned the same rights to another party, Canada Road Holdings Ltd., prior to entering into the assignment with 126.

The assignment agreement signed on October 18, 2021, included representations from 617 that it had not previously assigned its rights and had full authority to do so. These were later proven false. 126 made an initial $500,000 payment into trust and attempted to make a second payment, but requested confirmation from 617 affirming the truth of the representations before releasing funds. 617 rejected the conditional payment, terminated the contract, and retained the deposit. 126 subsequently filed a lawsuit on November 15, 2021, to recover the funds.

At trial, the court considered whether 617’s misrepresentations constituted a fundamental breach of contract, whether 126 had affirmed the agreement despite knowledge of the breach, and whether 126’s method of making the second payment amounted to repudiation. The judge found that 617 had fundamentally breached the agreement by falsely claiming it had exclusive rights to assign the property. Furthermore, 126 was not aware of the breach at the time of payment and had not affirmed the contract. The court rejected 617’s argument that 126 had repudiated the agreement by making a conditional payment through counsel.

As a result, the court ruled in favor of 126. It ordered that the $500,000 deposit be returned, along with prejudgment interest starting from October 20, 2021. Costs were awarded to 126 at Scale B. A claim against Mr. Inderjit Singh Virk, a director of 617, was discontinued on the first day of trial; he was awarded costs at Scale B as well. The court declined to award special costs to either party, finding that neither side’s conduct rose to the level of reprehensibility required.