Executive Summary: Key Legal and Evidentiary Issues

• Fox Island's registered mortgage over the Versante Hotel and P5 Parking Stalls was declared to have valid first priority over Bygenteel's unregistered leasehold interest under British Columbia's Land Title Act.

• Bygenteel failed to satisfy its onus under s. 29(2) of the LTA to prove that Fox Island had notice of the unregistered Bygenteel Agreements prior to registering its mortgage.

• No equitable fraud was established, as the Court found Fox Island acted as a normal lender in the ordinary course of business and conducted appropriate due diligence through its solicitor.

• Contemporaneous WeChat messages and email correspondence contradicted Mr. Ching's claims that he informed Fox Island's representative about the parking lease arrangements.

• A termination notice sent by 103 BC regarding the "Hotel Versante" trademark was declared a violation of the receivership stay of proceedings and of no force or effect.

• Solicitor-and-client costs were awarded against 103 BC for Mr. Ching's deliberate interference with the pending sale of the Hotel to 148 BC.

The Versante Hotel receivership and the parties involved

This case arises from a receivership proceeding involving the Versante Hotel, a luxury boutique hotel located in Richmond, British Columbia. The Hotel is part of a three-tower, mixed-use strata office, retail and hotel complex and development known as the International Trade Centre, built in 2018 and opened in 2021. The Hotel comprises 14 storeys, 100 guest rooms, event space, a restaurant, pool and penthouse lounge, with 84 parking stalls on Level 5 of the shared parkade (the "P5 Parking Stalls"). The Hotel property is owned by International Trade Center Properties Ltd. ("ITC"), one of a complex web of companies owned and controlled by Mo Yeung Ching (aka Michael Ching). Fox Island Development Ltd. and Advanced Venture Holding Co., Ltd. (collectively, "Fox Island") are the major secured creditors holding a first secured position with respect to the Hotel property.

The lending relationship and security arrangements

Fox Island advanced monies to ITC to refinance existing loans that had been obtained for the construction of the Hotel. Fox Island initially registered mortgages at the Land Title Office ("LTO") on October 10 and November 7, 2019. In 2021, a further loan agreement (the "Loan Agreement") was entered into and security granted by ITC in favour of Fox Island. Ultimately, Fox Island registered a mortgage and assignment of rents (collectively, the "Mortgage") against the Lands at the LTO on September 29, 2021. The loan agreements referred to ITC being the sole legal and beneficial owner of the Remainder Parcel (which includes the parkade) and Air Space Parcel 2 (the Hotel itself), and included ITC's representation and warranty that the property included approximately 333 parking stalls, 84 of which would be for the exclusive use of the Hotel and its guests on Parking Level 5. ITC defaulted under the Loan Agreement sometime in 2022/2023. In February 2023, Fox Island and ITC entered into a forbearance agreement, which also led to defaults. Despite extensions of the forbearance agreement in July and September 2023, further defaults followed. In December 2023, Fox Island made demand for repayment of the loan, which was then outstanding in the amount of approximately $78.9 million.

The Bygenteel Agreements and the parking stall dispute

A series of unregistered agreements involving non-arm's length parties created competing claims to the P5 Parking Stalls. On or about May 30, 2019, ITC, as landlord, leased to 1212429 B.C. Ltd. ("121"), as tenant, all of the parking stalls located on the Remainder Parcel under a 99-year Parking Head Lease. 121 is a company owned and controlled by Mr. Ching, who executed the Parking Head Lease on behalf of both parties. On or about November 5, 2019, 121, as assignor, assigned to Bygenteel Capital Inc. ("Bygenteel"), as assignee, a partial assignment of the Parking Head Lease in respect of the P5 Parking Stalls (the "Bygenteel Assignment"). Bygenteel is owned and controlled by Mr. Ching's daughter, Chung Lin Ching (aka Linda Ching). On or about July 1, 2021, Bygenteel, as landlord, leased the P5 Parking Stalls to Club Versante Management Ltd. ("Club Versante"), as tenant, under the "Club Versante Lease." Club Versante is a company owned and controlled by Ms. Ching, who signed the lease on behalf of both parties. The stated consideration for this lease was a one-time payment of $10.00. On or about August 15, 2021, Bygenteel, as vendor, entered into a purchase agreement with ITC, as purchaser, whereby Bygenteel agreed to transfer its right and interest in the P5 Parking Stalls for a purchase price of $6,000,000 (the "P5 Stalls Purchase Agreement"). The Receiver understood that this agreement never closed and the purchase price was not paid. None of these agreements were ever registered at the LTO.

The receivership and sale process

On January 24, 2024, Fox Island commenced this foreclosure proceeding. On February 29, 2024, Associate Judge Robertson granted Fox Island an Order Nisi, which included a declaration that the Mortgage was a charge on the Lands in priority to the claims, interests and charges in the Lands to the Debtor/Respondents, and a determination of a redemption amount of approximately $79.7 million. No one appeared for the Debtor/Respondents on that application. On March 4, 2025, the Court appointed Deloitte Restructuring Inc. as receiver of the Lands (the "Receiver"). The Receiver investigated the competing claims to the P5 Parking Stalls, and to resolve the continuing concerns regarding their ownership and the impact of any uncertainty in the context of a sale of the Lands, the Receiver entered into a settlement agreement with the various participants and claimants. On July 15, 2025, the Court approved the settlement agreement, which preserved the rights of Fox Island, Bygenteel, 121 and Club Versante with respect to any claims each party may have to the allocation of net proceeds arising from the value of the P5 Parking Stalls, with such proceeds to be held in trust by the Receiver pending further agreement or a court order. At a contested hearing in October 2025, the Court settled the amount of the Parking Stalls Net Proceeds to be held upon any sale at $4.2 million.

The legal framework and the question of notice

The central legal issue was whether Bygenteel's unregistered interest could override Fox Island's registered mortgage under s. 29(2) of the Land Title Act, R.S.B.C. 1996, c. 250. This provision requires two elements: first, that the registered interest holder (Fox Island) had notice—express, implied, or constructive—of the unregistered interest prior to registration; and second, that Fox Island engaged in "equitable fraud." Applying the test from Vancouver City Savings Credit Union v. Serving for Success Consulting Ltd., 2011 BCSC 124 ("VanCity"), the Court held that before a finding of equitable fraud can be made, there must be evidence of actual notice coupled with some act of dishonesty or deceit on the part of the person seeking the protection of s. 29 of the Land Title Act. The onus of establishing fraud under s. 29(2) falls on the holder of the unregistered interest (Bygenteel), and fraud is never presumed.

The evidence on notice and the Court's findings

The Court examined the competing evidence of Wen Yong Wang, a representative of Fox Island, and Mr. Ching. Mr. Ching claimed he told Mr. Wang about the parking lease arrangements and provided him with marketing materials including a 2016 "Amended Information Statement," but offered only bald assertions without contemporaneous supporting documentation. Mr. Wang, by contrast, produced a contemporaneous WeChat message dated August 22, 2019, which showed their first meeting occurred that day. In that message, Mr. Wang summarized the proposed collateral as including the Hotel and "100 parking spaces," and Mr. Ching replied the same day stating that the only inaccuracy was regarding the restaurants—making no mention of any lease regarding the P5 Parking Stalls, including the Parking Head Lease that had been executed months before. Fox Island's solicitor, Shiu-Yuen Choi of Norton Rose Fulbright, also repeatedly requested from ITC's counsel, Pryke Lambert Leathley Russell LLP, copies of all agreements related to the ownership or use of the parking stalls. At no time did ITC's counsel provide any lease, sublease, or other agreement relating to the P5 Parking Stalls. The Court found Mr. Wang's evidence more credible and reliable, and concluded as a fact that at no time prior to the registration of the Mortgage did Fox Island have any notice, express or implied, of the existence of the Bygenteel Agreements.

The trademark and digital accounts dispute

In a related decision issued the same day, the Court addressed a dispute over the "Hotel Versante" trademark and critical digital accounts. On February 4, 2026, Mr. Ching sent a termination notice on behalf of 1036524 B.C. Ltd. ("103 BC") to the Receiver, purporting to terminate the Trademark Agreement with an effective date of March 31, 2026. This occurred just one week before the original closing date for the sale of the Hotel to 1483810 B.C. Ltd. ("148 BC"), an affiliate of the petitioners. The Receiver also sought full administrative access and control over the Digital Accounts—various online platforms such as booking sites, Google Workspace and social media accounts—which were critical to the Hotel's ongoing operations. On February 16, 2026, Mr. Ching responded by advising the Receiver that he was concerned about giving up control of the Digital Accounts and indicated that access would only be provided once the Trademark was removed from the Hotel in accordance with the termination notice. In the midst of the ongoing discussions, and prior to the Receiver's notice of application being filed on February 19, 2026, 103 BC retained new insolvency counsel who began to facilitate a resolution. Ultimately, agreement was reached between the parties on the substantive relief. The Court declared the termination notice a violation of the stay of proceedings under the Amended and Restated Receivership Order, declared it of no force or effect, and ordered the transfer of the Digital Accounts to the Receiver.

The ruling and outcome

The Court ruled in favour of Fox Island on both applications. In the first decision (2026 BCSC 294), Justice Fitzpatrick granted the declaration that the petitioners have valid and enforceable first priority security over the P5 Parking Stalls and the Parking Stalls Net Proceeds, as defined in the Order of July 15, 2025. Costs were awarded in favour of the petitioners against all of the Debtor/Respondents, on a joint and several basis, on a full indemnity basis in accordance with section 7(h) of the Mortgage. Costs were also awarded in favour of the petitioners against Bygenteel on a party and party basis, joint and several with the cost award against the Debtor/Respondents. In the second decision (2026 BCSC 441), the Court declared the trademark termination notice of no force or effect, declared the Digital Accounts to be assets of Hotel Versante Ltd. and part of the approved sale, and ordered their transfer to the Receiver. The Court found that Mr. Ching's actions, beginning on February 4, 2026, both personally and on behalf of 103 BC, were designed to interfere in the looming sale to 148 BC. Solicitor-and-client costs were awarded to both the Receiver and the petitioners against 103 BC in relation to steps taken from February 9, 2026 to the date of judgment, with costs to be assessed before the Registrar.