Executive Summary: Key Legal and Evidentiary Issues

• Freedom Capital Inc. sought a broker fee from 661010 BC Ltd. and its director, Clive Kupritz, after a mortgage financing deal collapsed.
   
• Contractual language made the fee payable only if the defendants "cancelled" the loan commitments.
   
• Justice Schultes had to decide whether Kupritz's rejection of a revised financing proposal amounted to that cancellation.
   
• Competing affidavits from the parties raised preliminary admissibility disputes over notice and timing that the court resolved without excluding any evidence.
   
• Documentary evidence persuaded the court that the defendants' inability to afford the agreed fees, rather than any intentional cancellation, caused the loan to fail.
   
• A later costs ruling denied the defendants double costs on a settlement offer but ordered release of trust funds held during the litigation.
   

Facts of the case

Freedom Capital Inc., a mortgage broker whose sole director is Parbinder "Pip" Dhaliwal, brought a summary trial application against 661010 BC Ltd. and its sole director, Clive Kupritz, seeking a broker fee for arranging mortgage financing on four Delta properties owned by 661. On October 29, 2019, Freedom and 661 signed an agency agreement naming Freedom and referring broker Mary Mestaghi as 661's exclusive agents to arrange a mortgage of $2,280,000, with a brokerage commission of 4% of the gross mortgage amount. Freedom secured an offer from 1 City Financial Ltd. to lend 661 $2,310,000, with funding "expected to take place" by November 19. On November 12, 661 and Kupritz personally signed a separate fee agreement setting the broker fee at 2% of the mortgage amount, with a promissory note scheduling a combined $46,000 payable to Freedom on demand, and a Lawyer Direction to Pay instructing that $23,000 each go to Freedom and Mestaghi's company at closing.

A dispute then arose because a certificate of pending litigation required 661 to pay $287,000 into trust, leaving insufficient funds to cover the broker fees at closing. According to Freedom's senior mortgage specialist, Sylvia Morelos, Freedom proposed deferring half the combined lender and broker fees over eight months, secured by a second mortgage at 12% interest. She emailed this proposal to Kupritz on the evening of November 17, and the next night emailed again stating that Freedom had heard nothing further from him and was instructing the lender to cancel the file. Kupritz gave a different account: he found the original terms uneconomical, met Dhaliwal at a Starbucks on November 17 believing the original loan was off the table, received a "fresh" proposal by email that night, found it worse than the original, and told Morelos and Dhaliwal the next day that he would not proceed. Morelos denied that any "new loan" was ever proposed, characterizing the revised terms instead as an effort to help the defendants move forward with the existing loan. At his examination for discovery, Kupritz agreed he understood the promissory note's triggering events and agreed that he had "cancel[led] the loan."

Policy and legislative provisions at issue

The agency agreement provided that Freedom's commission became due on closing of financing from the lender, or, if a commitment had been accepted and executed by the borrower who then declined it, that Freedom could claim its full commission and other damages. The later fee agreement, signed personally by Kupritz, made the broker fee due on the earliest of three events: funding of the loan, the funding date specified in the commitment letter, or cancellation of the loan commitments by the borrowers. Because neither funding nor the scheduled funding date had occurred by the time Freedom ended its involvement, the case turned on whether the defendants' conduct constituted a "cancellation" within the third trigger.

Procedural rules also framed the preliminary disputes: the requirement that a corporate affidavit depose to the deponent's authorization, discussed in Bank of Montreal v. Brown; the rule against an applicant splitting its case and the restriction of a summary trial applicant's later affidavits to rebuttal evidence under Rule 9-7(8)(b)(i) of the Supreme Court Civil Rules; and the notice requirement for relying on discovery evidence under Rule 9-7(9)(a). In the companion costs decision, Rule 9-1(5)(a) permits an award of double costs after an offer to settle, and Rule 9-1(6) sets out the factors governing that discretion, including whether the offer ought reasonably to have been accepted.

Reasoning and analysis

On the preliminary objections, Justice Schultes found no prejudice warranting exclusion of any affidavit: Freedom had disavowed reliance on the deficient affidavit of Rosaleen Ram in favour of Morelos's affidavit, the defendants had been able to respond to that affidavit before the hearing, and defendants' counsel had used the discovery transcript to his own advantage despite the notice defect. Turning to the summary trial's suitability, the court applied principles summarized in its own prior decision in Kushty Consulting Ltd. v. Wissman, drawing on authorities including MacMillan v. Kaiser Equipment Ltd., Amacon Alaska Development Partnership v. ARC Digital Canada Corp., and Gichuru v. Pallai, and concluded that the documentary record allowed the essential issues to be resolved despite conflicting affidavits.

On the merits, the court found that the terms of the revised proposal were more consistent with Morelos's account than Kupritz's, since a delayed-payment structure would only make sense if the defendants could not afford the fees as originally structured. The court rejected Kupritz's version as implausible, including statements he attributed to Dhaliwal. Applying the objective approach to contractual interpretation from Sattva Capital Corp. v. Creston Moly Corp., the court held that "cancellation" of the loan commitments required intentional conduct by the borrowers preventing the loan from proceeding, not merely a failure to complete caused by an inability to afford agreed fees followed by a refusal of costlier alternative financing. On that basis, Kupritz's discovery admission that he had "cancelled" the loan was not determinative, since the surrounding facts showed his conduct stemmed from financial inability rather than a deliberate choice to abandon the loan. The court added that even if a cancellation had been found, the defendants' alternative argument based on Hadcock v. Georgia Pacific Securities Corp. — that Freedom had ended its involvement without insisting on performance or accepting repudiation — would not have succeeded, since a cancellation would trigger the fee directly rather than constitute a breach requiring an election of remedies.

In the later costs decision, the court applied the Rule 9-1(6) factors as explained in Hartshorne v. Hartshorne, focusing on whether the defendants' $3,000 settlement offer ought reasonably to have been accepted. The court found the offer bore only a marginal relationship to the amount in dispute, was unaccompanied by any supporting rationale, and was fairly described as a nuisance offer. The court also rejected the defendants' argument that the plaintiff should have recognized, once the discovery transcript was filed, that it lacked evidence of cancellation and accepted the offer, finding it was not unreasonable for the plaintiff to proceed to trial on its theory that the defendants' overall conduct amounted to cancellation.

Ruling and overall outcome

In the October 2025 decision, Justice Schultes dismissed Freedom's claim for the broker fee, finding that the defendants' financial inability to pay agreed fees, followed by their refusal of costlier deferred-payment terms, did not amount to a "cancellation" of the loan commitments as required to trigger the fee. The defendants were awarded their costs at the ordinary scale, subject to further submissions on any offers to settle. In the August 2026 costs decision, the court declined to award the defendants double costs, instead confirming their entitlement to ordinary costs at Scale B, and denied the defendants costs of the costs application itself since they were unsuccessful on that specific point. The court also ordered the release to the defendants of $49,243.09 held in trust by their counsel, funds that had been paid in to secure release of a certificate of pending litigation filed by Freedom.