Executive Summary: Key Legal and Evidentiary Issues

• Court considered whether a mortgagee’s sale of ALR farmland was conducted in a provident and commercially reasonable manner

• Dispute arose over the priority and validity of the mortgage between two corporate entities, potentially impacting entitlement to sale proceeds

• Appraisal and marketing history were evaluated to determine if the $650,000 sale price reflected fair market value

• Opposing party argued that undervaluation would prejudice future litigation over mortgage entitlement

• Evidence of market exposure and deteriorating improvements weighed heavily in the court’s approval

• The court dismissed the request for a preservation order based on speculative valuation and deferred cost resolution to the main action

Facts and outcome of the case

This case involved a dispute over the court-ordered sale of agricultural property located in Celista, British Columbia. The property, part of the Agricultural Land Reserve (ALR), was initially purchased in 2019 by Full Spectrum Medicinal Inc. (FSM) as part of a cannabis joint venture with Fiore Cannabis Ltd. and Chase Business Development Corp. The site featured two large prefabricated warehouse buildings, which fell into disrepair when the project stalled in 2020. In 2021, FSM obtained financing from SpringCreek Capital Corp., secured by a mortgage on the property.

In early 2023, SpringCreek initiated foreclosure proceedings due to default, and by court order was granted exclusive conduct of sale. The property had a troubled regulatory history, including a stop work order due to building code violations. SpringCreek listed the property with a commercial broker and marketed it over a 19-month period, ultimately accepting an offer from Hi-Grove Holdings Ltd. for $650,000—the only offer received. The offer was conditional only on court approval.

Chase Business Development Corp., a party to related litigation disputing the validity of SpringCreek’s mortgage, opposed the sale. Chase argued the property was worth significantly more and that the sale would prejudice its position in the mortgage entitlement dispute. It presented opinion evidence from a local realtor valuing the property closer to $1.47 million. However, the court found that the realtor lacked proper qualifications and had misrepresented key facts, including the state of the buildings and current use classification.

Justice Murray focused on whether the sale was provident—that is, fair and reasonable under the circumstances, even if potentially below market. Citing foreclosure principles, she noted the property was marketed for an extended period, drew limited interest, and required substantial, undetermined investment to bring it into compliance. She emphasized that mortgagees are not trustees for mortgagors and may sell in good faith even if the timing results in a lower price.

The court approved the $650,000 sale and dismissed Chase’s competing application for a preservation order. Costs for both applications were left to be determined as part of the ongoing litigation. No damages were awarded.