IN THE SUPREME COURT OF BRITISH COLUMBIA  
Citation:  
SWS Marketing Inc. v. Zavier,  
2022 BCSC 743  
Date: 20220506  
Docket: S138229  
Registry: Vancouver  
Between:  
And:  
SWS Marketing Inc.  
Plaintiff  
Odin Zavier, Thane Lanz, Randall Rogiani, Eduardo Soto, Gary Mythen, Burt  
Petersen, Charlene Petersen, Fan Jin, Gordon Lemon, Joseph Lanz, The  
Owners Strata Plan KAS 1886 and The Tenants: John Doe #1, Jane Doe #1,  
John Doe #2, Jane Doe #2, John Doe #3, Jane Doe #3, John Doe #4, Jane Doe  
#4, John Doe #5, Jane Doe #5, John Doe #6, Jane Doe #6, John Doe #7, Jane  
Doe #7, John Doe #8, Jane Doe #8, John Doe #9, Jane Doe #9  
Defendants  
Before: The Honourable Madam Justice Adair  
Reasons for Judgment  
Counsel for the Plaintiff:  
D. Palaschuk  
S. Stanley  
J. Nieuwenburg  
Counsel for the Defendants Odin Zavier,  
Thane Lanz, Randall Rogiani, Eduardo  
Soto, Gary Mythen, Burt Petersen, Charlene  
Petersen, Fan Jin, Gord Lemon and Joseph  
Lanz:  
M. Canofari  
G. Douvelos  
A. Grewal  
Representative of the Defendant The  
Owners Strata Plan KAS 1886, appearing in  
person:  
R. Gauthier  
SWS Marketing Inc. v. Zavier  
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Place and Date of Trial:  
Vancouver, B.C.  
February 14-18, 22-25 and 28,  
March 1-4 and 8-11, 2022  
Place and Date of Judgment:  
Vancouver, B.C.  
May 6, 2022  
SWS Marketing Inc. v. Zavier  
Page 3  
1. Introduction......................................................................................................... 4  
2. Procedural background....................................................................................... 7  
(a)  
November 2013: the action is filed and the then-plaintiffs apply for  
declaratory relief and an injunction before Sewell J. .............................................. 7  
(b)  
(c)  
(d)  
(e)  
Amendments to the notice of civil claim....................................................... 8  
The January 2021 hearing before Branch J. and the February 8 Order ...... 9  
The appeal of the February 8 Order .......................................................... 12  
Hearings in May and June 2021 before Lamb J. and Branch J. ................ 14  
(f) September 2021: the Defendants file a petition under the Strata Property Act;  
rulings from Lamb J. and Branch J....................................................................... 15  
(g)  
November 2021: the notice of civil claim is again amended and  
proceedings are consolidated............................................................................... 16  
3. Factual background .......................................................................................... 17  
(a)  
(b)  
(c)  
(d)  
(e)  
2008: Mr. Gauthier, Mr. Zavier and Mr. Lanz meet; SWS is formed ......... 17  
The Vernon Project is identified................................................................. 19  
Marketing and sale of units in the Vernon Project ..................................... 21  
The Joint Venture Agreements.................................................................. 24  
April 2011 to August 2013: no problems in the Vernon Project ................ 29  
(f) September 2013 and thereafter: many problems in the Vernon Project....... 30  
(g) 2017: Defendant-owners begin contacting the Home Buying Centre and  
disposing of their units.......................................................................................... 33  
(h) Strata Corporation issues after Mr. Saxvik becomes involved................... 39  
(i) Mr. Saxvik asserts he is entitled to exercise the rights of the Defendant-  
owners; the Gauthier Council refuses to recognize .......................................... 39  
(ii)  
The November 2020 Bylaws .................................................................. 40  
Events after the February 8 Order.......................................................... 42  
(iii)  
4. Comments on the pleadings ............................................................................. 45  
5. Comments on the witnesses, credibility and reliability ...................................... 54  
6. SWS’s claims – discussion and analysis .......................................................... 61  
(a)  
(b)  
Introduction................................................................................................ 61  
The claim for a declaration the Joint Venture Agreements have been  
breached and for an accounting........................................................................... 62  
(c)  
(d)  
Is Mr. Zavier a party to a Joint Venture Agreement? ................................. 63  
Have the Joint Venture Agreements been terminated by an accepted  
repudiation?.......................................................................................................... 65  
(i) Did the Defendants repudiate?.................................................................. 66  
SWS Marketing Inc. v. Zavier  
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(ii)  
Did SWS repudiate?............................................................................... 67  
Conclusion: the Joint Venture Agreements have not been terminated . 69  
Are Defendants entitled to rescission of the Joint Venture Agreements as a  
(iii)  
(e)  
remedy? ............................................................................................................... 69  
(f) SWS’s claims to a legal, or, alternatively, a beneficial, interest in each of the  
units and the “SWS Advances Theory” ................................................................ 72  
(g)  
The claim for judgment against the Defendants for the amounts of the down  
payments in the Joint Venture Agreements.......................................................... 80  
(h) What remedy should be granted for breach of the Joint Venture  
Agreements?........................................................................................................ 82  
(i) SWS’s claims for orders that all of the rights and duties of the Defendants that  
arise under the Strata Property Act be assigned to SWS “forthwith,” and for a  
permanent injunction preventing any of the Defendants from involving themselves  
in the affairs of the Vernon Project ....................................................................... 85  
(j) Can judgment be pronounced against the Defendant Burt Petersen, who has  
filed a consumer proposal? .................................................................................. 87  
7. The Counterclaim: Are the Defendants entitled to a remedy under the Strata  
Property Act?........................................................................................................... 91  
8. Summary and disposition.................................................................................. 99  
1.  
Introduction  
[1]  
This action involves two strata-titled buildings in Vernon, B.C. (the “Vernon  
Project”). Each building has seven residential strata lots or units that, for many  
years, have been operated as rental units, generating income for the unit owners.  
[2]  
The Vernon Project was purchased by Four Elements Marketing Inc., a  
company owned and controlled by the defendant Odin Zavier, in March 2011. The  
transaction was structured so that, before completion, Four Elements entered into  
separate contracts of purchase and sale for the individual units with end-purchasers,  
who provided the necessary financing to allow Four Elements to complete its  
purchase.  
[3]  
Nine of the 14 units were purchased from Four Elements by six of the  
individual defendants: Randall Rogiani, Eduardo Soto, Gary Mythen, Burt Petersen,  
Fan Jin, Gordon Lemon and Joseph Lanz (the father of the defendant Thane Lanz).  
 
SWS Marketing Inc. v. Zavier  
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I will refer to this group of six defendants, collectively, as the “Defendant-owners.”  
Mr. Zavier also purchased a unit. I will refer to the Defendant-owners and Mr.  
Zavier, collectively, as the “Defendants.” The remaining four units were sold to  
others. All the sales completed in March 2011.  
[4]  
[5]  
One of the units is now owned by the plaintiff, SWS Marketing Inc.  
SWS was formed in 2008 by Rene Gauthier, Mr. Zavier and Thane Lanz (“Mr.  
Lanz”), to carry on business in real estate investment. During the period relevant to  
the issues in this case, SWS was controlled by Mr. Gauthier.  
[6]  
SWS says that, in connection with each purchase of a unit in the Vernon  
Project, it entered into a written joint venture agreement (the “Joint Venture  
Agreement”) with the purchaser. Thus, each Defendant is a party to a Joint Venture  
Agreement. SWS says that, pursuant to the terms of the Joint Venture Agreement, it  
was obligated to “secure” the down payment toward the purchase price of the unit,  
and (among other things) it was given “full, exclusive and complete authority and  
discretion in the management and control of the business” of the joint venture. That  
business was owning and renting the unit until SWS either refinanced to buy out the  
owner, or SWS and the owner jointly decided to sell. The parties were to share all  
profits and losses equally.  
[7]  
SWS says that, beginning in September 2013, the Defendants breached and  
repudiated their respective Joint Venture Agreements by cutting SWS out of the  
management and control of the joint venture, and taking over themselves. However,  
SWS says that it never accepted the repudiation, with the result that, as of trial, none  
of the Joint Venture Agreements has been terminated. SWS seeks to have each  
Joint Venture Agreements specifically enforced against the corresponding  
Defendant.  
[8]  
In addition, SWS says that, by virtue of the terms of the Joint Venture  
Agreements, it became entitled to at least a beneficial interest (if not a legal interest)  
SWS Marketing Inc. v. Zavier  
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in 50% of the unit of each Defendant. SWS says that, as such, it is entitled to orders  
for sale of each of those units.  
[9]  
The Defendants say that SWS’s claims against them should be dismissed.  
They say that the Joint Venture Agreements cannot be interpreted in the way SWS  
asserts, and that the Joint Venture Agreements are, in any event, unenforceable.  
They say that SWS repudiated each of those Agreements in September 2013, and  
they accepted SWS’s repudiation. They say that, as a result, as of September 2013,  
all of the Joint Venture Agreements were terminated. Alternatively, the Defendants  
say they are entitled to rescission.  
[10] Mr. Zavier says further that he never signed a Joint Venture Agreement, and  
that the signature on the Joint Venture Agreement bearing his name is not his.  
[11] In addition, the Defendants and Mr. Lanz have brought a counterclaim (the  
“Counterclaim”) against both SWS and The Owners, Strata Corporation KAS 1886  
(the “Strata Corporation”) for the Vernon Project. They assert that, since February  
2021, the strata council, controlled by Mr. Gauthier, has engaged in, or may engage  
in, significantly unfair actions, contrary to s.164 of the Strata Property Act, S.B.C.  
1998, c. 43. The Defendants seek relief under sections 164 and 165 of the Strata  
Property Act, accordingly.  
[12] Both the Strata Corporation and SWS say that the Counterclaim must be  
dismissed.  
[13] As I will describe, what was sold to the Defendant-owners as a relatively low  
risk, low stress, self-financing real-estate investment in a unit in a small strata  
complex in Vernon, has generated more than eight years of litigation, and many,  
many court applications. The Defendant-owners became embroiled in bitter  
disputes between Mr. Gauthier, Mr. Zavier and Mr. Lanz about SWS and how the  
profits from the Vernon Project should be divided. At the end of the trial, it was  
observed that everyone wants the units to be sold, and that appeared to be the one  
area of consensus. I agree with that observation. Sale of the units would at least  
SWS Marketing Inc. v. Zavier  
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bring an end to the prolonged fighting over matters relating to the Strata Corporation  
and its governance, and reduce the scope of the war to one over money and the  
division of profits from the Vernon Project.  
[14] In these Reasons, I will begin by describing the procedural background. It  
illustrates some of the origins of deeply entrenched positions and the antagonism  
that has fueled this litigation since 2013. In addition, as a result of pre-trial rulings,  
some matters are res judicata. I will next describe the factual background, which  
begins in 2008. I will then discuss the pleadings on which these claims went to trial,  
and the problems created by how the claims and defences were pleaded. Next, I  
will comment on the witnesses, as credibility is a significant issue in relation to Mr.  
Gauthier, Mr. Zavier and Mr. Lanz in particular. Finally, I will turn to my discussion  
and analysis, first of the claims made by SWS, and then those in the Counterclaim.  
2.  
Procedural background  
(a)  
November 2013: the action is filed and the then-plaintiffs apply for  
declaratory relief and an injunction before Sewell J.  
[15] This action was filed on November 6, 2013. The named plaintiffs were SWS,  
Mr. Gauthier, William Gauthier and Marlene Gauthier. William and Marlene Gauthier  
are Mr. Gauthier’s parents, and they are the owners of two units in the Vernon  
Project.  
[16] On November 28, 2013, an application made by the then-plaintiffs came on  
for hearing before Sewell J. As of the hearing date, responses to the notice of civil  
claim had not yet been served, and some defendants had not yet been served with  
the notice of civil claim.  
[17] In unpublished oral Reasons for Judgment issued on November 28, 2013,  
Sewell J. described the application in this way:  
[1]  
THE COURT: This is an application brought by the plaintiffs SWS  
Marketing Inc. and Rene Gauthier, William Gauthier and Marlene Gauthier for  
a number of heads of relief. The relief sought by the plaintiffs can be broken  
down into two categories. The first relates to declaratory judgments on the  
   
SWS Marketing Inc. v. Zavier  
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merits of this litigation. The second relates to the seeking of injunctive relief  
against the defendants.  
[2]  
This dispute related to a joint venture agreement made with respect to  
a 14-unit strata titled building located in Vernon, British Columbia. The only  
plaintiff that seems to have a direct interest in this litigation is the plaintiff  
SWS Marketing Inc. The other plaintiffs are principals of SWS. The main  
issue in this litigation is between SWS Marketing and the defendants and  
arises out of the joint venture agreements.  
[18] Because defendants had not yet been served, Sewell J. was unable to deal  
with the plaintiffs’ requests for either declaratory relief or final judgment. However,  
Sewell J. addressed the plaintiffs’ request for injunctive relief.  
[19] In the result, Sewell J. dismissed the application for injunctive relief,  
explaining in part:  
[27]  
Turning to the balance of convenience, it seems to me that the  
balance of convenience in this case favours the defendants. I appreciate that  
Mr. Gauthier has said that the defendants put very little money down on the  
acquisition of their units. That is so. However, it is quite clear that the  
individual defendants did take out substantial mortgage debt and did assume  
personal liability with respect to the payment of those mortgages. Their  
interest in preserving their equity in this venture to repay those mortgages, is  
in my view a greater interest than SWS has in continuing to be a part of the  
joint venture.  
[28]  
I am also mindful of the fact that there has been a complete  
breakdown in the relationship between the members of this joint venture, and  
it would be in my view impractical if not impossible for the joint venture to  
continue on any sort of realistic business-like basis given that breakdown.  
[20] A request by counsel representing Mr. Zavier and the Strata Corporation for  
an order for special costs payable forthwith was refused.  
(b)  
Amendments to the notice of civil claim  
[21] Thereafter, the parties were before the court frequently. The notice of civil  
claim was amended in May 2015, November 2015 and October 2017. The  
existence of a Joint Venture Agreement between SWS and Mr. Zavier was  
mentioned for the first time when the notice of civil claim was amended in November  
2015. However, in that version, no relief was sought against Mr. Zavier based on  
the Joint Venture Agreement. It was not until the third amended notice of civil claim  
 
SWS Marketing Inc. v. Zavier  
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was filed in February 2018, that SWS finally made a full claim against Mr. Zavier,  
relying on a Joint Venture Agreement alleged to have been made with him.  
(c)  
The January 2021 hearing before Branch J. and the February 8 Order  
[22] On January 20 to 22, 2021, cross-applications came on for hearing before  
Branch J. For the most part, the applications involved the affairs of the Strata  
Corporation. Justice Branch’s oral Reasons for Judgment delivered February 8,  
2021 are indexed as SWS Marketing Inc. v. Zavier, 2021 BCSC 312 (the “Branch  
Reasons”).  
[23] The Branch Reasons began in this way (note omitted):  
[1]  
“It was the best of times, it was the worst of times, it was the age of  
wisdom, it was the age of foolishness…” This is a Tale of Two Councils. For  
seven years, this strata has had two groups, each purporting to operate as  
the properly constituted strata council, each incurring and paying expenses,  
each imposing and collecting strata fees. Finally, these duelling councils  
come before this court to bring back “liberty, equality and fraternity” to this  
troubled strata.  
[2]  
There are, not surprisingly, cross-applications. The named defendant  
Strata Corporation operates pursuant to control by what I will refer to as the  
“Zavier Council”. The defendant Strata Corporation’s application sought the  
following relief:  
a)  
A declaration that the plaintiffs, Rene Gauthier and Walter  
Gauthier, are not council members of the Strata Corporation;  
b)  
An order that Rene Gauthier cease and desist from  
representing himself to be the council president until further  
order of this Honourable Court or unless duly elected by the  
owners within the Strata Corporation and pursuant to the  
Strata Property Act;  
c)  
d)  
An order that the plaintiffs’ former counsel, Christ & Co., return  
the amount of $47,659.92 or such other amount that they hold  
in trust to the TD Bank Group; and  
Special costs  
[3]  
The plaintiffs, who control what I refer to as the “Gauthier Council”,  
sought the following orders:  
a) The Emergency Annual General Meeting held on 24  
September 2013 (the (“EAGM”, which purported to create the  
first Zavier Council) be declared void ab initio;  
 
SWS Marketing Inc. v. Zavier  
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b)  
c)  
A declaration that all Strata Meetings arranged and/or held by  
the defendants subsequent to September 24, 2013 are invalid  
and void; and  
Special costs against the contesting defendants.  
[24] Branch J. set out some of the background to the disputes, beginning at  
para. 6 of the Branch Reasons. He described various steps taken by the duelling  
strata councils. Branch J. found (and I agree) that, by April 2014, “the break  
between the plaintiff and defendant groups was complete. The plaintiffs and  
defendants then purported to carry out separate streams of meetings from that date  
up until today” (para. 19). The Defendant-owners, who were in the majority,  
supported the Zavier Council. The Gauthier Council was supported by only three  
units (and later a fourth).  
[25] Beginning at para. 29, Branch J. observed that “there is no shortage of  
procedural concerns” relating to how the Strata Corporation had been managed,  
both before and after the creation of the “duelling councils,” and he listed 23 of them.  
Among other things, both councils imposed strata fees on all units. The Defendants  
paid their strata fees as directed by the Zavier Council. The other units paid their  
fees as directed by the Gauthier Council. Each council claimed arrears were owing  
by the units not paying them fees.  
[26] At para. 35, Branch J. identified and declared the members of the strata  
council. They were: Mr. Gauthier, William Gauthier and Sacha Elez. He explained  
his reasons for drawing that conclusion [the Original Councilfrom August 2011  
included Mr. Gauthier]:  
a)  
The Original Council was properly elected. The fact that Rene  
Gauthier was elected as a council member at that time, although he was not  
an owner, is not fatal to the constitution of that council. Based on the  
evidence before me, no party objected to his participation in this role until  
2019, at which point his status was promptly addressed through SWS’s  
purchase of a unit.  
b)  
The Zavier Council’s 2013 EAGM and 2014 AGM were not properly  
called due to clear notice failings. Further, neither was called pursuant to  
s.43 of the SPA, the only proper means for owners to demand a meeting.  
Although Lanz and Zavier were on the Original Council, and did participate in  
SWS Marketing Inc. v. Zavier  
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calling these meetings, there is insufficient evidence that 20% of owners  
made a formal request to them for a meeting under s.43. There is no  
evidence of a request by the necessary number of owners to the properly  
elected Original Council, or a subsequent refusal by the Original Council to  
respond to this demand. Hence, I find that there was no proper council  
election at those two Zavier Council meetings. The failure to provide proper  
notice itself is fatal to the validity of these meetings given the importance of  
notice to the proper democratic functioning of a strata corporation: [citations  
omitted]. The notice problems outlined above were so sufficiently clear,  
egregious, and unnecessary that I conclude that s.47’s curative provision is  
unavailable to the defendants: [citation omitted].  
c)  
In relation to the subsequent Zavier Council meetings, they are all  
tainted with this “original sin” arising from their failure to be properly elected in  
2013 or 2014. All of their later meetings purported to be called by the  
improperly constituted Zavier Council. It may have been possible for the  
defendants to collectively have demanded and called a meeting pursuant to  
s.43, but none of the Zavier Council meetings were called pursuant to the  
authority of this section after a demand to the proper council. Given the lack  
of authority of the Zavier Council, the Zavier Council was not in a position to  
call further meetings on its own initiative.  
d)  
In terms of the Gauthier Council, I accept that the defendants Zavier  
and Lanz lost their status on the Original Council in 2013 and 2014 through  
their failure to participate in meetings called by Rene Gauthier. They were  
replaced by William Gauthier and Jorg Thielk. This became the properly  
constituted Gauthier Council in charge of calling further meetings: SPA,  
ss.26, 40.  
e)  
Although there were certain “glitches” in the conduct of the Gauthier  
Council meetings organized thereafter, there can be little dispute as to the  
validity of, at a minimum, the December 31, 2019 Gauthier Council AGM at  
which William Gauthier, Rene Gauthier and Sacha Elez were elected . The  
meeting minutes acknowledged, and on their face respected, the need to wait  
30 minutes before freshly determining quorum from the members present.  
By this time, SWS had purchased a unit, giving Rene Gauthier the status to  
be nominated to Council. Even if there was a problem with the budget  
presentation, that would not invalidate the election of the Gauthier Council. A  
full complement of three council members was elected. This was the  
Gauthier Council’s last properly constituted group, and indeed is the most  
recent council properly elected by either group. As such, I find that they are  
entitled to serve in that role pending a new strata meeting.  
[27] I consider all of these matters res judicata.  
[28] In these Reasons, I will continue to refer to a strata council of which Mr.  
Gauthier is a member as a “Gauthier Council.” However, since February 2021, a  
“Gauthier Council” and the Strata Corporation’s strata council are one and the same.  
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[29] At para. 43 of the Branch Reasons, Branch J. set out the orders he concluded  
were “necessary to put this strata back on a solid legal footing.” The formal entered  
order (the “February 8 Order”) consequent on Justice Branch’s rulings contained  
these terms:  
THIS COURT ORDERS that:  
1.  
2.  
3.  
The court declares that the present strata council members are Rene  
Gauthier, William Gauthier and Sacha Elez.  
The court orders that the present council will call an SGM to be held  
within the next 30 days in which a new strata council will be elected.  
The new council will prepare a consolidated set of financial  
statements for the year ended December 31, 2020 and the 2 months  
January 1, 2021 to February 28, 2021 defined as the consolidated  
financial statements that incorporate and combine all transactions on  
behalf of the strata corporation by the defendants, plaintiffs, the Zavier  
council, or the Gauthier council since January 1, 2013.  
4.  
To assist in the preparation of the consolidated financial statements  
by a date designated by the new council, the defendants, and the  
plaintiffs will submit to the new council all strata related accounting  
information, including but not limited to general ledgers, cheques,  
bank statements, invoices, receipts or other proof of payment of any  
strata corporation expenses and financial statements from January 1,  
2013 to February 28, 2021.  
5.  
6.  
The new council will call an AGM to be held on or before June 1, 2021  
or such later date agreed to by the parties or directed by the court at  
which time the new council’s proposed treatment of the defined  
transactions will be presented.  
If any plaintiff or defendant objects to the new council’s proposed  
treatment of the transactions a hearing will be arranged by the new  
council with Justice Branch at the court’s earliest availability to  
determine the proper treatment of the transactions. The new council  
shall make this application for a hearing within 5 days of the receiving  
notice of the dispute from any party.  
(d)  
The appeal of the February 8 Order  
[30] The then-plaintiffs (SWS, Mr. Gauthier, William and Marlene Gauthier and  
Jorg Thielk) appealed certain aspects of the February 8 Order (the “Appeal”). The  
Appeal came on for hearing on May 6, 2021, after the special general meeting  
mentioned in para. 2 of the February 8 Order had been held (I will return to this  
meeting, held on March 12, 2021, later in these Reasons).  
 
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[31] In the result, the Appeal was allowed in part, with Reasons indexed as SWS  
Marketing Inc. v. Zavier, 2021 BCCA 201 and dated May 13, 2021 (the “Appeal  
Reasons”). Saunders J.A. (for the court) said (at para. 24):  
[24]  
As I will explain, I consider that s. 165, relied on by the judge to base  
the order for a special general meeting, was not available to him and so the  
orders dependent on s. 165 must be set aside. Another provision, s. 164,  
was advanced at the hearing to ground a remedy but the necessary findings  
of fact to engage that section have not been madeattention having landed  
instead on s. 165. . . .  
[32] Saunders J.A. rejected the appellantsargument that Branch J. was in error in  
refusing to declare all of the Zavier Council’s past actions void. She said in part  
(beginning at para. 32):  
[32]  
The judge had the difficult task, in the short run, of finding a pathway  
to coherent governance of this strata corporation, within legal boundaries,  
while protecting financial accountability for actions taken in the irregular  
years. In my view, the judge made no reversible error in his appreciation of  
the governance issues before him; there is no basis to interfere with his  
conclusion that the case did not require express answers at this stage to the  
parties’ myriad, dated, complaints against each other. The strata governance  
case was always bound to sort itself into the questions of who is properly on  
the council, and who owes who for what. In any case, the judge did not  
dismiss the claims for relief for non-accounting related past actions of the  
Zavier Council; it is still open to the appellants to advance an issue that  
requires a remedy beyond the moral vindication a declaration may bring.  
Likewise, the order does not erect barriers to inter-party remedies in the  
litigation still outstanding.  
[33]  
As to the accounting issues, it seems to me that all the financial  
information relating to the strata corporation should be in the possession of  
the recognized strata council and if this does not occur, the appellants of  
course may ask for court assistance even without the sweeping declaration of  
invalidity they seek. In any case, I see no reason why financial statements  
cannot be prepared on the best information available to the council, with  
appropriate reservations noted.  
[34]  
In these circumstances, it was entirely appropriate, in my view, for the  
judge to consider, in addition to judicial economy, the possibilities of  
unintended consequences from a wholesale order nullifying all actions taken  
by the Zavier Council. Such an order risks being arbitrary, is contrary to  
modern practice in the case of illegal contracts, and would be made in the  
dark as to its effects upon both other vested interests and the strata  
corporation itself.  
SWS Marketing Inc. v. Zavier  
Page 14  
[33] The Court of Appeal ordered that paras. 2 through 6 of the February 8 Order  
be set aside, and that:  
the applications are remitted to the Supreme Court to determine the  
applicability of section 164 of the Strata Property Act, S.B.C. 1998, c. 43 and  
such further aspects of those applications to which the judge may engage or  
other matters properly presented by the parties.  
(e)  
Hearings in May and June 2021 before Lamb J. and Branch J.  
[34] On May 17, 2021, the parties appeared before Lamb J. on an application by  
the Defendants to dismiss on a summary trial SWS’s claim for judgment against  
them for $323,000. This was the amount of the down payments that, at the time,  
SWS asserted it “secured” under the Joint Venture Agreements. In response, SWS  
sought declarations that the Joint Venture Agreements were valid and not breached  
prior to September 2013. Judgment was reserved at the conclusion of the hearing.  
[35] On May 25, 2021, the parties again appeared before Justice Branch, on an  
application by the Defendants to have the then-plaintiffs found in contempt of court  
on the grounds that the plaintiffs had refused to allow the Defendants to vote at the  
March 12 meeting, held pursuant to the February 8 Order. The application was  
dismissed, with costs in the cause. Among other things, Branch J. noted that the  
provision in the February 8 Order requiring the calling and holding of a special  
general meeting had been struck down by the Court of Appeal.  
[36] On June 11, 2021, the parties and counsel were again before Branch J. At  
that time, Justice Branch pronounced an order (the “June 11 Order”), one of the  
terms of which concerned the production by the Defendants of certain accounting  
information related to the affairs of the Strata Corporation. The information included  
a list of strata fees receivable by owner as of December 2013 through to February  
28, 2021, together with proof of payments.  
 
SWS Marketing Inc. v. Zavier  
Page 15  
(f)  
September 2021: the Defendants file a petition under the Strata  
Property Act; rulings from Lamb J. and Branch J.  
[37] On September 10, 2021, a petition (now the Counterclaim) was filed under  
Action S218058. The respondents named were the Strata Corporation and SWS.  
Relief was sought under sections 164 and 165 of the Strata Property Act. Mr. Lanz  
was named as a petitioner, in addition to the Defendants. However, Mr. Lanz never  
owned a unit in the Vernon Project and was never a proper party to this proceeding.  
[38] On September 16, 2021, Lamb J. published her Reasons for Judgment,  
indexed as SWS Marketing Inc. v. Zavier, 2021 BCSC 1813, on the application  
heard on May 17, 2021. At paras. 17-22, Lamb J. described some of the procedural  
background, in particular, the evolution of the pleadings.  
[39] In the result, Lamb J. dismissed the application. She concluded that she was  
unable to find the facts necessary to resolve the isolated issue identified in the  
Defendants’ application, and she was not satisfied that a decision on this one issue  
would conclude the non-strata council issues between the parties. Justice Lamb  
concluded that, for the same reason, it would not be appropriate to grant the  
declarations sought by SWS.  
[40] Also on September 16, 2021, Branch J. gave oral reasons, indexed at 2021  
BCSC 1950, on an application brought by the then-plaintiffs to have the Defendants  
found in contempt of court. The then-plaintiffs asserted that, among other things, the  
Defendants had failed to comply with the terms of the June 11 Order requiring  
production of accounting information relating to the affairs of the Strata Corporation.  
Branch J. said, at paras. 5-6:  
[5]  
In relation to the relevant aspects of paragraph 1 of the Accounting  
Information Order, the defendants say that they generally satisfied this term  
through the provision of an electronic Dropbox stuffed full with the required  
documentation. In relation to other requests, the defendants say that there  
was simply no further documentation in their possession. The plaintiffs say  
that there is more that could have been produced.  
[6]  
Neither party provided sufficient information about the actual content  
of the Dropbox so that I could properly assess who is correct. I find that there  
 
SWS Marketing Inc. v. Zavier  
Page 16  
is insufficient evidentiary basis to establish an intentional breach of the  
Accounting Information Order beyond a reasonable doubt, such as is  
necessary to support a contempt order. Even if a breach were established, I  
would exercise my discretion not to issue an order for contempt on these  
grounds, given the apparent good faith effort to satisfy its terms. The mere  
fact that the plaintiffs "had the last word" in relation to particularizing their  
complaints about the defendants' production in a letter dated June 15, 2021,  
does not mean that the order was necessarily breached. The ping-pong of  
correspondence between counsel had to end at some point. Eventually the  
dispute had to come to the court for resolution.  
[41] On the other hand, Branch J. found that Mr. Zavier was in contempt of two  
other terms of the June 11 Order, one requiring delivery of an affidavit confirming  
certain aspects of the document production, and another requiring that a letter be  
sent to branches of TD Canada Trust (“TD Bank”) containing specific language,  
including specific identification by name of the members of the strata council. With  
respect to the letter, Justice Branch found that the letter sent by Mr. Zavier included  
additional language that was not permitted and that undermined the purpose of the  
order: see Reasons, paras. 13-15.  
(g)  
November 2021: the notice of civil claim is again amended and  
proceedings are consolidated  
[42] An order granting leave to amend the notice of civil claim to the form of the  
Fourth Amended Notice of Civil Claim (the “NCC”) was made on November 24,  
2021. It was only at this point that William Gauthier, Marlene Gauthier and Jorg  
Thielk were removed as plaintiffs. However, Mr. Gauthier continued to be named  
personally as a plaintiff, along with SWS. The NCC was filed December 7, 2021.  
[43] Also on November 24, 2021, an order consolidating this action with the  
petition filed by the Defendants (the Consolidation Order”) was made on the  
application of the Defendants under Rule 22-5(8). However, unlike an order that  
proceedings be tried at the same time (where each proceeding continues to exist as  
a separate proceeding), an order consolidating proceedings results in a single  
proceeding going forward. The Consolidation Order did not address the  
consequences of the two proceedings being consolidated into one. As a result, a  
further order was pronounced on February 18, 2022 (after the trial started) whereby:  
 
SWS Marketing Inc. v. Zavier  
Page 17  
the two proceedings were consolidated under Action No. S138229; the petition filed  
in S218058 was ordered to stand as a counterclaim; and the responses to petition  
filed by SWS and the Strata Corporation were ordered to stand as defences to the  
counterclaim.  
[44] The trial began on February 14, 2022 and was originally scheduled for 24  
days. To the credit of counsel and the parties, the trial was completed in 18 days.  
3.  
Factual background  
(a)  
2008: Mr. Gauthier, Mr. Zavier and Mr. Lanz meet; SWS is formed  
[45] Mr. Gauthier met Mr. Zavier and Mr. Lanz in 2008. Mr. Gauthier is somewhat  
older than Mr. Zavier and Mr. Lanz, and, at trial, Mr. Zavier frequently described Mr.  
Gauthier, during the period in which they were working together, as his “mentor.”  
The three met when Mr. Zavier and Mr. Lanz attended a game – “Cash Flow” – that  
Mr. Gauthier was running and hosting. Mr. Gauthier described Cash Flow as a  
game he used to teach people how to invest, and as like “Monopoly on steroids.”  
[46] As of 2008, Mr. Gauthier had a background and experience in real estate  
investment. He explained that he had done multiple courses in real estate  
investment (including as an instructor) and participated in deals. He also had a  
background in marketing and computers. He had begun, but not completed, a  
Masters degree in Business Administration.  
[47] After graduating from high school, Mr. Zavier briefly attended Douglas  
College. According to Mr. Zavier, he started Four Elements in 2007 and was the  
sole shareholder. Mr. Zavier explained that in 2007, Four Elements purchased a  
marketing licence, which allowed him to take on clients (or “students”) and advise  
them on marketing plans. According to Mr. Zavier, prior to the Vernon Project, he  
had done some real estate investments through Four Elements.  
[48] According to Mr. Lanz, he met Mr. Zavier in around 2006 or 2007 through a  
friend. Mr. Lanz explained that he took one of Mr. Zavier’s classes and they became  
   
SWS Marketing Inc. v. Zavier  
Page 18  
friends. Mr. Lanz explained that he was in the process of leaving his current  
employment to go into marketing, and suggested to Mr. Zavier that they work  
together. Mr. Zavier took him up on the suggestion, and, as of trial, they remain  
friends. As Mr. Lanz recalled, around 2008, one of his and Mr. Zavier’s clients  
mentioned the “Cash Flow” game, and that was how they met Mr. Gauthier.  
According to Mr. Lanz, at that point, he became interested in real estate investment.  
[49] Mr. Gauthier, Mr. Zavier and Mr. Lanz then decided to work together on real  
estate investment opportunities. SWS was incorporated in October 2008.  
Practically speaking, Mr. Gauthier, Mr. Zavier and Mr. Lanz held all of the common  
shares. However, Mr. Gauthier held more than 50% of the shares, and thus  
controlled SWS. All three were appointed the directors of SWS. However, Mr. Lanz  
ceased to be a director in December 2009. Mr. Gauthier and Mr. Zavier then  
continued as the only directors of SWS. There is some dispute about when Mr.  
Zavier ceased to be a director. Mr. Gauthier says Mr. Zavier ceased to be a director  
of SWS in March 2011. Mr. Zavier says it was not until February 2013 that he  
delivered his resignation as a director, and that Mr. Gauthier asked him to “back-  
date” his resignation to March 2011.  
[50] Prior to the Vernon Project, SWS had been involved in three residential real  
estate development projects in the Lower Mainland. As a result, Mr. Gauthier, Mr.  
Zavier and Mr. Lanz had some history of working together through SWS. According  
to Mr. Gauthier, on these three projects, SWS worked with the developer to add  
value to an original development and then marketed the individual homes to end-  
purchasers to generate a profit for SWS. Mr. Gauthier explained that the profit-  
sharing among him, Mr. Zavier and Mr. Lanz varied from project to project, and it  
was not based on shareholdings in SWS. On two of the projects (“Clayton Heights”  
and “72nd Avenue”), the profits were split one-third each. On the third project  
(“Cressy”), the profits were allocated 25% to Mr. Lanz, and the balance divided  
equally between Mr. Gauthier and Mr. Zavier.  
SWS Marketing Inc. v. Zavier  
(b) The Vernon Project is identified  
Page 19  
[51] Sometime in 2010, Mr. Lanz (without the involvement of Mr. Gauthier, Mr.  
Zavier or SWS) identified the Vernon Project as a possible real estate investment  
opportunity. Mr. Lanz explained that he was very good at finding deals, and that  
was his area of expertise. Among the features that attracted him to the Vernon  
Project were that it was being run as rental accommodation, but the buildings were  
strata-titled. The whole project was being offered for sale for about $116,000 per  
unit. Mr. Lanz explained that he had the Vernon Project appraised, and the  
appraisal came back at about $145,000 per unit, so, in Mr. Lanz’s view, it was a  
good deal.  
[52] According to Mr. Lanz, he then entered into an agreement of purchase and  
sale with the then-owners (two couples, the Gills and the Khuranas) to purchase the  
Vernon Project. As Mr. Lanz recalled he was thinking of selling individual units as  
skip transfers,which he had been taught how to do, and make a profit in that way.  
[53] In a skip transfer, a multi-unit development or project (such as the Vernon  
Project) would be purchased from the owner by a company such as Four Elements.  
Before completion of that transaction, the purchaser would sell the units to end-  
purchasers (often at a mark-up). In some cases, the sales to end-purchasers were  
necessary to provide the financing required for the original transaction to be  
completed. Then, on the completion date, title would be transferred from the owner  
directly to the end-purchasers, skippingthe entity in the middle (Four Elements, for  
example). With skip transfers, property purchase tax would only be paid once,  
instead of twice, and the middle entity could make a profit on the sales to the end-  
purchasers.  
[54] However, Mr. Lanz’s agreement did not go forward. In late August 2010, the  
parties signed a release agreement, declaring the agreement of purchase and sale  
null and void.  
 
SWS Marketing Inc. v. Zavier  
Page 20  
[55] According to Mr. Zavier, Mr. Lanz then contacted him concerning the Vernon  
Project. Mr. Zavier explained that he saw it as a good investment opportunity.  
[56] In late August 2010, Four Elements as buyer entered into a written agreement  
of purchase and sale with the owners of the Vernon Project (the “August  
Agreement”). The purchase price was $1,600,000. This represented an average  
price of about $114,285 for each of the 14 units. The August Agreement provided  
further:  
although the purchase price was $1,600,000, the sellers agreed to  
provide the purchaser (Four Elements) with an abatement of $100,000  
to pay for repairs and marketing of the Vernon Project to sell individual  
units. An addendum increased the amount of the abatement by  
another $20,000;  
the sellers acknowledged that Four Elements could sell its rights to  
take title to the Vernon Project or a unit or units to an end-purchaser,  
and the sellers acknowledged that they would transfer title directly to  
an end-purchaser, as directed by Four Elements. This allowed Four  
Elements to do skip transfers.  
[57] Completion of that transaction, in the result, did not occur until March 2011.  
[58] Mr. Zavier explained that after Four Elements signed the August Agreement,  
he got Mr. Gauthier involved. He explained that he did so because of Mr. Gauthier’s  
experience dealing with financial, strata and legal matters. According to Mr. Lanz,  
he reluctantly agreed to have Mr. Gauthier involved.  
[59] Mr. Gauthier’s evidence about how and when he became involved with the  
Vernon Project was not always consistent. At one point, he said that he was  
approached in late July 2010 by Mr. Zavier, and he, Mr. Zavier and Mr. Lanz  
discussed SWS’s participation at what Mr. Gauthier said was an SWS directors’  
meeting. Mr. Gauthier claims that he made notes of this meeting, and the notes  
were marked as Exhibit 8. Both Mr. Zavier and Mr. Lanz denied that any such  
SWS Marketing Inc. v. Zavier  
Page 21  
meeting occurred. At another point, Mr. Gauthier agreed that he and SWS became  
involved in the Vernon Project around September 2010. I find the latter is the more  
likely.  
(c)  
Marketing and sale of units in the Vernon Project  
[60] The marketing of individual units in the Vernon Project was to be done  
through SWS. The purchase price for the units would be marked-up from the  
average price per unit under the August Agreement, so that Four Elements would  
earn a considerable paper profit as a result of the difference between the price at  
which it was buying the units and the price at which it was selling the units to end-  
purchasers. Provided individual purchasers were found, Four Elements could then  
close on the August Agreement by means of skip transfers. The individual  
purchasers would essentially provide the financing and the cash proceeds Four  
Elements required to complete the main transaction. According to Mr. Zavier, Four  
Elements on its own did not have the financial capability to close on the August  
Agreement unless it found individual end-purchasers for the units. Mr. Zavier  
explained that, if Four Elements had been unable to find end-purchasers for the  
individual units, it would have had to abandon the transaction.  
[61] The plan was that each of the 14 units in the Vernon Project would be  
marketed by SWS to individuals on the basis that the unit would be rented, and the  
owner would enjoy the benefits of a real estate investment that was essentially self-  
financing and was fully managed by SWS. The only contribution required from an  
individual owner was a small deposit or down payment, and a mortgage sufficient to  
provide proceeds to pay the balance of the purchase price. SWS would provide the  
rest of the down payment (either $29,000 or $31,000, depending on the total  
purchase price of a unit). The mortgage debt and expenses of owning a unit would  
be covered and serviced by the rental income. A unit on the ground floor would be  
offered for sale at $145,000, and a unit on the second floor would be offered for sale  
at $155,000.  
 
SWS Marketing Inc. v. Zavier  
Page 22  
[62] Mr. Zavier, Mr. Lanz and Mr. Gauthier were all involved in approaching  
potential buyers for units. None of the eventual purchasers lived in the Vernon area.  
The contact person for the Defendant-owners excluding Joseph Lanz was Mr.  
Zavier. Mr. Zavier was also the contact person for Sacha Elez. Mr. Lanz was the  
contact person for Joseph Lanz (Mr. Lanz’s father). None of these individuals dealt  
with Mr. Gauthier. Most had participated in the real estate investment seminars Mr.  
Zavier offered.  
[63] One of the Defendant-owners, Mr. Soto, described his dealings with Mr.  
Zavier concerning investment in the Vernon Project. Mr. Soto explained that, at the  
time, he was in his mid-20s and working in the oil and gas industry in Alberta. He  
explained that Mr. Zavier had already coached him quite a bit on real estate. Mr.  
Soto explained that the low down payment was an attractive feature of the  
investment, and he would not have purchased the unit if he had been required to  
fund a $29,000 down payment on his own. The fact that others (namely, SWS) were  
going to take care of management of the unit was also a positive feature.  
[64] Mr. Soto, like the other Defendant-owners (excluding Mr. Lemon), arranged  
for a mortgage through TD Bank to finance the balance of the purchase price. Mr.  
Gauthier had identified a mortgage-broker there to assist, and made the  
introductions.  
[65] Mr. Elez also described how he came to purchase a unit in the Vernon  
Project. As of trial, Mr. Elez was running a craft liquor distribution business in  
Saskatchewan. Before that, he had been a member of the Canadian Armed Forces.  
Mr. Elez explained that he had purchased his first house in Trenton, Ontario when  
he was 20, and became interested in investing in real estate. He saw it as  
something he could do alongside his career as a pilot.  
[66] Mr. Elez explained that he was part of an investor group and mentorship  
program, and the opportunity to invest in the Vernon Project was presented by Mr.  
Zavier at one of the group meetings. As Mr. Elez recalled, it was presented as a  
“hands-off” deal, and that the property would be managed by SWS. Mr. Elez  
SWS Marketing Inc. v. Zavier  
Page 23  
explained that, at the time, he was a pilot awaiting training and he did not want to  
burden himself with an investment. The Vernon Project was presented as one  
having positive cash flow, and not requiring much cash up front. Mr. Elez explained  
that he just needed to provide $2,500 and obtain a mortgage. He explained that  
management of the unit by someone else (namely, SWS) was a major selling  
feature. The down payment of $31,000, which SWS was providing, was needed to  
qualify for a mortgage. Mr. Elez explained that he would not have made the  
investment if he had been required to make the $31,000 down payment on his own.  
He explained that the amount represented his salary for a year, and having to come  
up with it would have limited the number of deals he could do.  
[67] As Mr. Elez recalled, Mr. Zavier was his main contact, and Mr. Gauthier was  
not involved.  
[68] Each of the Defendant-owners entered into a contract of purchase and sale  
with Four Elements (the “Purchase Contract”). The basic details are as follows:  
Defendant-Owner  
Date of Offer  
14 Dec. 2010  
Purchase Price;  
deposit  
Comments  
Randall Rogiani  
(unit 101)  
$155,000; $100 on Deposit of $2,275  
execution and to be delivered to  
$2,275 on removal Four Elements  
of conditions  
Randall Rogiani  
(unit 102)  
14 Dec. 2010  
14 Dec. 2010  
same as unit 101  
same as unit 101  
Randall Rogiani  
(unit 106)  
same as unit 101  
same as unit 101  
Eduardo Soto (unit 14 Dec. 2010  
104)  
$145,000; $100 on Deposit of $2,275  
execution and to be delivered to  
$2,275 on removal SWS  
of conditions  
Gary Mythen (unit  
105)  
10 Jan. 2011  
$145,000; $100 on Deposit of $29,000  
execution; $29,000 to be delivered to  
on removal of  
conditions  
SWS  
SWS Marketing Inc. v. Zavier  
Page 24  
Defendant-Owner  
Date of Offer  
Purchase Price;  
deposit  
Comments  
Burt Petersen (unit 4 Jan. 2011  
205)  
$155,000; $100 on Deposit of $2,275  
execution; $2,275  
on removal of  
conditions  
to be delivered to  
SWS  
Fan Jin (unit 107)  
9 Jan. 2011  
21 Jan. 2011  
4 Dec. 2010  
$145,000; $100 on Deposit of $2,275  
execution; $2,275  
on removal of  
conditions  
to be delivered to  
SWS  
Gordon Lemon  
(unit 206)  
$155,000; $100 on Deposit of $2,275  
execution; $2,275  
on removal of  
conditions  
to be delivered to  
Four Elements  
Joseph Lanz (unit  
204)  
$155,000; $100 on Deposit of $2,275  
execution; $2,275  
on removal of  
conditions  
to be delivered to  
Four Elements  
[69] Mr. Zavier also entered into a Purchase Contract, for unit 108. The offer is  
stated to be accepted March 12, 2011. The purchase price was $145,000. A  
deposit of $2.00 was payable on execution. A further deposit of $2,500 was  
required to be delivered to Four Elements on removal of conditions.  
[70] Mr. Elez entered into a Purchase Contract for unit 201. The offer is dated  
December 14, 2010 and was signed as accepted by Mr. Zavier on behalf of Four  
Elements. The purchase price was $155,000. A deposit of $100 was payable on  
execution. A further deposit of $2,275 was required to be delivered to SWS on  
removal of conditions.  
(d)  
The Joint Venture Agreements  
[71] As part of the transaction, each of the Defendant-owners also signed a Joint  
Venture Agreement. At trial, an admission was made that Mr. Zavier signed all of  
these Joint Venture Agreements on behalf of SWS.  
[72] I conclude that the Joint Venture Agreements were signed by the Defendant-  
owners and Mr. Elez at the same time as the Purchase Contracts. The concept of  
 
SWS Marketing Inc. v. Zavier  
Page 25  
the small down payment required for the investment is not reflected at all in the  
Purchase Contracts. Rather, it is only clear through the terms of the Joint Venture  
Agreements. Thus, the transaction being described during the marketing of units is  
reflected in two documents signed by the Defendant-owners: the Purchase Contract  
and the Joint Venture Agreement.  
[73] The Joint Venture Agreements in evidence have typed portions and  
handwritten additions. The typed portions are, for the most part, identical in all  
material respects. The handwritten additions are not identical, but the differences, in  
terms of the substantive issues in this case, are not material. With two exceptions  
(Mr. Mythen and Mr. Lemon), the profit share and allocation between the owner and  
SWS was 50% each.  
[74] The Joint Venture Agreement for Mr. Soto shows the material terms, and  
provides (in relevant part) as follows [all sic; underlining shows handwritten  
additions]:  
THIS JOINT VENTURE AGREEMENT (“Agreement”), made and entered into  
as of this 18th day of January 2011 by and between Eduardo Soto (referred  
to as the “JV”) of Vancouver BC and SWS Marketing Inc. of Surrey, BC.  
ARTICLE I GENERAL PROVISIONS  
1.01 Business Purpose. The business of the Joint Venture shall be as  
follows:  
Own and rent [unit number in Vernon Project], Vernon, BC until such  
time as SWS Marketing Inc. refinances using commercial funding to buy out  
the JV or SWS Marketing, Inc. and the JV jointly decide to sell the property.  
1.02 Term of the Agreement. This Joint Venture shall commence on the  
date first above written and shall continue in existence until the properties  
have been refinanced and/or sold.  
. . .  
ARTICLE III OBLIGATIONS OF THE JOINT VENTURERS  
SWS Marketing Inc. is responsible for all marketing and putting securing  
$29000 down payment towards the purchase price. SWS Marketing, Inc. is  
also responsible for completing the renovations that have been started, on  
going maintenance (fees for this purpose are deducted from the rents prior to  
division of profits,) and managing the property.  
SWS Marketing Inc. v. Zavier  
Page 26  
Eduardo Soto is responsible for contributing $2,275.00 as part of the down  
payment towards the purchase price and securing financing on the balance of  
the purchase price.  
ARTICLE IV ALLOCATIONS  
4.01 Profits and Losses. Commencing on the date hereof and ending on the  
termination of the business of the Joint Venture, all profits, losses and other  
allocations to the Joint Venture shall be allocated as follows at the conclusion  
of each fiscal month: 50% SWS Marketing Inc. 50% JV.  
ARTICLE V RIGHTS AND DUTIES OF THE JOINT VENTURERS  
1.  
5.01 Business of the Joint Venture. SWS Marketing shall have full,  
exclusive and complete authority and discretion in the management  
and control of the business of the Joint Venture for the purposes  
herein stated and shall make all decisions affecting the business of  
the Joint Venture. A[s] such, any action taken shall constitute the act  
of, and serve to bind, the Joint Venture. SWS Marketing, Inc. shall  
manage and control the affairs of the Joint Venture to the best of its  
ability and shall use its best efforts to carry out the business of the  
Joint Venture. JV shall not participate in or have any control over the  
Joint Venture business nor shall It have any authority or right to act for  
or bind the Joint Venture.  
. . .  
. . . ARTICLE VII PAYMENT OF EXPENSES All expenses of the Joint  
Venture shall be paid by either party of the joint venture and shall be  
reimbursed by the Joint Venture from the monthly rents.  
ARTICLE VIII INDEMNIFICATION OF THE JOINT VENTURERS  
The parties to this Agreement shall have no liability to the other for any loss  
suffered which arises out of any action or inaction if, in good faith, it is  
determined that such course of conduct was in the best interests of the Joint  
Venture and such course of conduct did not constitute negligence or  
misconduct. The parties to this Agreement shall each be indemnified by the  
other against losses, judgments, liabilities, expenses and amounts paid in  
settlement of any claims sustained by it in connection with the Joint Venture.  
ARTICLE IX DISSOUTION  
9.01 Events of the Joint Venturers. The Joint Venture shall be dissolved  
upon the happening of any of the following events:  
(a) The adjudication of bankruptcy, filing of a petition pursuant to a Chapter  
of the Federal Bankruptcy Act, withdrawal, removal or insolvency of either of  
the parties.  
(b) The sale or other disposition, not including an exchange of all, or  
substantially all, of the Joint Venture assets.  
(C) Mutual agreement of the parties.  
ARTICLE X MISCELLANEOUS PROVISIONS  
10.01 Books and Records. The Joint Venture shall keep adequate books  
and records at its place of business (as determined by SWS Marketing. Inc.,)  
SWS Marketing Inc. v. Zavier  
Page 27  
setting forth a true and accurate account of all business transactions arising  
out of and in connection with the conduct of the Joint Venture.  
. . .  
10.03 Integrated Agreement. This Agreement constitutes the entire  
understanding and agreement among the parties hereto with respect to the  
subject matter hereof, and there are no agreements, understandings,  
restrictions or warranties among the parties other than those set forth herein  
provided for.  
. . .  
[75] Mr. Mythen’s Joint Venture Agreement had the following written in by hand at  
the end of Article IV Allocations:  
SWS will pay Gary an additional 10k when this agreement ends.  
[76] The Joint Venture Agreement for Mr. Lemon had a similar term added to  
Article IV.  
[77] Other details concerning the Defendant-owners’ Joint Venture Agreements  
are as follows:  
Defendant-Owner  
Date stated to be  
made  
Amount SWS was “putting securing”  
for down payment per Article III  
Randall Rogiani  
Gary Mythen  
Burt Petersen  
Fan Jin  
5 January 2011  
22 January 2011  
4 January 2011  
undated  
$87,000 ($29,000 for each unit)  
$29,000  
$31,000  
$29,000  
$29,000  
$31,000  
Gordon Lemon  
Joseph Lanz  
undated  
4 January 2011  
[78] Although Article I contemplates the joint venture continuing until SWS  
“refinances using commercial funding to buy out the JV,” it is silent with respect to  
the terms on which SWS’s buy-out are to be exercised. In particular, it is silent with  
respect to the price SWS will be required to pay. Article I provides in the alternative  
for the joint venture to continue until SWS and the owner “jointly” decide to sell the  
SWS Marketing Inc. v. Zavier  
Page 28  
unit. This alternative is very important with respect to remedy, as I discuss later in  
these Reasons.  
[79] SWS says that Mr. Zavier also signed a Joint Venture Agreement. Mr.  
Gauthier identified part of Exhibit 16 as a copy of the Joint Venture Agreement  
signed by Mr. Zavier (in his personal capacity) and by Mr. Gauthier on behalf of  
SWS. The document is dated March 8, 2011. The original was never produced. At  
trial, Mr. Zavier was adamant that he never signed a Joint Venture Agreement and  
went so far as to assert that Mr. Gauthier had forged his signature.  
[80] The terms of this Joint Venture Agreement are the substantially the same as  
those in Mr. Soto’s Agreement, with changes as necessary in details.  
[81] Mr. Elez also signed a Joint Venture Agreement. The Agreement is dated  
January 10, 2011, and was signed by Mr. Zavier on behalf of SWS. Again, the  
terms are substantially the same as those in Mr. Soto’s Agreement, with changes as  
necessary in details.  
[82] No other Joint Venture Agreements were in evidence at trial. Mr. Zavier  
asserted that Mr. Gauthier’s parents, William and Marlene Gauthier, who purchased  
units 103 and 203 were not asked to sign any Joint Venture Agreement. Mr.  
Gauthier disputed this.  
[83] The purchase of units by the Defendant-owners and Mr. Elez completed on  
March 18, 2011. Mr. Zavier, on behalf of Four Elements, initialled and signed the  
vendor’s statement of adjustments (the “Vendor’s Statement of Adjustments”) for all  
of these transactions. Under the “Debit” column, each Statement of Adjustments  
contained an entry stating “To: SWS Marketing Inc. – Joint Venture Agreement.”  
The amount shown was the amount of the down payment that SWS was responsible  
for “putting securing,” as described in the corresponding Joint Venture Agreement.  
The text above the signature line on p. 2 of each Statement of Adjustments read:  
THE VENDOR, having read and reviewed the above, HEREBY APPROVES  
this Statement and consents to the disbursement of funds as herein set forth.  
SWS Marketing Inc. v. Zavier  
Page 29  
[84] At trial, when asked on cross-examination about the Vendor’s Statements of  
Adjustment, Mr. Zavier asserted that he did not understand what he was signing,  
and that he did not attempt to read the documents before he signed them. Rather,  
according to Mr. Zavier, the documents were simply given to him and he signed. He  
asserted further that, in March 2011, it was his practice not to read legal documents  
before signing them. Although Four Elements had its own legal representation for  
these transactions, Mr. Zavier asserted that the documents were placed before him  
for signature by Mr. Gauthier, his “mentor.” When pressed further, Mr. Zavier said  
that he did not really remember exactly what happened, although he knew that he  
signed the documents. In any event, Mr. Zavier insisted that Four Elements never  
received any of the money reflected in the “debit column” for “SWS Marketing Inc. –  
Joint Venture Agreement.”  
[85] Mr. Zavier does not dispute that he acquired unit 108 for a purchase price of  
$145,000. The Vendor’s Statement of Adjustments for that unit shows a completion  
date of March 31, 2011. It is initialled and signed by Mr. Zavier on behalf of Four  
Elements. Like the other statements of adjustment, the “Debit” Column shows  
$29,000 for “SWS Marketing Inc. – Joint Venture Agreement.” This corresponds to  
the amount in Article III of the Joint Venture Agreement in Exhibit 16.  
(e)  
April 2011 to August 2013: no problems in the Vernon Project  
[86] Beginning in April 2011, SWS took over full management of the units in the  
Vernon Project. It collected the rents and, from that income, paid expenses,  
including the Defendants’ mortgage payments. There was little evidence about  
whether there were any profits (or losses) allocated and shared under Article IV of  
the Joint Venture Agreements. I conclude there were none of any significance.  
[87] In August 2011, Mr. Gauthier, Mr. Zavier and Mr. Lanz convened a meeting of  
the Strata Corporation. Mr. Gauthier’s position was that, by virtue of the terms of the  
Joint Venture Agreements, SWS controlled all of the units and therefore could vote  
(to the exclusion of the owners) to elect the members of the strata council. Nothing  
indicates that, at the time, anyone (including Mr. Zavier and Mr. Lanz) expressed a  
 
SWS Marketing Inc. v. Zavier  
Page 30  
different view, or that any Defendant-owner either wanted or expected to be  
involved. Accordingly, at the Strata Corporation meeting, Mr. Gauthier was elected  
strata council president, Mr. Zavier was elected vice-president and Mr. Lanz was  
elected secretary-treasurer. I will call this (as did Branch J.) the “Original Council.”  
[88] As Justice Branch found, the Original Council did not follow many of the  
requirements under the Strata Property Act. However, at trial, all of the  
Defendants made an admission that no one had any complaint about how SWS  
managed the Vernon Project up to August 31, 2013. Indeed, in his evidence, Mr.  
Soto described the management of his unit prior to September 2013 as “excellent,”  
and said that he was “100% satisfied.Like Mr. Soto, Mr. Elez said that he was  
“totally satisfied.”  
[89] The Defendant-owners admitted that, up to August 31, 2013, SWS performed  
its obligations under the Joint Venture Agreements. However, they also admitted  
that, thereafter, they stopped complying with the Joint Venture Agreements.  
(f)  
September 2013 and thereafter: many problems in the Vernon Project  
[90] In early September 2013, serious disputes between Mr. Gauthier and Mr.  
Zavier boiled over. Mr. Lanz, who described his own difficulties and unhappiness  
with Mr. Gauthier, took Mr. Zavier’s side. Although I heard evidence at trial from all  
three men about these matters, I do not consider it necessary to describe the details  
of the disputes any further. I will simply note that some have been the subject of  
proceedings before the B.C. Provincial Court.  
[91] At trial, Mr. Gauthier explained that, as a consequence of the disputes, he  
decided to close the SWS bank account that had been used to manage the Vernon  
Project, in particular, to deposit rents and to pay expenses (including owners’  
mortgages) (the “Old Account”). Mr. Gauthier then opened a new SWS account (the  
“New Account”) for the same purposes. He arranged to transfer all of the funds from  
the Old Account (about $15,200) to the New Account. Mr. Zavier had been a  
signatory on the Old Account. However, he was not a signatory on the New  
 
SWS Marketing Inc. v. Zavier  
Page 31  
Account. Mr. Gauthier offered Mr. Zavier and Mr. Lanz “view-only” on-line access  
for the New Account, but nothing beyond that. They rejected his offer. Mr. Lanz  
took great offence at what he considered Mr. Gauthier’s unilateral actions involving  
the SWS bank accounts.  
[92] Branch J. aptly described what happened at this time (Branch Reasons, para.  
13):  
. . . It is sufficient to note that these disputes triggered the onset of hostilities  
between the two sides, which dispute has now lasted longer than the French  
Revolution.  
[93] The Fall of 2013 also marked the beginning of the duelling strata councils:  
the “Gauthier Council,” and the “Zavier Council,of which Mr. Zavier and Mr. Lanz  
were members.  
[94] Mr. Zavier and Mr. Lanz had a much closer relationship with the Defendant-  
owners than did Mr. Gauthier. After Mr. Gauthier closed the Old Account, Mr. Zavier  
and Mr. Lanz quickly began contacting the Defendant-owners and Mr. Elez. Mr.  
Zavier and Mr. Lanz told them that Mr. Gauthier had stolen money. On September  
24, 2013, Mr. Zavier and Mr. Lanz convened what purported to be an “emergency”  
meeting of the Strata Corporation. At this meeting, they repeated the claims that Mr.  
Gauthier had stolen money.  
[95] A new strata council (a Zavier Council) was elected at this meeting, which  
included Mr. Zavier and Mr. Lanz. However, as found by Justice Branch, the  
members of this strata council were not properly elected.  
[96] At this time, the position of Mr. Zavier and Mr. Lanz was that Mr. Gauthier’s  
actions resulted in termination of the Joint Venture Agreements. They  
communicated that position to the Defendant-owners and Mr. Elez. The Defendant-  
owners and Mr. Elez were told they were therefore no longer bound by the Joint  
Venture Agreements, and they should stop having SWS collect the rents for their  
units. The corollary was that, going forward, individual owners would have to make  
all of their own arrangements for management of their units. This included collection  
SWS Marketing Inc. v. Zavier  
Page 32  
of rents, finding tenants and ensuring that their monthly mortgage payments were  
made. These were all things that, up to the end of August 2013, SWS had been  
managing.  
[97] I find that the Defendant-owners and Mr. Elez accepted what they were told  
by Mr. Zavier and Mr. Lanz. They stopped complying with the Joint Venture  
Agreements. They ceased to deal with SWS, and took the steps Mr. Zavier and Mr.  
Lanz told them were now necessary. That included collecting the rents for the units.  
They supported the Zavier Council that had been established by Mr. Zavier and Mr.  
Lanz, and ignored Mr. Gauthier and the Gauthier Council. They did not attend  
Strata Corporation meetings called by the Gauthier Council.  
[98] However, at trial, Mr. Soto and Mr. Elez described the many difficulties they  
encountered in trying to manage their respective units from locations outside of B.C.  
Locating suitable tenants was a serious problem. Repairs after a flood took many  
months to organize and complete. Units became infested with bugs. Moreover,  
instead of enjoying the benefits of a passive, hands-off real estate investment, Mr.  
Elez and the Defendant-owners became embroiled in litigation. Mr. Soto described  
the situation as “hell” for many people and one of the worst experiences he has had.  
As of trial, the mortgage on his unit was in foreclosure.  
[99] As I noted above, this action was filed by SWS and others in November 2013.  
A certificate of pending litigation (“CPL”) was claimed and registered against the  
units owned by the Defendant-owners excluding Joseph Lanz (who was not yet  
named as a defendant) and Mr. Zavier. As I noted above, in the original notice of  
civil claim, no claim was made against Mr. Zavier asserting that he was a party to a  
Joint Venture Agreement. A title search (part of Exhibit 28) for Mr. Zavier’s unit  
shows that a certificate of pending litigation in relation to this action was registered  
against title on July 25, 2017. However, as I also noted above, SWS’s claim in  
relation to Mr. Zavier’s unit was not fully pleaded until the 3rd amended notice of civil  
claim, amended in November 2017 and filed in February 2018.  
SWS Marketing Inc. v. Zavier  
Page 33  
[100] Each of the Gauthier Council and the Zavier Council levied separate strata  
fees on the units, creating more confusion. Justice Branch noted, at Branch  
Reasons para. 24:  
[24]  
Seeking to collect on their designated strata fees, the Zavier Council  
placed liens and obtained payment from the plaintiffs in the amount of  
$65,433. On the other side, the Gauthier Council sent demand letters to the  
defendants which resulted in $47,659.92 being held in trust with former  
plaintiffs’ counsel.  
(g)  
2017: Defendant-owners begin contacting the Home Buying Centre and  
disposing of their units  
[101] By 2017, some of the Defendant-owners had had enough and wanted out of  
their investments in the Vernon Project. None contacted SWS about selling. This is  
not surprising given what they had been told about the status of the Joint Venture  
Agreements and Mr. Gauthier. Instead, encouraged by Mr. Zavier, Defendant-  
owners took a different route.  
[102] At trial, I heard evidence from Christian Saxvik, who was called in both the  
plaintiff’s and the Defendants’ cases. Mr. Saxvik is associated with the “Home  
Buying Centre” group, and he is the manager of one of the companies in the group,  
1125003 B.C. Ltd. (“112”). Mr. Saxvik explained that the Home Buying Centre helps  
people who have properties that are difficult to manage, and it relieves them of the  
headache. He explained that, in relation to units in the Vernon Project, 112 would  
agree to manage, collect rents, and look after maintenance and repairs, among  
other things. According to Mr. Saxvik, 112 has agreements (in the form of a long-  
term lease with option to purchase) (the “Lease-Option Agreement”) with Mr.  
Rogiani, Mr. Lemon, Mr. Mythen, Mr. Zavier and Mr. Soto in respect of their units in  
the Vernon Project. There are no Lease-Option Agreements with Ms. Jin, Mr.  
Petersen or Joseph Lanz. However, according to Ms. Jin, Mr. Saxvik approached  
her about buying her unit.  
[103] 112 was incorporated in June 2017. A corporate search done in June 2018  
shows that Mr. Zavier’s wife, Marijana Zavier, was then a director. An admission  
 
SWS Marketing Inc. v. Zavier  
Page 34  
was made as part of Exhibit 38 that Mr. Zavier “has a beneficial interest in [112] of  
25% on the basis of his marriage to Marijana Zavier pursuant to the Family Law Act.”  
The inference to be drawn is that Ms. Zavier has a 50% interest in 112.  
[104] Mr. Saxvik explained that he first became involved in the Vernon Project in  
2017, when he received a phone call from Mr. Rogiani. According to Mr. Rogiani, it  
was Mr. Zavier who suggested that he contact Mr. Saxvik concerning Mr. Rogiani’s  
investment in the Vernon Project. In the result, in July 2017, Mr. Rogiani entered  
into Lease-Option Agreements for all three of his units in the Vernon Project. Mr.  
Rogiani explained that he made the Lease-Option Agreements with 112 because his  
lifestyle had changed and he did not want the stress of ownership of the units.  
[105] The key terms of the Lease-Option Agreements are identical, and include the  
following (from the Lease-Option Agreement for Mr. Rogiani’s unit 102) [the  
“Tenant/Buyer” is 112, and the “Landlord/Seller” is Mr. Rogiani; bold and underlining  
in original]:  
In consideration of the sum of $1 and mutual promises and covenants  
hereinafter stipulated, the Parties hereby agree as follows:  
1.  
DESCRIPTION  
The Landlord/Seller agrees to lease that the Tenant/Buyer agrees to rent the  
real property and improvements located at [address and legal description  
given]  
. . .  
2.  
TERM  
The Term of this Agreement will continue until the 1st mortgage balance  
outlined in section 9 is at zero ($0) and will commence on August 1, 2017  
(the “Commencement Date”). A 1st mortgage balance reaching zero ($0),  
will be considered an automatic exercise of the Option to Purchase as  
outlined in section 17 . . .  
3.  
RENT  
Rent: Rent to be paid by the Tenant/Buyer is an amount equal to the monthly  
mortgage payments payable pursuant to the First Mortgage and pursuant to  
the property tax (including municipal services water/sewer), strata payment  
and property insurance cost in the amount not to exceed $730.00. For the  
sake of clarity, if the total pro-rated monthly mortgage, property tax, strata  
payment, and insurance payment decrease, the Rent to be paid by the  
Tenant shall be reduced accordingly. . . .  
SWS Marketing Inc. v. Zavier  
Page 35  
4.  
OPTION TO PURCHASE  
The Tenant/Buyer, as part of the consideration herein, is hereby granted the  
exclusive right, option and privilege of purchasing the Property at any time  
during the term of this Lease/Option agreement or any extension thereof. . . .  
. . .  
9.  
FURTHER ENCUMBRANCES  
The Landlord/Seller hereby warrants that the total of the leases, options,  
mortgages, liens and any other encumbrances against the Property, whether  
of public record or not, are as follows:  
(a)  
A first mortgage in favour of TD Canada Trust Mortgage [redacted] in  
the amount of $99,981.56 (at April 1, 2017) and registered at the Land Title  
Office . . .  
(c)  
The Landlord/Seller covenants and agrees not to further encumber  
the Property in any way whatsoever without the prior written consent of the  
Tenant/Buyer . . . The Landlord/Seller also covenants and agrees to provide,  
at the Tenant/Buyer’s request, a statement that all monthly maintenance fees  
(if applicable), municipal taxes and mortgage amounts have been paid on  
account of the Property.  
. . . The Landlord/Seller further agrees to keep all mortgages, liens, taxes or  
other encumbrances on the Property current and in good standing, . . .  
. . .  
13.  
BINDING AGREEMENTS  
The Parties hereto agree that this Lease/Option, Power of Attorney, Form C,  
and Form D comprises the entire agreement of the parties and that no other  
representation or agreements have been made or relied upon, . . .  
. . .  
OPTION TO PURCHASE TERMS  
15.  
PRICE AND TERMS  
The Tenant/Buyer has the Option to Purchase the Property for the price of  
THE FIRST MORTGAGE BALANCE at the Closing Date plus $6,000.  
. . .  
19.  
CLOSING ARRANGEMENTS  
The exercise of this Option shall convert it into a binding agreement for the  
sale and purchase of the Property . . .  
. . .  
22.  
REGISTRATION OF AGREEMENT  
The Tenant/Buyer may register this Agreement in the Land Title Office in the  
jurisdiction in which the Property is located and the Landlord/Seller shall  
provide the Agreement to the Tenant/Buyer in registrable form.  
SWS Marketing Inc. v. Zavier  
Page 36  
23.  
INDEPENDENT LEGAL ADVICE  
The Landlord/Seller acknowledges to the Tenant/Buyer that the  
Landlord/Seller has had the opportunity to read the contents of this  
Lease/Option agreement . . . and obtain legal advice with respect to this  
Lease/Option agreement. . . .  
. . .  
[106] 112 has registered Lease-Option Agreements in the Kamloops Land Title  
Office in respect of Mr. Rogiani’s units and Mr. Lemon’s unit.  
[107] Mr. Saxvik explained that 112 was aware of this litigation. He explained that  
the titles were “pulled” when the Rogiani Lease-Option Agreements were registered,  
and he saw the CPL was registered. Mr. Saxvik explained that the Lease-Option  
Agreements were registered after the CPL, and that the CPL was not a concern. Mr.  
Saxvik was asked whether SWS had approved any of the Lease-Option  
Agreements, and he said no. He explained that SWS and 112 have no relationship  
with one another, and, from his perspective, 112 did not need permission from  
anyone to make an agreement with the registered owner of a unit. According to Mr.  
Saxvik, 112 has not been able to register other Lease-Option Agreements (for  
example, for Mr. Soto) because it has been unable to obtain a Form F” for those  
units in respect of strata fees, despite requests. A Form F is a certificate of payment  
of strata fees, as described in s. 115 of the Strata Property Act.  
[108] SWS did not consent to any Defendant-owner or Mr. Zavier entering into the  
Lease-Option Agreements. Rather, SWS says that doing so is a breach of the Joint  
Venture Agreements.  
[109] SWS asserts that Mr. Zavier and Mr. Lanz are using 112 as a means to divert  
to themselves profits from the Vernon Project (and, specifically anticipated profits on  
the sale of units) that properly belong to SWS. SWS points to the price at which  
112’s option can be exercised under the Lease-Option Agreements, and says this  
gives 112 the ability to acquire a unit at far below market value. SWS asserts that  
Mr. Zavier and Mr. Lanz intentionally created the chaos Defendant-owners  
experienced beginning in September 2013 and thereafter, in order to encourage  
SWS Marketing Inc. v. Zavier  
Page 37  
owners to give up their units to 112, as Mr. Rogiani, for example, did. When these  
propositions were put to Mr. Zavier on cross-examination, he denied them.  
[110] SWS says that, contrary to what Mr. Zavier claimed at trial, this plan can be  
seen in Exhibit 55. Exhibit 55 shows screenshots of a series of text messages  
exchanged between Mr. Zavier and Mr. Elez (when he was still a defendant in the  
action) in the first months of 2019.  
[111] In February, Mr. Zavier inquired whether Mr. Elez wanted “Andrew” (who was  
associated with Mr. Saxvik and 112) to take over Mr. Elez’s unit. Text messages  
from March illustrate Mr. Elez’s frustration with owning a unit in the Vernon Project,  
and the difficulties with trying to manage ownership remotely. On March 20, Mr.  
Zavier sent the following messages to Mr. Elez:  
Sacha, Gord [Lemon] handed his property over the Christian [Saxvik]. Do  
you want to do the same thing? Let’s call Christian up and make this happen  
for you.  
They take care of all the issues and payments.  
[112] More texts were exchanged on March 21, and Mr. Zavier repeated the theme  
that the Joint Venture Agreements were no longer in force. An exchange begins at  
11:23 a.m. [all sic]:  
[Mr. Zavier at 11:23 a.m.] Next, what about giving Vernon up and letting  
Christian and Andrew take over? No payment, no tenants, no hassles. You  
have his email. As i mentioned before Gord just sold his to them and he’s  
happy.  
[Mr. Elez at 11:30 a.m.] I would prefer if you would formulate your thoughts  
into a single text rather than spam my phone. It makes it difficult to reply and  
is disruptive to my work. I had always considered you a friend as well,  
however now im uncertain. You advised to rent my unit regardless of  
cockroaches and find and manage my own tenant. You sold me this deal as  
a hands off investment and now, knowing full well that I live several provinces  
away you tell me that im on my own. That’s not a very friendly thing to do.  
Please send me all the details regarding the promisary note. I’d like copies of  
all the contracts, statements and receipts in a single email that I can forward  
to my lawyer for review. If she agrees that it all sounds fair then I’d be happy  
to comply with your request.  
SWS Marketing Inc. v. Zavier  
Page 38  
[113] Over the next hour or so, Mr. Zavier and Mr. Elez exchanged more text  
messages. Mr. Zavier encouraged Mr. Elez to contact Mr. Saxvik about selling his  
unit, as others had done. Mr. Elez indicated that he wished to have his lawyer  
“review everything” and give him some advice about what to do.  
[114] On April 8, 2019, Mr. Zavier sent Mr. Elez several more messages about Mr.  
Saxvik. Mr. Zavier continued to press Mr. Elez to contact Mr. Saxvik and repeated  
his position (“the position we are all taking”) that the Joint Venture Agreements had  
ceased to exist in September 2013 [all sic]:  
[Mr. Zavier at 8:59 p.m.] Christian is willing to take your unit over Sacha?  
Just call him. FYI there is NO JV...it ended when Rene took all our trust  
monies...that’s the position we are all taking.  
[Mr. Zavier at 9:31 p.m.] With no JV in place there’s no 50% ownership. That  
means you own 100% of the property...  
[Mr. Zavier at 9:33 p.m.] Sws didn’t pay for anything, they didn’t offer to pay  
either. They didn’t return the security deposit they had. They didn’t pay for  
your mortgage... the JV has been over a long time, since sws sued us in  
2013.  
[Mr. Elez at 9:34 p.m.] Sorry, lost reception while driving. Ill have a chat with  
Christian.  
[Mr. Zavier at 9:34 p.m.] You’ve also seen all the difficulties r. Gauthier has  
caused in the last 6 yrs  
[Mr. Zavier at 9:35 p.m.] That may be a good idea, they don’t recognize sws  
jv and they will fight with me in court. And pay all the fees and take care of all  
the issues. Make sure you make some money please! Negotiate it. Randy  
[Rogiani] and Gord [Lemon] did and they are happy.  
[115] In submissions, SWS argued that Mr. Zavier’s conduct in encouraging Mr.  
Elez and Defendant-owners to contact Mr. Saxvik and make agreements with 112  
was relevant to motive and supported SWS’s claim that Mr. Zavier and Mr. Lanz had  
intentionally created chaos among the Defendant-owners to achieve their own goals  
and cut SWS out of any profits from the Vernon Project. SWS argued that Mr.  
Zavier’s conduct and involvement with 112 was also relevant to the credibility of both  
Mr. Zavier and Mr. Lanz.  
SWS Marketing Inc. v. Zavier  
(h) Strata Corporation issues after Mr. Saxvik becomes involved  
Page 39  
(i)  
Mr. Saxvik asserts he is entitled to exercise the rights of the  
Defendant-owners; the Gauthier Council refuses to recognize  
[116] Mr. Saxvik explained that, after the first Lease-Option Agreements were  
made, he took the position that, with respect to Strata Corporation matters, 112, as  
the holder of long-term leases pursuant to the Lease-Option Agreements, was  
entitled to exercise the rights provided under s. 148 of the Strata Property Act,  
which provides in part:  
148 (1) In this section, "long term lease" means a lease to the same person  
for a set term of 3 years or more.  
(2) If a residential strata lot is leased under a long term lease, the tenant is  
assigned the powers and duties of the landlord under this Act, the bylaws and  
the rules for the term of the lease.  
(3) Before exercising any powers of the landlord, the tenant must have given  
to the strata corporation written notice of the assignment referred to in  
subsection (2), stating the name of the tenant and the time period during  
which the lease is effective.  
[117] According to Mr. Saxvik, he also held powers of attorney from the Defendants  
with whom 112 had Lease-Option Agreements, permitting him to exercise all of the  
rights (and duties) of those Defendants in respect of Strata Corporation matters. Mr.  
Saxvik explained that, when 112 began entering into Lease-Option Agreements, the  
only strata council he was aware of, based on what he was told, was the Zavier  
Council. He explained that he had no difficulties dealing with the Zavier Council,  
including on matters relating to the payment of strata fees and obtaining Form Fs.  
According to Mr. Saxvik, his knowledge about the existence of the Gauthier Council,  
as a strata council, was vague. He became more aware of it as a result of  
applications and hearings in this action.  
[118] According to Mr. Saxvik, the required notice of assignment under s. 148 was  
given to the Strata Corporation, and to the Gauthier Council. However, Mr. Gauthier  
and the Gauthier Council refused to recognize the assignment or that 112 had rights  
as a long-term tenant.  
   
SWS Marketing Inc. v. Zavier  
(ii) The November 2020 Bylaws  
Page 40  
[119] On November 24, 2020, the Gauthier Council caused amended bylaws for the  
Stata Corporation (the “November 2020 Bylaws”) to be registered in the Kamloops  
Land Title Office. They stated in part as follows, concerning annual and special  
general meetings:  
26(4) Except on matters requiring a unanimous vote, the vote for a strata lot  
may not be exercised if the strata corporation is entitled to register a lien  
against that strata lot under section 116(1) of the [Strata Property] Act 7 days  
or less prior to the vote.  
27(1) If within 1/2 hour from the time appointed for an annual or special  
general meeting a quorum is not present, the eligible voters, present in  
person or by proxy, constitute a quorum. . . . This bylaw is an alternative to  
section 48(3) of the [Strata Property] Act. This bylaw does not apply to a  
meeting demanded pursuant to section 43 of the Act . . .  
. . .  
(7)  
For any property that SWS Marketing Inc. has a Joint Venture  
Agreement with the owner on title, unless the two parties agree, the vote by  
SWS Marketing Inc. carries.  
[120] The Zavier Council had caused a set of bylaws to be registered in the  
Kamloops Land Title Office on January 2, 2020 (the “Zavier Bylaws”). Branch J.  
determined that the Zavier Council was not lawfully entitled to exercise the powers of  
a strata council under the Strata Property Act. However, in the context of the  
complaints made in the Counterclaim, it is useful to compare some of the provisions  
of the Zavier Bylaws with the November 2020 Bylaws.  
[121] The Zavier Bylaws provide with respect to the quorum for an annual or  
special general meeting as follows:  
28.  
Quorum  
(1)  
Quorum for an annual or special general meeting shall be the  
eligible voters holding 1/3 of the strata corporation’s votes  
present in person or by proxy.  
(2)  
If at the time appointed for a general meeting, a quorum is not  
present:  
(a)  
a meeting held pursuant to section 43 of the Act is  
cancelled; and  
 
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(b)  
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for a meeting held other than pursuant to section 43 of  
the Act, the persons present in person or by proxy and  
entitled to vote at any time during the meeting shall  
constitute a quorum.  
[122] Section 28(2) corresponds generally to s. 27(1) of the November 2020  
Bylaws. However, there is no section in the November 2020 Bylaws corresponding  
to s. 28(1) of the Zavier Bylaws. This must simply have been an oversight and  
accidental omission in the November 2020 Bylaws, and can be corrected by  
reference to s. 48 of the Strata Property Act, which provides:  
Quorum for annual or special general meeting  
48 (1) Business must not be conducted at an annual or special general  
meeting unless a quorum is present.  
(2) Subject to the bylaws, a quorum for an annual or special general meeting  
is  
(a) eligible voters holding 1/3 of the strata corporation's votes, present  
in person or by proxy, or  
(b) if there are fewer than 4 strata lots or fewer than 4 owners, eligible  
voters holding 2/3 of the strata corporation's votes, present in person  
or by proxy.  
(3) Unless otherwise provided in the bylaws, if within 1/2 hour from the time  
appointed for an annual or special general meeting a quorum is not present,  
the meeting stands adjourned to the same day in the next week at the same  
place and time but, if on the day to which the meeting is adjourned a quorum  
described in subsection (2) is not present within 1/2 hour from the time  
appointed for the meeting, the eligible voters present in person or by proxy  
constitute a quorum.  
[123] Section 31 of the Zavier Bylaws deals with voting. With respect to voting by  
an owner with unpaid strata fees, it provides in s. 31(7):  
An owner will not be entitled to vote at an annual general meeting except on  
matters requiring a unanimous vote or a 80% vote if the strata corporation is  
entitled to register a lien against the strata lot under section 116 of the Act.  
[124] Section 116 of the Strata Property Act provides in relevant part:  
Certificate of Lien  
116 (1) The strata corporation may register a lien against an owner's strata  
lot by registering in the land title office a Certificate of Lien in the prescribed  
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form if the owner fails to pay the strata corporation any of the following with  
respect to that strata lot:  
(a) strata fees;  
. . .  
(3) Subsections (1) and (2) do not apply if  
(a) the amount owing has, under section 114, been paid into court or  
to the strata corporation in trust,  
(b) arrangements satisfactory to the strata corporation have been  
made to pay the money owing, or  
(c) the amount owing is in respect of a fine or the costs of remedying  
a contravention.  
. . .  
[125] Section 31(7) of the Zavier Bylaws corresponds generally to s. 26(4) of the  
November 2020 Bylaws.  
[126] However, there is nothing in the Zavier Bylaws corresponding to s. 27(7) of  
the November 2020 Bylaws. Indeed, the Defendants seek to have s. 27(7) declared  
unenforceable. They rely on it as evidence to support their claims that, since  
February 8, 2021, the Gauthier Council has engaged in or may engage in  
significantly unfair actions, and made decisions that are significantly unfair, in  
relation to the Defendants, and favoured the interests of SWS.  
(iii) Events after the February 8 Order  
[127] Following pronouncement of the February 8 Order, a meeting of the Strata  
Corporation was held on March 12, 2021. This was the meeting referred to in  
para. 2 of the February 8 Order. At trial, Mr. Saxvik described his unhappiness with  
how this meeting was conducted by Mr. Gauthier and called the meeting chaotic.  
Mr. Saxvik and Mr. Lanz were especially unhappy with the decision not to permit all  
unit-owners to vote at the meeting. The reason given was the non-payment of strata  
fees. This decision was the subject of the May 25, 2021 hearing before Justice  
Branch, where the Defendants sought (ultimately unsuccessfully) to have the then-  
plaintiffs found in contempt of court.  
 
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[128] In any event, para. 2 of the February 8 Order, requiring the calling of a special  
general meeting, was set aside by the Court of Appeal.  
[129] Mr. Saxvik explained that when he then reviewed the November 2020  
Bylaws, he saw what he described as a provision giving SWS the right to override all  
the others, namely, s. 27(7). Mr. Saxvik perceived this as resulting in management  
of the Strata Corporation that was neither independent nor unbiased.  
[130] Mr. Saxvik asserted that, from his perspective, Mr. Gauthier was using the  
Strata Corporation, and management by the Gauthier Council, to further his own  
personal interests, while ignoring the interests of the owners of the units represented  
by Mr. Saxvik through 112. Mr. Saxvik explained that he did not care about the  
fights among the owners, and he did not care who was on the Strata Council, as  
long as it operated properly.  
[131] Mr. Saxvik expressed frustration that he has been unable to get Form Fs from  
the Gauthier Strata Council, despite requests. He explained that he needed a Form  
F in order to register a Lease-Option Agreement in the Land Title Office. According  
to Mr. Saxvik, units having Lease-Option Agreements had paid strata fees, but as  
directed by the Zavier Council. According to Mr. Saxvik, since delivery of the Branch  
Reasons, there has not been any reconciliation between the strata fees already paid  
to the Zavier Council, and the fees claimed to be owing by the Gauthier Council. He  
also claimed not to have received any accounting. The result, from Mr. Saxvik’s  
perspective, is that he does not know whether strata fees are owing and if so, how  
much. According to Mr. Saxvik, no strata fees have been paid to the Strata  
Corporation for the seven units Mr. Saxvik is managing on behalf of 112. Mr. Saxvik  
expressed considerable mistrust of Mr. Gauthier and is not prepared to accept what  
the Strata Corporation (through the Gauthier Council) has provided by way of an  
accounting of outstanding and unpaid strata fees.  
[132] On the other hand, according to Mr. Gauthier, there has been a reconciliation  
done for strata fees, and he explained that the results are shown for the Defendants’  
units in Exhibit 61. For example, according to Mr. Gauthier, the strata fees owing in  
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Page 44  
respect of unit 101 (one of Mr. Rogiani’s units) as of December 2021 were about  
$5,500. Based on Exhibit 61, none of the Defendants’ units is paid up to date.  
[133] Apart from Mr. Saxvik’s complaints, no Defendant presented evidence to  
challenge Mr. Gauthier’s evidence that strata fees are due and owing from each of  
the Defendants, as shown on Exhibit 61. The June 11 Order included terms that  
required each of the Defendants to submit information about strata fees paid and  
proof of payment. However, at trial, no Defendant tendered any evidence about the  
strata fees that had been levied against and paid by that Defendant. There was  
nothing based on which I could find that, in fact, that Defendant had paid all strata  
fees due and owing.  
[134] An annual general meeting of the Strata Corporation was held on January 7,  
2022. The notice package identified by Mr. Gauthier (Exhibit 63) included a copy of  
the proposed budget and the proposed strata fees for each unit. The rhetoric  
included in the notice (referring repeatedly to the Zavier Council as “the former  
bogus strata council”) may have made Mr. Gauthier feel better, but it did not belong  
in a notice of an annual general meeting and was unnecessarily provocative.  
[135] According to Mr. Saxvik, because the Strata Corporation (and Mr. Gauthier in  
particular) has refused to recognize that 112 has any of the rights under s. 148 of the  
Strata Property Act, he did not receive the complete notice package, and  
specifically was not sent copies of the ledgers said to be included. Mr. Gauthier did  
not deny this. However, Mr. Gauthier’s position (as stated in the minutes for the  
January 7, 2022 meeting) was that “due to privacy laws, only the owners themselves  
can ask that [Mr. Saxvik] receive a copy of the ledgers.”  
[136] At the meeting, a budget was passed, and Mr. Gauthier, William Gauthier and  
Mr. Elez were elected as the members of the strata council. Units with unpaid strata  
fees, in short, all of the units for which Mr. Saxvik had proxies, were not allowed to  
vote on any matters. The minutes reflect that (among other things) Mr. Saxvik  
asserted that there was no quorum and the meeting was invalid, and that he also  
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Page 45  
took issue with the assertion that units he represented owed strata fees (and  
therefore were not permitted to vote).  
[137] However, on the evidence before me, I find that there was a quorum as  
required, and that strata fees were owing by the units represented by Mr. Saxvik.  
The effect of s. 26(4) of the November 2020 Bylaws, which is not challenged in the  
Counterclaim, is that units with unpaid strata fees may not exercise a vote except  
where a unanimous vote is required. The refusal to allow units represented by Mr.  
Saxvik to vote was justified.  
[138] I will address the consequences of these matters in the discussion of the  
Counterclaim, below.  
4.  
Comments on the pleadings  
[139] The trial proceeded based on the NCC and a response to civil claim (the  
“RCC”) filed on behalf of the Defendants (as the group was then constituted) on April  
5, 2016. My comments concerning the pleadings will focus on these two  
documents. The NCC in particular did little to promote the efficient identification and  
resolution of the issues in this action. Rather, its drafting had the opposite effect.  
[140] It is the role of pleadings to serve as the frame for an action. Properly drawn,  
they precisely define the issues the court will be asked to decide, they advise the  
other party of the case to be met, they determine the extent of pre-trial procedures,  
and they guide the trial process. The provisions of the Supreme Court Civil Rules  
governing pleadings exist to support and facilitate those ends. When pleadings are  
disorganized, prolix or confusing, or when they raise irrelevancies, pleadings impede  
litigation in contradiction to their mandate. See, for example: The Owners, Strata  
Plan LMS3259 v. Sze Hang Holding Inc., 2012 BCCA 196, at para. 1; and Atlantic  
Waste Systems Ltd. v. Attorney General of Canada, 2015 BCSC 1324, at para.  
25.  
[141] Rule 3-1(2) requires that a notice of civil claim must set out “a concise  
statement of the material facts giving rise to the claim” and “a concise summary of  
 
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Page 46  
the legal basis for the relief sought” [underlining added], and must otherwise comply  
with Rule 3-7.  
[142] With respect to a response to civil claim, for any fact set out in Part 1 of the  
notice of civil claim that is denied, a defendant must “concisely set out the  
defendant’s version of that fact” [underlining added]: Rule 3-3(2)(a)(ii). Further, a  
response to civil claim must “set out, in a concise statement, any additional material  
facts that the defendant believes relate to the matters raised by the notice of civil  
claim” [underlining added]: Rule 3-3(2)(a)(iii). Rule 3-3(2)(c) requires that, if the  
defendant opposes any of the relief sought against the defendant, the defendant  
must set out a concise summary of the legal basis for that opposition. The response  
to civil claim “must otherwise comply with Rule 3-7”: Rule 3-3(2)(d).  
[143] The requirements in Rule 3-1(2) and Rule 3-3(2), that the pleading set out a  
“concise statement” and “concise summary,” are mandatory and directed to  
promoting clarity. The word “concise” is defined in The Oxford English Dictionary  
(11th ed. Revised) as “giving information clearly and in a few words.” Thus, both  
brevity and clarity are important in a pleading. See Sahyoun v. Ho, 2013 BCSC  
1143, at para. 23.  
[144] The requirement that the statement of the material facts and the summary of  
the legal basis be “concise” emphasizes the importance of stating clearly everything  
that is necessary, but not more. Going beyond a concise statement or summary is  
not conducive to defining and limiting the issues in the case. It is incompatible with  
the goal of the efficient resolution of issues on their merits: see Rule 1-3. The court  
or the adverse party should not have to hunt through many sentences and  
paragraphs to find the concise statement of the essential elements of a claim or  
defence. See Atlantic Waste, at para. 26.  
[145] Rule 3-7(1) brings home the point that a material fact is different than  
evidence and that evidence must not be pleaded. A material fact is one that is  
essential in order to formulate a complete cause of action. If a material fact is  
omitted, a cause of action is not sufficiently pleaded, and liable to be struck out. See  
SWS Marketing Inc. v. Zavier  
Page 47  
Skybridge Investments Ltd. v. Metro Motors Ltd., 2006 BCCA 500, at para. 9.  
The distinction between a material fact and an evidentiary fact is discussed by K.J.  
Smith J.A. in Jones v. Donaghey, 2011 BCCA 6. A material fact is a disputed fact  
that, when resolved, will have legal consequences as between the parties to the  
dispute (para. 9). Mr. Justice Smith continued, at para. 18:  
[18]  
. . . [A] material fact is the ultimate fact, sometimes called “ultimate  
issue”, to the proof of which evidence is directed. It is the last in a series or  
progression of facts. It is the fact put “in issue” by the pleadings. Facts that  
tend to prove the fact in issue, or to prove another fact that tends to prove the  
fact in issue, are evidentiary or “relevant” facts.  
[146] As Voith J.A. wrote recently in Mercantile Office Systems Private Limited  
v. Worldwide Warranty Life Services Inc., 2021 BCCA 362, beginning at para. 20,  
the provisions of the Rules (and the related forms) governing pleadings:  
[20]  
. . . establish how comprehensive and prescriptive the requirements  
for specific categories of pleadings are. These formal and content-based  
requirements are neither anachronistic nor technical. Instead, they are  
necessary and serve to further the purposes of the Rules. Those purposes  
and their importance have been expressed on numerous occasions by both  
this Court and by trial judges.  
[21]  
Pleadings are foundational. They guide the litigation process. This is  
true in relation to the discovery of documents, examinations for discovery,  
many interlocutory applications and the trial itself.  
[22]  
Pleadings also give effect to the underlying policy objectives of the  
Rules, which are to ensure the litigation process is fair and to promote justice  
between the parties: Wong v. Wong, 2006 BCCA 540 at paras. 2223. They  
enable the parties and the court “to ascertain with precision the matters on  
which parties differ and the points on which they agree; and thus to arrive at  
certain clear issues on which both parties desire a judicial decision”:  
[citations omitted].  
[23]  
For the court, pleadings serve the ultimate function of defining the  
issues of fact and law that will be determined by the court. In order for the  
court to fairly decide the issues before them, the pleadings must state the  
material facts succinctly: [citations omitted]. They must be organized in such  
a way that the court can understand what issues the court will be called upon  
to decide: [citations omitted].  
[147] Later in his reasons, Voith J.A. addressed the idea that a pleading should “tell  
a story,” and that narrative and the recital of evidence are acceptable in a pleading.  
He wrote, beginning at para. 43:  
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Page 48  
[43]  
. . . Drafting a pleading is not a mathematical exercise. It involves the  
exercise of judgment and it requires some degree of flexibility. . . .  
[44]  
Nevertheless, none of a notice of claim, a response to civil claim, and  
a counterclaim is a story. Each pleading contemplates and requires a  
reasonably disciplined exercise that is governed, in many instances in  
mandatory terms, by the Rules and the relevant authorities. Each requires  
the drafting party to “concisely” set out the “material facts” that give rise to the  
claim or that relate to the matters raised by the claim. None of these  
pleadings are permitted to contain evidence or argument.  
[45]  
What constitutes a material fact is well understood. Material facts are  
the elements essential to formulate a claim or a defence. . . .  
. . .  
[49]  
The judge’s assertion that a pleading can contain the evidence, as  
opposed to the material facts, that a party may be entitled to establish at trial  
is an error in principle. In saying this, I recognize that there are times where  
the distinction between what constitutes a material fact and what constitutes  
evidence may be blurred and difficult to apply. There are also times when, as  
a practical matter, some limited evidence may be necessary to make a  
pleading more comprehensible. But the distinction between what constitutes  
evidence and what constitutes a material fact is important. Furthermore,  
what evidence may be relevant at trial and what material facts are relevant to  
a pleading are two different things. This distinction is expressly identified in  
the Rules and in the relevant case law, and it is central to a proper pleading.  
[148] I will begin with the NCC. In my respectful opinion, it did not fulfill the ultimate  
function of a pleading. It impeded, rather than facilitated, the identification of the  
factual and legal issues the court was being asked to decide, and the efficient  
resolution of the issues on their merits. This created difficulties for everyone.  
Moreover, it added to the length of the trial, as evidence was called (by both sides)  
on matters that were tangential at best.  
[149] SWS’s claim is, essentially, one in contract against each Defendant. In that  
respect, SWS relies on the Joint Venture Agreements. SWS seeks remedies for  
what it asserts is a breach of contract. This is not a novel claim.  
[150] Part 1, the Statement of Facts, is 81 paragraphs long. Some length must be  
expected given the number of Defendants. However, the NCC is filled with  
evidence, making it most unhelpfully prolix. One unfortunate result is that any  
material facts are overwhelmed (if not completely lost) in what surrounds them.  
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[151] I set out, as an illustration of the basic problem, paras. 20 and 21 from the  
NCC. These two paragraphs, which were added when the NCC was amended,  
describe events concerning the three other projects that pre-date the Vernon  
Project, and about Mr. Zavier’s purchase of a house (at this point in the NCC, the  
Joint Venture Agreement has not yet been mentioned) [underlining indicating  
amendments omitted]:  
[20]  
In 2009, Odin Zavier saw the success Rene Gauthier and SWS was  
having with some real estate projects including assisting Robert A. Allen in  
the spring of 2009 with getting ten homes sold in Clayton Heights, Surrey.  
Odin Zavier approached Rene Gauthier to do a similar project with SWS. In  
2009, Odin Zavier worked with SWS to assist a distressed builder in selling  
four homes in Clayton Heights near the corner of 194 Street and 72 Ave, in  
Surrey and then another five homes just a block away on 72nd Ave. SWS  
assisted the builder in finding buyers and helping them obtain mortgages.  
SWS was the legal entity used by Rene Gauthier and Odin Zavier to enter  
into contracts for the Clayton Heights project.  
[21]  
In January 2010, Odin Zavier and Rene Gauthier through SWS as the  
contracting party bought six empty lots in the Cressey area on 2nd Ave in  
Surrey. After purchasing the lots, SWS entered into an agreement with  
Legendary Construction Ltd, to build the homes whereby a new jointly owned  
company LS Projects Ltd was established. Through LS Projects Ltd,  
Legendary Construction Ltd would be responsible for the construction of the  
houses and SWS would be responsible for contributing the land and selling  
the lots. Legendary Construction Ltd and SWS would share the profits or  
losses from the sale of the six units. From August 2010 to October 2010, LS  
Projects sold four of the six homes to third parties for a sales price excluding  
taxes of $749,000 and one of the homes was sold for $715,000 excluding  
taxes. Sometime around July 2010, because Odin Zavier had a new baby on  
the way and was living in a 2 bedroom condo, Odin Zavier expressed his  
desire to purchase the sixth unsold Cressey lot at 17312 2nd Ave., Surrey for  
$749,000. As Odin Zavier did not have the down payment of $239,000, using  
SWS’s share of proceeds from the sale of the 5 other units, SWS made the  
$239,000 down payment (“$239,000 Zavier House Payment") and it became  
a receivable from Odin Zavier and Four Elements a company owned by Odin  
Zavier. Odin Zavier closed the purchase of 17312 2nd Ave his new home in  
December 2010.  
[152] These are not facts pleaded in support of some separate claim by SWS  
against Mr. Zavier (distinct from the claims made against the other Defendant-  
owners). The mass of detail is the opposite of a concise statement. These  
paragraphs do not contain material facts pleaded in support of any cause of action  
against any Defendant. At best, these paragraphs plead evidence, although even as  
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evidence, their relevance is obscure. Court time was taken up in both the plaintiff’s  
case and the defence case calling evidence about these other projects, and about  
Mr. Zavier’s purchase of his house.  
[153] Para. 48 provides another example. This paragraph was also added when  
the NCC was amended, and reads [underlining indicating amendments omitted]:  
[48]  
From 2011 to 2013, SWS managed the 14 units as required in the  
SWS JV Agreement. SWS used one bank account to collect rents and pay  
all expenditures for the 14 units including the mortgage payments and all  
operating and strata expenses. SWS did a lot of repairs on the deck  
membranes, repairing leaks, replacing all the heaters with base board  
heaters, cleared out the crawl spaces, replaced old insulation and replaced  
carpet with laminate in many units. Pursuant to the SWS JV Agreement,  
SWS did not charge a management fee and R Gauthier did not charge for  
any of his time.  
[154] This paragraph should have stopped after the first sentence. Everything else  
is evidence.  
[155] Counsel for the Defendants argued that an inference should be drawn against  
SWS for not including in earlier versions of the notice of civil claim the allegations  
concerning the $239,000 loan that now appear in para. 21 of the NCC. However,  
since the contents of para. 21 are not material facts at all, no adverse inference can  
be drawn from a failure to plead them.  
[156] Counsel for the Defendants also argued that an inference should be drawn  
against SWS for not pleading the terms of a handwritten note, a copy of which was  
marked as Exhibit 8. I discuss this Exhibit below, in the context of Mr. Gauthier’s  
credibility. In my view, there is no possibility that material facts could be located in  
Exhibit 8. Pleading it would be contrary to the Rules. While there are other  
difficulties with Exhibit 8, no adverse inference can be drawn from the fact that it is  
not mentioned in the NCC.  
[157] Material facts about the Joint Venture Agreements are pleaded in para. 24 of  
the NCC (although the para. begins with a lengthy pleading of evidence), and then  
in para. 27, paras. 33-36 and paras. 38-41. At least some of these paragraphs are  
SWS Marketing Inc. v. Zavier  
Page 51  
redundant. The repetition demonstrates a failure on the part of the drafter to set out  
a concise statement of the material facts. The pleading is disorganized and  
confusing.  
[158] The NCC also suffers from the opposite problem: that material facts  
necessary to state a complete cause of action have not been pleaded at all. I give  
two examples.  
[159] The first concerns Mr. Gauthier. Mr. Gauthier was one of the originally-  
named plaintiffs. He remained a plaintiff through to the NCC. Soon after the trial  
began, it became apparent that no cause of action had been pleaded on behalf of  
Mr. Gauthier and no relief was sought on his behalf. When I raised this problem,  
counsel quickly agreed that Mr. Gauthier should be removed as a plaintiff, and an  
order was made accordingly. However, an action should not arrive at the first day of  
trial with no cause of action pleaded on behalf of a named plaintiff. The extreme  
length of the NCC likely obscured the fact that no cause of action had been pleaded  
in respect of Mr. Gauthier.  
[160] The second example concerns Mr. Lanz. He has been a named defendant  
since the original notice of civil claim was filed in November 2013. However, as of  
the NCC, no cause of action was pleaded against him. It follows that no relief can  
be granted against him. The claim by SWS against him must be dismissed.  
[161] I turn then to the RCC. It does not suffer from the basic problem in the NCC  
of being filled with evidence. However, it has other problems.  
[162] In a response to civil claim, “Part 1: Response to Notice of Civil Claim Facts”  
is where one would expect to find the material facts pleaded relevant to the defence:  
see Rule 3-3(1) and (2)(a), and Form 2. However, the facts based on which the  
Defendants say the Joint Venture Agreements are not enforceable by SWS against  
them, and that they are entitled to rescission, are pleaded in Part 3: Legal Basis.”  
There, the Defendants plead [all sic]:  
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1.  
The plaintiffs SWS and Gauthier were parties in individual joint  
venture agreements (the “JVs”) with the defendants Odin Zavier,  
Eduardo Soto, Randall Rogiani, Burt Petersen, Charlene Petersen,  
Gary Mythen, Gordon Lemon, Fan Jim, Sacha Elez, Joseph Lanz and  
Doris Lanz.  
. . .  
3.  
The plaintiffs SWS and Gauthier misrepresented to the defendants  
the true source of the down payments to purchase the individual  
Strata units, namely that SWS was providing the down payments of  
$29,000 and $32,000 when in fact SWS did not invest any money at  
all into the purchase of the Strata units.  
. . .  
5.  
The failure of SWS and Gauthier to disclose critical information during  
negotiations leading to entering the JVs with each defendant owner  
gives rise to the tort of negligent or fraudulent misrepresentation  
thereby entitling the respondents to rescission of the JVs.  
. . .  
[163] However, the Defendants have failed to plead all of the material facts  
necessary, in accordance with the authorities and the Rules, to state a complete  
cause of action seeking rescission of a contract on the basis of fraudulent or  
negligent misrepresentation.  
[164] Fraud claims must be strictly pleaded and strictly proved: BG Checo  
International Ltd. v. British Columbia (Hydro and Power Authority) (1990), 44  
B.C.L.R. (2d) 145 (C.A.), at p. 168. Moreover, the Rules provide, in Rule 3-7(18):  
(18) If the party pleading relies on misrepresentation, fraud, breach of  
trust, wilful default or undue influence, . . . full particulars, with dates and  
items if applicable, must be stated in the pleading.  
[165] In Wang v. Shao, 2019 BCCA 130, Newbury J.A. (for the court) set out the  
basic elements of a fraud claim, at para. 24:  
[24]  
. . . It is trite law that fraudulent misrepresentation involves the  
following elements that must be proven by the claimant:  
(a)  
the wrongdoer must make a representation of fact to the  
victim;  
(b)  
the representation must be false in fact;  
(c)  
the party making the representation must have known the  
representation was false at the time it was made;  
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(d)  
the misrepresentor must have intended the victim act on the  
representation; and  
(e)  
the victim must have been induced to enter into the contract in  
reliance upon it.  
(Derry v. Peek [1889] UKHL1, 14 App. Cas. 337 (H.L.); see also Islip v.  
Coldmatic Refrigeration of Canada Ltd. 2002 BCCA 255 at para. 11.)  
[166] In the RCC, full particulars, as required by the Rules are lacking. Moreover,  
and assuming for the sake of argument that the first two elements described by  
Newbury J.A. can been identified in the RCC, the remaining elements have not been  
pleaded as facts. Rather, there is simply a conclusory statement in para. 5 of the  
Legal Basis.  
[167] Just as inducement is an essential element of a fraudulent misrepresentation  
claim, reliance on a false representation is also an essential element of a negligent  
misrepresentation claim: see, for example, Queen v. Cognos Inc., [1993] 1 S.C.R.  
87, at p. 110; and Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R.  
165, at para. 18. Nothing is pleaded in that respect.  
[168] These are not simply pleadings points. Proper pleadings, setting out the  
elements of a complete cause of action or defence, guide the evidence that must be  
adduced at trial. Here, neither inducement nor reliance on a false representation  
was pleaded or proved. Without evidence, the defence was doomed to failure.  
[169] In addition, in closing argument and in the alternative to their rescission  
defence, the Defendants asserted that in September 2013, SWS had repudiated the  
Joint Venture Agreements and they had accepted the repudiation, terminating the  
Joint Venture Agreements. However, this alternative defence is not pleaded at all.  
[170] In summary, pleadings matter. The importance of proper pleadings, in  
accordance with requirements described in the authorities and the Rules, cannot be  
overstated. Counsel ignore those requirements at their peril.  
SWS Marketing Inc. v. Zavier  
5. Comments on the witnesses, credibility and reliability  
Page 54  
[171] The calling of evidence at trial was somewhat unusual. In part, that was to  
accommodate evidence being called in SWS’s claim, and then in the Counterclaim.  
Mr. Gauthier and Mr. Saxvik, for example, testified twice, once in the plaintiff’s case,  
and then again in the Defendants’ case (including the Counterclaim).  
[172] In SWS’s case, SWS called Mr. Gauthier, Mr. Elez and Mr. Saxvik, all of  
whom gave oral evidence. SWS had also given notice under Rule 12-5(21) that it  
wished to call two of the Defendant-owners, Mr. Soto and Mr. Petersen, as adverse  
witnesses. Mr. Soto attended and gave evidence in SWS’s case. Mr. Petersen did  
not. I will address Mr. Petersen’s circumstances separately below.  
[173] With respect to the remaining Defendant-owners, as part of its case, SWS  
read in answers to interrogatories and discovery evidence given by Ms. Jin, Mr.  
Mythen and Joseph Lanz, and read in discovery evidence only given by Mr. Rogiani  
and Mr. Lemon. This evidence was only admissible against the party giving it. None  
of these Defendant-owners testified at trial.  
[174] In their case (including the Counterclaim), the Defendants called Mr. Lanz,  
Mr. Zavier and Mr. Saxvik.  
[175] No attack was made on the credibility or reliability of either Mr. Elez or Mr.  
Soto. However, credibility is a significant issue in relation to the three main  
witnesses: Mr. Gauthier, Mr. Zavier and Mr. Lanz. SWS also attacks Mr. Saxvik’s  
credibility.  
[176] SWS says that neither Mr. Zavier nor Mr. Lanz was a credible witness. SWS  
says that both were evasive, obstructive and dishonest. Moreover, SWS says that  
both were motivated to advance their own financial interests in the litigation,  
especially through 112. SWS says that the evidence of both Mr. Zavier and Mr.  
Lanz should only be accepted on points that are not controversial or are  
corroborated by other reliable evidence, or where admissions were made.  
 
SWS Marketing Inc. v. Zavier  
Page 55  
[177] With respect to Mr. Zavier, SWS says that Mr. Zavier’s evidence was  
intentionally dishonest and aimed at misleading the court. SWS says that his  
evidence that he did not sign a Joint Venture Agreement must be rejected. SWS  
says that, contrary to directions given to Mr. Zavier by the court, he chose to argue  
and advocate his case rather than answer questions put to him on cross-  
examination. SWS argues further that Mr. Zavier sought to evade every question  
put to him on cross-examination that, if answered truthfully, would have harmed his  
position in the case. SWS says that, when pressed on matters, Mr. Zavier retreated  
to positions where he could blame others (in particular, Mr. Gauthier, his “mentor”).  
[178] With respect to Mr. Lanz, SWS says that, like Mr. Zavier, he was evasive and  
argumentative. Instead of providing responsive answers to questions put to him on  
cross-examination, he chose to argue and advocate for the Defendants’ case. SWS  
says that Mr. Lanz’s evidence was internally inconsistent, and he demonstrated a  
poor memory, except in areas that appeared helpful for the Defendants’ case.  
[179] SWS says that, where there is a conflict between the evidence given by Mr.  
Gauthier, and the evidence given by either Mr. Zavier or Mr. Lanz, Mr. Gauthier’s  
evidence should be preferred.  
[180] With respect to Mr. Saxvik, SWS says that his credibility must be questioned.  
SWS points to what SWS says are inconsistencies in Mr. Saxvik’s evidence about  
when he learned of the Gauthier Council (for example), and SWS says that Mr.  
Saxvik’s evidence concerning his mistrust of Mr. Gauthier lacks meaningful details.  
[181] On the other hand, the Defendants say that there are serious problems with  
Mr. Gauthier’s credibility. They point to a pleading filed on behalf of Mr. Gauthier  
and SWS in April 2013 in other litigation involving the Vernon Project, where it was  
asserted that SWS did not obtain any direct or indirect benefit from the purchase of  
any of the units. However, this is inconsistent with the position taken by SWS in this  
action, namely, that it has at least a beneficial interest in each of the Defendants’  
units.  
SWS Marketing Inc. v. Zavier  
Page 56  
[182] The Defendants say that the explanation now advanced by SWS concerning  
the down payments on the units, and that they were related to (among other things)  
a loan made to Mr. Zavier to purchase his house, came very late in the day and  
cannot be believed. The Defendants say that Mr. Gauthier simply refuses to admit  
that the down payments were not payments made by SWS at all, but were paper  
profits. The Defendants also point out that, in Mr. Gauthier’s Affidavit No. 1, sworn  
for the November 2013 hearing before Sewell J., there is no mention of the  
existence of a Joint Venture Agreement with Mr. Zavier. Moreover, at that time, Mr.  
Gauthier swore that SWS had “invested $265,000 into the [Vernon Project] via the  
Joint Ventures,” in contrast to his later evidence. As of trial, this number had grown  
to $415,000.  
[183] The Defendants say that the July 26, 2010 note (Exhibit 8) only appeared  
shortly before trial, and the original has never been produced. The Defendants say  
that Mr. Gauthier’s evidence that he had the original note, lost it, found it again and  
then lost it again is not credible.  
[184] Both Mr. Palaschuk (for SWS) and Mr. Canofari (for the Defendants and Mr.  
Lanz) cite Bradshaw v. Stenner, 2010 BCSC 1398, aff’d 2012 BCCA 296, which is  
one of the leading cases describing the basic principles that apply to credibility  
assessments.  
[185] The assessment of credibility involves examination of various factors such as:  
the witness’s ability and opportunity to observe events; the firmness of the witness’s  
memory; the witness’s ability to resist the influence of interest to modify his or her  
recollection; whether the witness's evidence harmonizes with independent evidence  
that has been accepted; whether the witness changes his or her testimony during  
direct and cross-examination; whether the witness’s testimony seems unreasonable,  
impossible, or unlikely; whether a witness has a motive to lie; and the demeanour of  
a witness generally. Moreover, the assessment of a witness’s credibility must  
reasonably subject the witness’s story to an examination of its consistency with the  
probabilities of the surrounding conditions or circumstances. The real test of the  
SWS Marketing Inc. v. Zavier  
Page 57  
truth of the story of a witness in such a case must be its harmony with the  
preponderance of the probabilities which a practical and informed person would  
readily recognize as reasonable in that place and in those circumstances. See  
generally Bradshaw v. Stenner, at paras. 186-187.  
[186] It is my role as the trial judge to analyse the testimony of witnesses, and  
observing their demeanour is a part of that role. The ability or willingness of a  
witness to respond to questions adds to the impression of the capacity of the witness  
to recall events and provide accurate testimony. A witness’s credibility may be  
adversely affected if the witness is imprecise, evasive, long-winded or argumentative  
in response to questions. Of course, as the trial judge, I decide how much weight to  
give to any evidence, and I can accept some, all or none of the evidence of a  
witness. I am not obliged to reject all of a witness’s evidence simply because I have  
concluded that, generally, the witness is neither credible nor reliable.  
[187] I have concluded that I must exercise considerable caution in approaching the  
evidence of all of Mr. Gauthier, Mr. Zavier and Mr. Lanz. This is especially true in  
relation to events in 2010 and 2011.  
[188] I begin with Mr. Gauthier. He was SWS’s main witness concerning the events  
relating to the origins of the Vernon Project in 2010 and the purchase of units by the  
Defendants in 2011.  
[189] Mr. Gauthier has sworn and filed a huge number of affidavits (over 70) in  
relation to the many pre-trial applications in this action. As a result, he has told a  
story, although (as the evolution of the notice of civil claim shows) not necessarily  
the same story, over a period of years.  
[190] One of the major issues at trial concerned whether SWS had in fact funded,  
through cash consideration, the “down payments” on the units or whether (as the  
Defendants assert) these amounts represented “paper profits” built into the structure  
of the Vernon Project. This was raised as an issue when the parties were before  
Sewell J. in November 2013, shortly after the notice of civil claim was filed.  
SWS Marketing Inc. v. Zavier  
Page 58  
[191] Thereafter, Mr. Gauthier, on behalf of SWS, endeavoured to create an  
accounting of advances and loans to Mr. Zavier and Four Elements, pre-dating the  
Vernon Project, that might support the conclusion that SWS had invested real cash  
into the Vernon Project, to cover the down payments. This conclusion is necessary  
given the claim by SWS for an order that it has a legal, or alternatively, beneficial,  
interest in each of the Defendants’ units. It was also necessary to support SWS’s  
position that, on a sale, it was entitled to “repayment” of the down payment, before  
any profit split under Article IV of the Joint Venture Agreement.  
[192] Indeed, in its written closing submissions, SWS argued:  
Mr. Gauthier’s evidence is SWS secured the SWS Down Payments on the  
Defendant Owners 10 units from unpaid advances to Zavier/Four Elements of  
$415,000. Repayment to SWS of the $415,000 was not required as it was  
converted into SWS’s 50% equity in the Vernon Project and used to secure  
the Defendant Owners $29,000 or $31,000 down payment per unit required in  
Article III of the JV Agreement.  
[193] As will be seen in the Discussion below, concerning what I term the “SWS  
Advances Theory,” I reject this part of SWS’s claim. I do so in large part because I  
do not find Mr. Gauthier’s evidence supporting the Theory to be credible. My strong  
impression of Mr. Gauthier’s evidence at trial was that it was manufactured after the  
fact that is, after the issue had been flagged by Sewell J. and was then seized on  
by the Defendants in an attempt to justify and explain SWS’s claims. The  
evidence, therefore, lacked both credibility and reliability. It was not in harmony with  
the preponderance of probabilities that a practical and informed person would readily  
recognize as reasonable in the circumstances at the time. Mr. Gauthier’s  
explanation came as an afterthought, after this action had been filed.  
[194] I have very significant concerns about the reliability of the note