Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs sought recovery of $95,000 paid under an Assignment Agreement for a townhouse purchase that failed due to the Developer's foreclosure.

• Contractual ambiguity in clauses 5.2, 5.4, and 5.8 of the Assignment Agreement created inconsistencies regarding payment terms, trust obligations, and deposit treatment.

• Defendants argued surrounding circumstances and realtor negotiations demonstrated the $95,000 was intended as a direct payment to the defendants rather than a deposit held in trust.

• Plaintiffs' initial lawsuit against the Developer for $88,000 was inconsistent with their subsequent claim for $95,000 against the defendants, raising questions about post-contract conduct.

• Summary judgment under R. 9-6 was denied because genuine issues for trial existed regarding the parties' contractual intentions.

• Application for summary trial under R. 9-7 was also dismissed due to insufficient evidence of surrounding circumstances to properly interpret the ambiguous agreement.

The pre-construction townhouse purchase and assignment

In November 2021, Gursher Singh Bhangal, Satinder Singh Bhangal, and Narinder Singh Thandi entered into a pre-construction contract (the "Head Contract") to purchase a townhouse being built by West Point Pacific Construction (64th Ave) Ltd. (the "Developer") for a purchase price of $925,050. The defendants paid the Developer a deposit totalling $88,000, with the balance due on completion. The Head Contract set the latest completion date at 12 months from the estimated completion date of October 31, 2022, making the latest completion date October 31, 2023.

The assignment to the Parhars

On December 22, 2021, the defendants assigned their rights in the Head Contract to the plaintiffs, Gurdip Kaur Parhar and Puneet Singh Parhar, through an Assignment Agreement. The Assignment Agreement was negotiated by two realtors: Aarshdeep Dhillon on behalf of the defendants and Goldie Bhatti on behalf of the plaintiffs. Mr. Bhatti prepared the Assignment Agreement. Under the agreement, the plaintiffs were to pay the defendants a total "Assignment Amount" of $157,000. The first payment of $95,000 was to be made once the Developer consented to the assignment, and the balance of $62,000 was payable on the completion of the Head Contract. On December 23, 2021, upon receiving the Developer's consent to the assignment, the plaintiffs paid a total of $95,000 to the defendants.

The foreclosure and failed transaction

In or around June 2022, foreclosure proceedings were commenced against the Developer. The transfer of the townhouse to the plaintiffs was not submitted for registration to the Land Title Office by October 31, 2023, the Latest Completion Date. In December 2022, the plaintiffs commenced an action against the Developer and its principals, seeking damages and judgment against the Developer for $88,000, being the deposit paid under the Head Contract. In May 2024, the defendants were added to the same action, with the plaintiffs seeking judgment for $95,000, being the amount paid under the Assignment Agreement. The plaintiffs subsequently discontinued the action against the Developer and its principals.

The contractual provisions at issue

The central dispute revolved around the interpretation of several clauses within the Assignment Agreement. Clause 5.8 contained what the court termed the "Deposit Release Clause," which provided that if the transfer of the townhouse was not submitted for registration to the Land Title Office by the Latest Completion Date, then, at the option of the plaintiffs, the Assignment Amount was to be released to the plaintiffs and the Assignment Agreement would be terminated. However, clauses 5.2 and 5.4 also addressed payments, and the court identified glaring inconsistencies among them. Clause 5.2 referred to the $95,000 as a "deposit" to be delivered "in trust to DIRECT TO ASSIGNOR" and held in trust in accordance with the provisions of the Real Estate Services Act, S.B.C. 2004, c. 42. Clause 5.4 separately provided for the payment of $62,000, being the Assignment Amount other than the $95,000 deposit, and also provided for the payment of $95,000 to "Sellers" — a capitalized term not defined in the Assignment Agreement — and the balance of $62,000 on completion. Clause 5.8 further directed that the initial $88,000 deposit paid by the Assignor be "released to the Assignor" and the balance of the Assignment Amount ($69,000) be paid in trust by the Stakeholder and released to the Assignor on the transfer of the property. These provisions conflicted regarding who was to receive the money, to whom the monies were to be paid, and the basis on which those monies were to be held or released.

The summary judgment application under R. 9-6

The plaintiffs argued that the Deposit Release Clause in clause 5.8 provided a straightforward entitlement to the return of the $95,000, relying on the principles from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 on contract interpretation and Tang v. Zhang, 2013 BCCA 52 on the legal meaning of "deposits." The defendants countered that the plaintiffs' reading of those decisions was too narrow and that neither the law nor the facts were as straightforward as the plaintiffs argued. The court agreed with the defendants. The court noted that the plaintiffs' sole reliance on the Deposit Release Clause comprised in the last three lines of clause 5.8 ignored the surrounding circumstances, including Mr. Dhillon's evidence that he and Mr. Bhatti had agreed the plaintiffs would pay $95,000 to the defendants as soon as the Developer consented to the assignment, and his denial that there was any discussion about holding that money in trust. The court also observed that the plaintiffs initially sought to recover the $88,000 deposit from the Developer, a position that was inconsistent with their current position that they were entitled to $95,000 from the defendants. Given the ambiguity of the Assignment Agreement, the court noted that evidence of post-contract conduct could arguably inform interpretation. Justice Ahmad concluded that the defendants were not bound to lose and that there was a genuine issue for trial. The plaintiffs' application for summary judgment under R. 9-6 was dismissed.

The summary trial application under R. 9-7

The court then considered whether the matter could be resolved by summary trial. Under R. 9-7(15)(a), the court may grant judgment unless it is unable, on the whole of the evidence, to find the facts necessary to decide the issues of fact or law, or it would be unjust to decide the issues on the application. The court identified several factual questions that remained unresolved, including what the parties' representatives specifically discussed about whether the $95,000 would be paid directly to the defendants or held in trust, what the plaintiffs knew about the defendants' status or ability to hold the $95,000 "in trust" under the Real Estate Services Act, what was discussed about the Declaration of Deposit Form, why Mr. Dhillon did not delete the reference to "trust" in the provisions of the Assignment Agreement, and why the plaintiffs initially commenced the action against the Developer. The plaintiffs offered no evidence as to the surrounding circumstances about how or why the parties agreed to the payment provisions they did. The defendants purported to provide objective evidence of the parties' intention through the evidence of Mr. Dhillon; however, even that evidence raised issues requiring determination, most notably the absence of any explanation for the inclusion of "trust" language in clause 5.2. Without sufficient evidence regarding the surrounding circumstances, the court was unable to find the facts necessary to decide the issues raised on the application.

The ruling and outcome

Justice Ahmad dismissed both the plaintiffs' application for summary judgment under R. 9-6 and their application for summary trial under R. 9-7. The court acknowledged the importance of summary trial procedures in ensuring access to justice and did not discount the possibility that a summary trial might ultimately be suitable if further steps were taken to establish a more fulsome picture of the surrounding circumstances of the Assignment Agreement. The court suggested that more fulsome affidavit evidence from the realtors and, possibly, cross-examination, may assist, but declined to make specific orders in that regard given minimal submissions from the parties on the point. Either party was granted leave to re-apply for summary trial under R. 9-7, and the court noted it was not seized of any such future application. Costs of the application were awarded to the defendants, Gursher Singh Bhangal, Satinder Singh Bhangal, and Narinder Singh Thandi. No exact monetary amount was ordered in favour of any party on the merits, as the substantive claim for the $95,000 remains to be determined at a future proceeding.