Executive Summary: Key Legal and Evidentiary Issues

• The Court held that the defendants lost the right to a statutory stay in favour of London arbitration because they filed a response to civil claim addressing the merits before bringing a stay application under s. 8(1) of the International Commercial Arbitration Act.

• The May 2021 Cascadero Loan and the June 2021 Pangaea Loan were found suitable for determination by summary trial, resulting in money judgments against InCor Holdings and, for the Pangaea Loan, jointly and severally against Pangaea.

• Ms. Bennett, Mr. Molyviatis and Pangaea were declared in contempt of a disclosure order ancillary to a Mareva injunction for failing to provide sworn worldwide asset lists and account statements, and were ordered to post substantial security for good behaviour.

• The Court declined to expand the Mareva injunction but left it in place, while later striking the responses to civil claim of Ms. Bennett, Mr. Molyviatis and InCor Services for chronic non-compliance with rules and court orders.

• After striking those defences, the Court granted judgment against Ms. Bennett, Mr. Molyviatis and InCor Services, jointly and severally, for multiple loans and investments based on pleaded and now-deemed-admitted fraudulent misrepresentation and unjust enrichment claims.

• Special costs were awarded against the Application Respondents for this application and for the proceeding up to that point, based on conduct the Court characterized as reprehensible.                                                                                                                                                                                                                       

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Background and parties

Mr. Lorne Harder retired in February 2019 after more than 30 years in the insurance industry, having sold his major shareholdings in a large regional brokerage. He then pursued investments through Springhill Investments Ltd. and Harder Investments Ltd., of which he is the sole shareholder, officer and director.

In May 2019, Mr. Harder met Jocelyn Bennett and George Molyviatis. At that time, both Mr. Harder and Mr. Molyviatis were investors in Cascadero Copper Corporation. Mr. Harder developed a rapport with them and came to trust them. They represented to him that they had significant experience in public markets and in expanding mining companies, that Ms. Bennett managed investment funds for high net worth clients and for InCor Holdings, and that Mr. Molyviatis was an experienced international financier with over 25 years of investment and banking project experience. They also represented themselves to him as very high net-worth individuals.

InCor Holdings Limited is an English holding company controlled by Ms. Bennett and Mr. Molyviatis. It owns shares and invests in subsidiary companies primarily in the mineral and gold mining business. Pangaea Resources Limited is another company also wholly owned or controlled by them (at least at the material times), and they are its directors and shareholders. InCor Energy Minerals/Energy Materials entities, InCor LeadFX Limited Partnership, LeadFX Inc., InCor Holdings PLC and InCor Services Limited are also defendants associated with them. The plaintiffs say the particular inter-company relationships are unclear, and the Court noted that Bennett and Molyviatis apparently treated their various companies “almost interchangeably and without explanation.”

Mr. Harder, through Springhill and Harder Investments, invested approximately $7 million between October 2019 and March 2020 in companies controlled by or associated with Ms. Bennett and Mr. Molyviatis, and also loaned some $11.35 million to companies controlled by or associated with them, including InCor Holdings and, at least indirectly, Pangaea.

Equity investments and arbitration clauses

In October 2019, Springhill, represented by Mr. Harder, entered into a Framework Agreement with InCor Holdings Limited (IHL), InCor Energy Minerals Limited (IEML), Ms. Bennett and Mr. Molyviatis. The first transaction under that agreement was Springhill’s purchase of common shares in IHL for $3.5 million, resulting in a 12.3% interest in IHL. The second transaction was Springhill’s purchase of partnership units in IEML for $1.5 million. In March 2020, Springhill entered into a further sale agreement with IHL to purchase an additional two million partnership units in IEML for $2 million.

The Framework Agreement contained a “Governing Law and Jurisdiction” clause providing that it and related documents, and any non-contractual obligations arising out of or in connection with them, were governed by the laws of England and Wales. It further provided that any dispute or claim arising out of or in connection with the Framework Agreement, including disputes relating to non-contractual obligations and negotiations, “shall be referred to and finally resolved by arbitration under the LCIA Rules,” with three arbitrators, the seat of arbitration in London, and English as the language. The March 2020 sale agreement had an arbitration clause materially identical to the one in the Framework Agreement.

The plaintiffs plead that these investments (the InCor share purchase and limited partnership investments) were made in reliance on “Investment Representations.” These include alleged representations that InCor Holdings was directly or indirectly invested in LeadFX, that the equity injection from Springhill would be used to increase ownership in LeadFX, that InCor Energy Materials was or was to be the general partner in InCor LeadFX Limited Partnership and held shares in LeadFX, and that the strategy was to fund LeadFX in the short term and that its mine would be open in two years. They also allege non-disclosure of allegations of fraud, misappropriation and securities misconduct, including criminal investigations in Switzerland concerning Ms. Bennett and Mr. Molyviatis.

Those investment claims, including fraudulent and negligent misrepresentation, unlawful means conspiracy, breach of contract and unjust enrichment, remained in the action and were later addressed in part against some defendants after defences were struck.

Loan transactions and alleged misrepresentations

The notice of civil claim and later reasons identify several loans. Two of them were the focus of the summary trial: the May 2021 Cascadero Loan and the June 2021 Pangaea Loan. A further March 2022 loan to InCor Holdings was also pleaded and was dealt with in the later striking-out judgment.

In May 2021, Mr. Harder, through Springhill, loaned InCor Holdings $6,538,000 to finance the purchase of shares in Cascadero Copper (the Cascadero Loan). Ms. Bennett and Mr. Molyviatis represented that the loan would be secured by shares that InCor Holdings owned or would acquire in four other companies, with an estimated value of $8.5 million, and that the loan would be short-term. They also represented that Springhill would receive 500,000 InCor Holdings shares with a par value of €0.10 per share as “interest.”

These terms were reflected in a May 17, 2021 email from Ms. Bennett to Mr. Harder and in a promissory note that Ms. Bennett drafted and signed on behalf of InCor Holdings. The promissory note promised to pay Springhill the principal sum of $6,308,050 on or before December 31, 2021, and provided that Springhill would receive 500,000 ordinary shares of InCor Holdings “as full payment of interest on the Principal.” Mr. Harder advanced funds both by wiring money to InCor Services Ltd. as directed, and by purchasing Cascadero shares on InCor’s behalf. The total advanced under this arrangement was $6,538,000, almost $300,000 more than the face amount stated in the note.

In June 2021, Ms. Bennett approached Mr. Harder for a second loan of $4 million to assist Besra Gold Inc. in completing an initial public offering on the Australian Securities Exchange (the Pangaea Loan). In a June 21, 2021 email, she stated that InCor Holdings and Pangaea owned Besra interests and needed to pay $4 million to another investor to allow the IPO to proceed. She asked if Mr. Harder would consider a short-term loan “for a maximum of 3 months,” with an expectation that the repayment term would be shorter, and proposed that he be paid a fee of one million Besra CDIs at A$0.20. She further said that Pangaea would provide security by assigning payments due under existing and future agreements for sales of Pangaea’s Besra shares.

Mr. Harder agreed to advance the $4 million. A promissory note dated June 21, 2021, signed on behalf of InCor Holdings, promised to repay $4 million by December 31, 2021, with “interest” as one million Besra shares at A$0.20. Ms. Bennett confirmed receipt of the funds and told Mr. Harder they were preparing a promissory note/loan agreement between InCor Holdings and Pangaea to grant the specific security over Pangaea’s assets.

The Besra IPO completed in October 2021, raising about $10 million, but no repayment or security was provided by that deadline. Later, InCor paid $1 million on July 27, 2022 and $1 million on October 12, 2022. The Court found, based on communications and surrounding context, that those payments were made on the Pangaea Loan.

The plaintiffs also pleaded a March 2022 loan to InCor Holdings of $350,000 (the March 2022 InCor Holdings Loan). They allege Ms. Bennett, Mr. Molyviatis and/or InCor Holdings represented it as a short-term loan for InCor’s business and that those representations were untrue because the funds were not used as stated and were not repaid in the short term or at all.

In addition, the plaintiffs made three loans totalling $1.05 million to LeadFX, which are mentioned in the reasons but were not part of the 2024 summary trial or the 2026 striking-out judgment.

Mareva injunction and disclosure obligations

When the plaintiffs commenced their action in October 2023, they also applied for what they described as a worldwide Mareva injunction. Justice Milman granted a Mareva injunction on more limited terms than sought. He found there was a strong prima facie case for the loan-related claims but not for the investment claims. He ordered that certain securities or proceeds from securities owned directly or indirectly by InCor Holdings, Pangaea, Ms. Bennett and Mr. Molyviatis be frozen.

He found that the interests of justice supported freezing “at a minimum” $8,858,050 of InCor Holdings’ assets to secure the amounts owing under the May 17, 2021 promissory note ($6,308,050 plus approximately $50,000 in share-based “interest”), the June 21, 2021 promissory note ($2 million plus approximately $50,000 in interest), and another December 13, 2021 loan (which was not part of the 2024 summary trial). He further found that Pangaea’s assets should be frozen to the extent necessary to secure $2,050,000 (relating to the Pangaea Loan) if InCor’s assets proved insufficient.

To give effect to the Mareva injunction, he ordered each of InCor Holdings, Pangaea, Ms. Bennett and Mr. Molyviatis to provide, within 10 days of service of the order, a sworn list of all worldwide assets, together with brokerage and bank account statements from August 2021 onward. It is recorded that InCor Holdings provided the required disclosure, but Pangaea, Ms. Bennett and Mr. Molyviatis did not. They appealed and obtained a stay of the disclosure obligation pending appeal. The Court of Appeal later dismissed the appeal and the stay lapsed, at which point the disclosure obligation revived.

On October 8, 2024, Justice Walker ordered Pangaea, Ms. Bennett and Mr. Molyviatis to provide an updated list of assets and a list of documents by October 18, 2024. They did not comply. This non-compliance led to the contempt application and subsequent sanctions.

Stay application under the International Commercial Arbitration Act

Relying on the arbitration clauses in the investment agreements, InCor Holdings and InCor Energy Minerals applied under s. 8 of the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233, to stay the B.C. action in favour of arbitration in London. Section 8(1) allows a party to an arbitration agreement to apply to stay legal proceedings “before submitting the party’s first statement on the substance of the dispute.” Section 8(2) makes a stay mandatory once the statutory preconditions are satisfied.

The plaintiffs argued that the defendants had already submitted a “first statement on the substance of the dispute” through: (a) two affidavits sworn by Ms. Bennett in response to the Mareva injunction application, and (b) a response to civil claim (RTCC) filed on November 3, 2023, which addressed the merits of the dispute.

The Court held that Ms. Bennett’s affidavits, although describing the underlying investment and loan dealings, were prepared and filed for the purpose of resisting interim Mareva relief and to address whether the plaintiffs had a “strong prima facie case.” In that context, they were not considered “statements on the substance of the dispute” under s. 8(1); they fell within the Act’s s. 9 recognition that seeking or resisting interim measures from a court is not incompatible with an arbitration agreement.

By contrast, the Court found that the RTCC was a “statement on the substance of the dispute.” It denied the factual allegations in the notice of civil claim, set out the defendants’ own version of events, advanced legal arguments, and requested dismissal of the plaintiffs’ claims with costs, including those relating to the Equity Investments. It did not confine itself to jurisdictional objections or to asserting arbitrability; it did not even mention the arbitration clauses.

On that basis, the Court concluded that the statutory precondition in s. 8(1) was not met when the stay application was brought, because the RTCC had already been filed. The statutory right to a stay was therefore lost. The Court dismissed the stay application, noting that the bright-line language of “first statement on the substance of the dispute” focuses on the nature of the filing, not the party’s subjective purpose or motive in filing it.

Summary trial judgment on the loans

The plaintiffs then brought a summary trial application under Rule 9-7 seeking judgment on the Cascadero Loan and Pangaea Loan. The Court first considered whether those claims were suitable for summary trial. It noted that Rule 9-7 permits judgment where the court can find the necessary facts on the record and where it would not be unjust to do so, even if some conflicts in affidavit evidence exist that can be resolved by documents, discovery testimony and undisputed facts.

The Court held that summary trial was appropriate. It emphasized that the defendants had been served and had previously participated in the litigation but chose neither to respond to the summary trial application nor to attend the hearing. It observed that the plaintiffs had a legitimate concern that delay could jeopardize their ability to collect, given previous findings about risk of asset dissipation, and that obtaining judgment on discrete debt claims would help protect recovery prospects while the more complex claims were developed.

On the Cascadero Loan, the Court found that, despite Ms. Bennett’s later assertion that this was an open-ended credit facility repayable only from surplus cash, the contemporaneous documents and her role in drafting the promissory note showed it was a short-term loan. Although part of the funds were advanced after the stated December 31, 2021 due date and the documentation was “sloppy,” the note still governed the relationship and established that repayment was due by that date, or at least that the loan became repayable on demand on reasonable notice thereafter. The Court rejected the suggestion that repayment was contingent on a sufficient return from Cascadero shares.

The Court therefore held that InCor Holdings had breached the loan agreement by failing to repay the principal, failing to provide the promised security, and failing to deliver the 500,000 InCor shares as “interest.” It granted judgment against InCor Holdings for $6,308,050 plus additional damages to be assessed for the value of 500,000 InCor shares, and interest under the Court Order Interest Act.

On the Pangaea Loan, the Court found it was a short-term loan due no later than December 31, 2021, as evidenced by the June 21, 2021 promissory note and Bennett’s email describing it as a three-month loan (with some caution built into that estimate). It held that InCor Holdings and Pangaea were both parties to the loan agreement. It relied on Ms. Bennett’s representations that Pangaea would grant security and use proceeds from its Besra shares to repay the plaintiffs, on her evidence that Pangaea’s ability to repay was affected by Besra’s share price, and on Pangaea’s sale of Besra shares. The Court concluded that Pangaea had undertaken to repay the plaintiffs, via InCor, from those proceeds but had not done so beyond the $2 million already repaid.

The Court held that the two $1 million payments in 2022 were repayments on the Pangaea Loan and reduced the outstanding principal on that loan to $2 million. It therefore granted judgment against InCor Holdings and Pangaea, jointly and severally, for $2 million plus the equivalent of AU$200,000 (the stated par value of one million Besra shares at A$0.20), and interest under the Court Order Interest Act.

The Court rejected the claim that Pangaea was liable for the Cascadero Loan. It held that Ms. Bennett’s statements that sale of Pangaea’s Besra shares would generate enough to repay both loans were made after the Cascadero Loan had been arranged and were an inducement to make the Pangaea Loan, not a guarantee of the earlier loan. It also found there was no basis for unjust enrichment because Pangaea had not been shown to benefit from the Cascadero Loan.

Findings of contempt and security for good behaviour

In the same 2024 application, the plaintiffs sought a declaration that Ms. Bennett, Mr. Molyviatis and Pangaea were in contempt of the disclosure portions of Milman J.’s Mareva order. Applying the three-part test for civil contempt, the Court found beyond a reasonable doubt that:

• the disclosure order was clear and unequivocal,

• each of the alleged contemnors had actual knowledge of it and of the end of the appeal-related stay, and

• they had intentionally failed to do what the order required, namely provide sworn lists of worldwide assets and specified bank and brokerage records.

The Court noted that InCor Holdings had complied and that Bennett had sworn an affidavit quoting the order, but that Bennett, Molyviatis and Pangaea had not complied despite the dismissal of their appeal and subsequent reminders. It also noted that they were aware of the contempt proceedings through discovery questioning and correspondence, and that they did not attend the hearing.

As a sanction, the Court ordered, under Rule 22-8(3), that Ms. Bennett, Mr. Molyviatis and Pangaea post security for good behaviour in the total amount of $8,858,050, with Pangaea’s obligation capped at $2,050,000 in line with the quantum Milman J. had associated with its loan exposure. The Court explained that this amount matched what the Mareva injunction was designed to secure and that the failure to comply with the disclosure order undermined the injunction’s objective of preserving assets to satisfy potential judgments.

The order required that the security be posted within 60 days (or another deadline to be proposed by plaintiffs’ counsel on settlement of the order). It allowed any of the affected defendants to apply within that period to vary or set aside the security requirement if they could show either that they had not been responsible for or participated in any unlawful dissipation of InCor or Pangaea assets (including contrary to the Mareva order), or that compliance was impossible. Any such application had to be accompanied by full compliance with the original disclosure order, and the Court indicated that any application based on inability to comply would still need to address potential unlawful dissipation.

The Court limited Pangaea’s security obligation to $2,050,000, consistent with Milman J.’s reasons. It also provided that any person affected by the order could apply after the posting of security to vary it.

The defendants did not post the required security, did not apply to vary or set aside the security order, and did not purge their contempt by complying with the disclosure requirements.

Striking of defences and final judgments

By the time of the 2026 application, the Court recorded that the three Application Respondents—Ms. Bennett, Mr. Molyviatis and InCor Services—had effectively ceased participating in the proceeding. They had earlier filed responses to civil claim, retained and discharged counsel, appealed orders, and brought a jurisdictional challenge, but later stopped responding to communications and court processes.

The Court catalogued a pattern of non-compliance, including:

• failure to respond to multiple document production requests and to comply with Justice Walker’s October 8, 2024 document production order;

• failure to cooperate in scheduling or attending examinations for discovery;

• failure by John Terry to attend a discovery on behalf of InCor Services on the original appointment date and again after the Court ordered him to attend at his own expense;

• failure of Bennett, Molyviatis and Pangaea to comply with Milman J.’s disclosure order after the appeal was dismissed and despite repeated reminders, leading to the contempt finding;

• failure to comply with the order to post security for good behaviour;

• failure to pay any part of the 2024 summary trial judgments; and

• failure to respond to or attend the 2026 application to strike their responses to civil claim.

The Court also noted evidence, obtained during enforcement efforts, that Pangaea, under the direction of Ms. Bennett and Mr. Molyviatis, had disposed of proceeds of Besra share sales after the Mareva injunction was in place, even though under the loan agreement those funds were to be used to repay the Pangaea Loan and under the Mareva order they were to be frozen.

Under Rule 22-7 of the Supreme Court Civil Rules, the Court may strike a party’s response to civil claim and direct the proceeding to continue as if no response had been filed where a party refuses or neglects to comply with the Rules or with court orders. The Court described this as a “draconian” remedy reserved for “the most egregious of cases” but concluded that this threshold was met. It also noted that the plaintiffs had warned the defendants in writing that they would seek to strike the responses if non-compliance continued, and that the contempt order had not led to compliance.

The Court therefore struck the responses to civil claim of Ms. Bennett, Mr. Molyviatis and InCor Services and proceeded to consider judgment against them on the basis that the factual allegations in the Further Amended Notice of Civil Claim were deemed admitted.

The Court reviewed the pleaded causes of action, including fraudulent misrepresentation and unjust enrichment. It noted that the NOCC alleged:

• specific and general misrepresentations by Ms. Bennett and Mr. Molyviatis concerning their experience, integrity, and the nature and security of the investments and loans;

• that they knew those representations were false or were reckless as to their truth and intended the plaintiffs to rely on them;

• that the plaintiffs did rely on them in making the investments and loans; and

• that the plaintiffs suffered losses as a result.

It further noted that the NOCC alleged that InCor Services received loan and investment monies for stated purposes but did not use them for those purposes and had no agreement entitling it to retain those funds, thereby enriching it at the plaintiffs’ expense without a juristic reason.

Based on those deemed-admitted pleadings and the legal principles set out in authorities cited in the reasons, the Court concluded that the elements of fraudulent misrepresentation and unjust enrichment were made out against the Application Respondents. It also noted that there was additional evidence on the record (such as information from Swiss criminal proceedings) showing the use of plaintiffs’ funds for other purposes and the existence of Swiss freezing orders, but it was not necessary to rely on that evidence to dispose of the claims under Rule 22-7.

The Court granted judgment to the plaintiffs as against Ms. Bennett, Mr. Molyviatis and InCor Services, jointly and severally, for:

• the Cascadero Loan (in addition to the existing judgment against InCor Holdings);

• the outstanding balance of the Pangaea Loan (in addition to the existing judgment against InCor Holdings and Pangaea);

• the March 2022 InCor Holdings Loan;

• the $3.5 million InCor Investment;

• the October 2019 and March 2020 Limited Partnership Investments; and

• contractual interest and interest under the Court Order Interest Act, to the extent that statutory interest did not duplicate contractual interest.

The Court granted leave to the plaintiffs to appear for an assessment of damages for these claims and invited them to set the matter down for a brief hearing. It specified that the liability of other defendants for these claims remained to be determined and that certain other claims, including the LeadFX loans, were not resolved by this judgment.

Other relief and costs

In the 2026 reasons, the Court granted additional relief sought by the plaintiffs. It released the plaintiffs from a confidentiality undertaking that restricted their use of the asset list provided by InCor Holdings under the disclosure order, allowing them to use that list in proceedings in Switzerland, New Zealand, Australia and other jurisdictions where they were attempting to enforce the summary trial judgment and recover funds, provided those proceedings directly concerned the subject matter of this action. The Court directed that the form of order should specifically identify active proceedings and define contemplated proceedings in which the asset list could be used.

The Court also corrected paragraph 8 of its December 13, 2024 order to reflect that Pangaea, as well as InCor Holdings, was liable for post-judgment interest on the Pangaea Loan under the Court Order Interest Act, consistent with paragraph 65 of the 2024 reasons.

The plaintiffs asked for an order permitting them to further particularize their claims in light of new information from other jurisdictions. The Court declined to make a specific order on particulars but noted that they could seek leave to amend the Further Amended Notice of Civil Claim under Rule 6-1, and indicated a willingness to deal with such an application on a short or without-hearing basis if uncontested and properly served.

On costs, the Court held that the conduct of the Application Respondents, as described in its reasons, was “reprehensible” within the meaning of the leading authority on special costs. It therefore ordered that they pay the plaintiffs’ costs of the 2026 application as special costs and that they be jointly and severally liable, together with InCor Holdings, for the costs of the overall proceeding up to that point, also assessed as special costs. The judgments do not state a single overall total for all damages, interest, security and costs.