Executive Summary: Key Legal and Evidentiary Issues

• Deliberate defaults by Paul DeThomas and Glen Valley Cannabis Ltd., followed by an application filed about three years and four and a half months after judgment, weighed strongly against setting aside the default judgment.
   
• Personal guarantee terms that named Cion Farms Ltd. as borrower and required payment upon demand gave Mr. DeThomas defences worthy of investigation.
   
• Unreconciled mortgage-schedule entries and an alleged business-interference claim gave GVC a partial defence, which did not outweigh its default, its delay and Ceridwen’s interest in retaining the judgment.
   
• Corporate claims held by Ceridwen Holdings Ltd. against the Curtises were choses in action captured by a family-law restraining order made under s 91 of the Family Law Act.
   
• Settling those claims without Mr. DeThomas’s prior written consent or a further court order was a prohibited dealing that fell outside the order’s ordinary-course-of-business exception.
   
• Because the proposed one-third/two-thirds split of the $350,000 Holdback Funds rested entirely on that settlement, the court refused to order the distribution.
   

Facts of the case

Ceridwen Holdings Ltd., formerly DeThomas Family Holdings Ltd., is a family holding company established during the marriage of Kimberly Cawson and Paul DeThomas. It financed a cannabis cultivation venture in Langley, British Columbia, that Mr. DeThomas undertook with his longtime friends Grant and Jillian Curtis. The venture ran first through Cion Farms Ltd., incorporated in January 2018, and later through Glen Valley Cannabis Ltd. (GVC), incorporated in April 2018.

Ceridwen alleges it lent money to Cion between February and August 2018, and it relies on personal guarantees dated September 2018. After operations moved to GVC later that year, a Consolidated Promissory Note dated December 31, 2018 identified GVC as borrower. It recorded a mortgage payable of about $3.17 million and an operations payable of about $3.16 million. Ceridwen further alleges advances of about $2.19 million to GVC in 2019 and 2020, and it relies on a warehouse lease providing for monthly rent of $25,000. The Curtises dispute that the advances were made and deny executing the guarantees attributed to them.

Mr. DeThomas and Ms. Cawson separated on July 9, 2020, and their interests in Ceridwen form part of the asset pool in their family law proceedings. That year, GVC agreed to sell its land for approximately $3.6 million. The sale included a manufactured home the Curtises had purchased and installed for about $350,000. Under a holdback agreement reached on or about August 17, 2020, the Curtises agreed to discharge a certificate of pending litigation. In exchange, $350,000 of the sale proceeds would be held in trust pending agreement or court order. Ceridwen consented while preserving its claimed priority as second mortgagee.

Ceridwen sued GVC and the Curtises on November 19, 2020, and added Cion and Mr. DeThomas as defendants in February 2022. Mr. DeThomas was personally served on April 10, 2022. On May 11, 2022, he emailed Ceridwen’s counsel: “Please proceed with the default judgment.” GVC’s counsel, who had accepted service, advised on May 26, 2022 that the firm was no longer acting. Default judgment was entered against Mr. DeThomas, GVC and Cion on June 2, 2022, with damages and costs to be assessed.

In October 2023, while a family-law restraining order was in force, Ceridwen settled with the Curtises. Mr. DeThomas and GVC applied to set aside the default judgment on October 20, 2025. Separately, Ceridwen and the Curtises applied to distribute the Holdback Funds under their settlement, and Ceridwen sought an assessment of approximately $9.45 million in damages.

Policy and legislative provisions at issue

The restraining order was made on August 4, 2023 in the family proceeding under s 91 of the Family Law Act. It applied to Ms. Cawson personally and in her capacity as majority shareholder, director, or officer of the corporations listed in Schedule A, which expressly included Ceridwen. Paragraph 2(a) restrained any transfer, sale, conversion, disposition, encumbrance, assignment, or similar dealing with assets held personally or corporately in which Mr. DeThomas has or may have an interest. Those dealings required his prior written consent or a further court order. Paragraph 2(c) permitted expenditures in the ordinary course of business. It excluded the liquidation or disposition of corporate assets, including transactions that may defeat or adversely affect his interest.

Under the Settlement Agreement, the Curtises agreed to pay Ceridwen one-third of the Holdback Funds and 75% of the proceeds of any future sale of Grant Curtis’s GVC shares. In return, Ceridwen agreed to credit share revenue against the Curtises’ indebtedness. Under cl 5, it also agreed not to collect the remaining debt until all the shares had been sold, and no deadline was set for those sales. Clause 9 provided that a settling party would not pursue a related claim against another person who might seek contribution or indemnity from a settling party.

Mr. DeThomas’s guarantee required payment “forthwith upon demand by the Lender” under cl 2.1. Clause 2.3 waived notice of the borrower’s default, while cl 3.1(d) provided that a novation did not release the guarantor. Clause 6.4 made the guarantee the entire agreement, and cl 6.5 required any amendment or waiver to be in writing and signed by the lender. Rule 3-8(11) of the Supreme Court Civil Rules gave the court discretion to set aside the default judgment in the interests of justice.

Reasoning and analysis

Applying the Miracle Feeds considerations as summarized in 1163499 B.C. Ltd. v Holm, 2026 BCCA 270, the court found that both applicants defaulted deliberately. Mr. DeThomas explained that he believed the litigation was a family strategy aimed at the Curtises. That belief ceased to be objectively reasonable once he was served with a pleading seeking judgment against him personally. His explanation carried even less weight for GVC, which was represented by counsel when served.

Delay also weighed strongly against both applicants. Mr. DeThomas acknowledged the judgment at his examination for discovery in the family proceeding on November 4, 2022. He estimated the amount owing at less than $2 million while acknowledging that Ceridwen claimed more than $9 million. Even so, neither applicant moved for relief until October 2025.

On the third consideration, the court found that Mr. DeThomas had identified defences worthy of investigation. His guarantee named Cion as borrower, which raised the question whether it extended to the obligations now claimed. In addition, no pre-action demand under cl 2.1 appeared in the materials. Those defences did not resolve Ceridwen’s separate allegation that he personally indemnified GVC’s lease obligations.

GVC’s defences were weaker. Mr. DeThomas did not recognize the Consolidated Promissory Note, but he did not positively assert that it was forged. His evidence about the lease did not, by itself, establish that it was not executed. Still, a mortgage schedule exhibited in the evidence recorded a December 31, 2020 adjustment of negative $2,130,128 and a closing balance of negative $610,118, followed by a January 2021 opening balance of $1,520,010. Ms. Cawson’s evidence did not expressly reconcile those entries. Taken with the proposed business-interference claim, that evidence met the low threshold for a partial defence.

Turning to the settlement, the court held that Ceridwen’s claims against the Curtises were corporate choses in action captured by the express wording of the restraining order. The settlement prescribed when and on what terms Ceridwen could collect the remaining debt, along with conditions for discontinuance and release, so it was a dealing with those claims. It also fell outside the ordinary-course exception, because it was a compromise of litigation claims rather than an expenditure incurred to operate the business. The result was the same on a broader reading informed by Louie v Zhou, 2019 BCSC 799. The evidence did not establish that compromising substantial litigation claims formed part of Ceridwen’s ordinary day-to-day activities.

The court declined to determine an alternative request to vary the restraining order. The record did not permit a meaningful comparison of what Ceridwen was giving up against what it might receive, so the request was left for a properly supported application. Because the proposed allocation of the Holdback Funds derived entirely from the settlement, the settlement could not supply the legal foundation for distribution. The court did not decide whether any party has a separate entitlement to the funds.

In the overall balance, Ceridwen identified no lost document, unavailable witness, or other evidence that had dissipated, although reopening would deprive it of a judgment fixing liability. Mr. DeThomas’s guarantee defences went to whether he is personally liable for significant portions of the debt claimed. An assessment of damages could not provide an equivalent opportunity to determine that issue. By contrast, much of GVC’s challenge to the amounts claimed could be addressed through an assessment. In GVC’s case, the considerations favouring reopening did not outweigh those favouring finality.

Ruling and overall outcome

Mr. DeThomas succeeded in having the June 2, 2022 default judgment set aside insofar as it concerns him, and he must file an amended response within 21 days. GVC’s application was dismissed. The judgments against GVC and Cion remain in place, with Ceridwen’s damages against both to be assessed at trial together with its claims against Mr. DeThomas.

Mr. DeThomas and GVC also succeeded in opposing distribution of the Holdback Funds. The funds remain in trust under the 2020 Holdback Agreement, subject to the restraining order, pending agreement or further court order. Ceridwen’s assessment application was dismissed as it concerned Mr. DeThomas, although its underlying claims against him were not dismissed. The parts of that application concerning GVC and Cion were adjourned to trial.

The parties must take the steps required to arrange a case planning conference within 60 days. No monetary amount was awarded, and damages remain unassessed. Costs were reserved, and if the parties cannot agree, each may file written submissions of no more than five pages within 30 days.