Executive Summary: Key Legal and Evidentiary Issues

• Appeal focused on whether Johan Nielsen, a self-represented member and former interim director of the Stave Gardens Community Association, was denied procedural fairness when his costs application was dismissed and he was declared a vexatious litigant with special costs ordered against him.

• The court held that Nielsen was not given a meaningful opportunity to be heard on either his own costs application or the respondents’ applications for special costs and vexatious litigant relief, rendering the chambers process procedurally unfair.

• The dispute arose from governance of the Stave Gardens Community Association and its assets, including about $260,000 in proceeds realized after property was recovered and sold to satisfy a tax liability, and concerns over the use of Society resources in related defamation litigation.

• The respondents obtained an ex parte order on November 1, 2023 suspending all business of the Society and directing that virtually all Society assets be held in term deposits, before the notice of civil claim was served on the Society or members of the group described as a “ghost board of directors”.

• The evidentiary record showed that while Nielsen filed multiple applications and made procedural errors, his efforts were directed at challenging the ex parte November 1 Order and its consequences for the Society, and did not amount to habitual, meritless or abusive litigation.

• The court allowed the appeal, set aside all four terms of the February 18, 2025 order, dismissed the respondents’ January 28, 2025 application for vexatious litigant and special costs, remitted Nielsen’s December 23, 2024 costs application to the Supreme Court of British Columbia for a new hearing, and awarded Nielsen his costs of the appeal.

Facts and outcome of the case

Background and parties

The dispute involves the Stave Gardens Community Association, a society whose directors at various times included the appellant, Johan Nielsen, and the respondents, Colleen Beland, Greg Cowan, Brendan Keys and Birgit Keys. The respondents participated in a process to restore the Society and recover property that had escheated to the Attorney General. After selling the property to pay a tax liability, they left proceeds of approximately $260,000. Other members complained that the respondents had not been transparent in their dealings, and allegedly defamatory comments about the respondents were posted on social media. In September 2023 the respondents filed a defamation action against other Society members, not including Nielsen. On September 27, 2023, other members voted to remove the respondents from the board of directors, a process the respondents opposed. The respondents became concerned that the new board would use Society resources to fund the defence of the defamation action.

Ex parte orders and Nielsen’s applications

On October 23, 2023, the respondents filed a notice of civil claim, naming themselves as plaintiffs and the Society as defendant. They sought an order suspending all business of the Society pending resolution of the defamation action (except for annual filings to keep it in good standing) and an order requiring the Society’s directors to reinvest all Society assets into term deposit accounts for no less than three years or until resolution of the defamation proceeding, with a nominal $10,000 left in the chequing account and annual expenses of $4,294.95 to be included in that amount. They brought an ex parte application for this relief before one judge on October 26, 2023, which the clerk’s notes record as dismissed. On November 1, 2023, the respondents brought the same application ex parte before another chambers judge, without having served the Society or the members of the “ghost board of directors”, and without amending their materials other than adding a copy of the Societies Act. The chambers judge granted the orders sought, suspending all business of the Society and directing the reinvestment of the Society’s assets into term deposits (the November 1 Order). Nielsen, a Society member and former interim director, then filed applications beginning November 9, 2023 seeking to be added as a party, to set aside or modify the November 1 Order, and to address the validity of an annual general meeting held on the evening of November 1. Because of service difficulties and confusion, he filed several notices of application in November and December 2023, and later obtained an order for substituted service. He continued to seek relief related to the November 1 Order and his role in the Society.

Discontinuance, consent order and costs applications

After the respondents retained counsel, the hearing of Nielsen’s December 2023 applications was adjourned by consent to allow settlement discussions. Counsel told Nielsen that the discussions were being conducted with serious intent and that, if negotiations failed, he could bring back both applications on four days’ notice. The matter did not settle. Instead, on January 17, 2024, the respondents filed a requisition for a consent order that set aside the November 1 Order and directed the Society to resume normal business activities. The requisition was signed by counsel for the plaintiffs and by respondent Colleen Beland, purporting to act as representative of the Society. On February 6, 2024, the respondents filed a notice of discontinuance of the action. The consent order was signed and entered on February 12, 2024. On February 16, 2024, the respondents filed a further application, returnable March 5, 2024, to cancel the term of the November 1 Order suspending the Society’s business as of February 6, 2024, citing a need to correct an “irregularity”. That application was stated to be on notice to Nielsen. A judge granted the order on March 5, 2024. On February 28, 2024, Nielsen filed another application seeking to set aside the November 1 Order and the consent order, suspend the discontinuance until the Society filed a response and counterclaim, declare that the November 1 Order appeared to have been obtained fraudulently, and obtain directions regarding the Society. On March 12, 2024, when that application came before the chambers judge, the court concluded the action was “gone” because of the discontinuance, stated there was no authority to do anything further, and directed that Nielsen’s earlier December 13 and 22, 2023 applications were “simply gone” and should not be pursued. Nielsen confirmed he would not proceed with them. On December 23, 2024, Nielsen filed a new application seeking costs he had incurred in the discontinued proceeding, relying on the rule that a party discontinuing must pay the costs of the other party. He sought special costs on the basis of alleged abuse of process and contempt. On January 28, 2025, the respondents filed a cross-application seeking orders restricting Nielsen from commencing proceedings without leave and requiring him to pay lump sum special costs for what they described as “reprehensible conduct”.

Chambers decision on costs and vexatious litigant relief

Both applications were heard on February 18, 2025 before the same chambers judge who had issued the November 1 Order. The court questioned Nielsen’s standing to seek costs as a non-party in a discontinued action and dismissed his application, stating that bringing the application was not appropriate and indicating that there was no point in hearing further submissions from him on costs. Turning to the respondents’ application, the court heard submissions that Nielsen had brought improper and vexatious applications and had failed to heed earlier directions not to bring more applications in the discontinued action. When asked to respond, Nielsen tried to explain the history of the proceeding and his reasons for bringing applications, including that he believed he had misunderstood the law on costs after discontinuance, but the court declined to hear a full explanation and described his conduct as vexatious litigation. The court ordered Nielsen to pay lump sum costs of $3,000 to the respondents within 45 days, ordered that he not file any new materials in relation to the action, and ordered that he not commence any proceedings against the respondents in the Supreme Court of British Columbia without first obtaining leave of a justice.

Appeal and outcome

Nielsen appealed, arguing that the hearing was procedurally unfair and that the chambers judge erred in granting the respondents’ orders while stating there was no jurisdiction to grant his. The court held that although the impugned orders were discretionary, the process leading to them was demonstrably unfair. It found that Nielsen was not given a meaningful opportunity to be heard on matters central to the applications, particularly given the seriousness of a vexatious litigant finding and a special costs order, and that his repeated, respectful requests to explain the procedural history and his position were refused. The court also reviewed the record and concluded there was no basis to find that Nielsen had habitually, persistently and without reasonable grounds instituted vexatious legal proceedings, or that his conduct justified special costs. The court allowed the appeal, set aside all four terms of the February 18, 2025 order, dismissed the respondents’ January 28, 2025 application, and remitted Nielsen’s December 23, 2024 costs application to the Supreme Court of British Columbia for a new hearing. It ordered that Nielsen is entitled to the costs of the appeal.