IN THE SUPREME COURT OF BRITISH COLUMBIA  
Citation:  
Konicek v. Vantown Infrastructure Invesco  
Inc.,  
2022 BCSC 1590  
Date: 20220909  
Docket: S189109  
Registry: Vancouver  
Between:  
And  
Ralph Konicek and Jennic #60 Holdings Ltd.  
Plaintiffs  
Vantown Infrastructure Invesco Inc.,  
R.S.K. Excavating & Contracting Ltd.,  
Paul Leung, Amy Hung Ying Leung,  
The Crown in Right of Canada  
Defendants  
And  
Ralph Konicek and Jennic #60 Holdings Ltd.  
Defendants by Counterclaim  
Before: The Honourable Madam Justice W.A. Baker  
Reasons for Judgment  
Counsel for Plaintiffs and Defendants by  
Counterclaim:  
M. Dew  
J. Mackoff  
Counsel for Defendants, Vantown  
Infrastructure Invesco Inc. and R.S.K.  
Excavating & Contracting Ltd.:  
D. Taylor  
C. Holloway  
The Defendant, Paul Leung, Appearing in  
Person:  
Paul Leung  
Amy Leung  
The Defendant, Amy Hung Ying Leung,  
Appearing in Person:  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 2  
Place and Date of Trial:  
Vancouver, B.C.  
October 12-14, 18-22, 25, 27-29,  
2021  
November 1-5, 29-30, 2021  
December 1-2, 2021  
January 17-21, 2022  
Place and Date of Judgment:  
Vancouver, B.C.  
September 9, 2022  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 3  
Table of Contents  
I. INTRODUCTION ................................................................................................ 4  
II. BACKGROUND ................................................................................................. 4  
III.  
ISSUES......................................................................................................... 18  
A. Credibility ...................................................................................................... 19  
B. Did the plaintiffs breach the SPA and its associated agreements? ............... 25  
1. Failed to satisfactorily maintain ongoing good faith relationships with  
customers and clients....................................................................................... 28  
2. Failed to qualify or register RSK for work projects..................................... 31  
3. Failed to bid competitively/ Failed to pursue and secure projects.............. 33  
4. Failed to pursue and secure “as and when” work...................................... 37  
5. Failed to satisfactorily maintain key equipment ......................................... 37  
6. Published his intention to retire and his belief Vantown would not complete  
the transaction; ................................................................................................. 41  
7. Failed to properly maintain and hand-over financial and business records43  
8. Failed to deliver RSK as a “turn-key” operation......................................... 49  
9. Conclusion on breaches of SPA................................................................ 51  
C. Did Mr. Konicek make any fraudulent misrepresentations? .......................... 58  
D. Are the plaintiffs liable in equitable fraud?..................................................... 61  
E. Did the plaintiffs breach a duty of good faith owed to the defendants? ......... 61  
F. Are the defendants entitled to any damages which must be set off against  
amounts owing to the plaintiffs under the SPA and its associated agreements?.. 61  
G. What amounts, if any, remain payable by Vantown to the plaintiffs under the  
SPA and its associated agreements?................................................................... 63  
H. Are the guarantees granted by RSK and Paul Leung, and the mortgage  
granted by Paul and Amy Leung, valid?............................................................... 66  
1. RSK/Paul Leung Guarantees .................................................................... 66  
2. The Leung Mortgage ................................................................................. 69  
IV.  
CONCLUSION.............................................................................................. 74  
V. COSTS ............................................................................................................. 75  
Konicek v. Vantown Infrastructure Invesco Inc.  
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I.  
INTRODUCTION  
This action arises out of the sale of a business in Kitimat, British Columbia.  
[1]  
The plaintiffs, Ralph Konicek and Jennic #60 Holdings Ltd. (“Jennic”), sold their  
shares in R.S.K. Excavating & Contracting Ltd. (“RSK”) to Vantown Infrastructure  
Invesco Inc. (“Vantown”) pursuant to a share purchase agreement, dated April 27,  
2016 (the “SPA”). The purchase price was partially paid on completion, and partially  
paid by promissory notes secured with a deferred payment loan agreement  
(the “DPLA”). The DPLA was guaranteed by RSK and was personally guaranteed by  
Paul Leung. Mr. Leung and his wife, Amy Leung, granted a mortgage over their  
family home in Vancouver as further security for the DPLA.  
[2]  
Vantown defaulted on the payments required under the DPLA. The plaintiffs  
brought foreclosure proceedings to recover the outstanding amount, pursuant to the  
security granted under the DPLA, including the Leung mortgage. The defendants  
have defended this foreclosure proceeding on the basis that the plaintiffs defaulted  
on various obligations and covenants they owed pursuant to the SPA, or made false  
representations in the SPA, and that Vantown suffered resulting losses which must  
be set off against any amounts owing under the DPLA, with the result being that no  
amounts are due and owing to the plaintiffs under the SPA or the DPLA.  
[3]  
Vantown and RSK also counterclaim against Mr. Konicek and Jennic, seeking  
damages sounding in fraudulent misrepresentation, breach of contract, breach of  
duty of good faith and honest performance, and equitable fraud.  
II.  
BACKGROUND  
[4]  
Ralph Konicek lived in Kitimat virtually his entire life. He left high school to  
start working in a paper mill in Kitimat, BC, where he worked until 1984. Mr. Konicek  
started a small landscaping company shortly thereafter.  
[5]  
Mr. Konicek was successful, and gradually his residential landscaping  
business grew to a commercial and industrial landscaping business. He acquired  
heavy equipment as his business grew. By 1990 Mr. Konicek had 610 employees  
   
Konicek v. Vantown Infrastructure Invesco Inc.  
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during his busy seasons. In the summer he did landscaping, and installed and  
maintained irrigation systems and flower beds. In the winter he did snow removal,  
site maintenance, and sanding/salting.  
[6]  
In 1991 Mr. Konicek incorporated his business as R.S.K. Excavating &  
Contracting Ltd., and RSK purchased its first commercial property. On that property,  
RSK built an office and a shop. RSK was able to store up to six pieces of heavy  
equipment on the property.  
[7]  
While RSK had grown from a small proprietorship, Mr. Konicek continued to  
do the accounting work for the company, with the assistance of his wife. It was an  
unsophisticated system, entirely paper based. At the end of the year, he would send  
all the documents for the business to his accountant, Mr. Brian Perry, who would  
then prepare the annual financial statements and tax returns.  
[8]  
In the late 1990s and early 2000s, RSK developed what would become a  
significant relationship with Alcan in the town of Kemano. The town of Kemano  
existed to support the dam and power plant associated with Alcan’s operations. In  
approximately 2000, the power generating plant was modernized and could be  
operated remotely from the Alcan smelter in Kitimat. This resulted in the Kemano  
town site being decommissioned. RSK obtained a contract to assist in  
decommissioning the town site, including demolition of buildings, shortening sewer  
lines, removing fire hydrants, cleaning up hazardous materials, and general clean up  
work.  
[9]  
The Kemano town site decommissioning project was a significant one for  
RSK, both in terms of scale and revenue. RSK received approximately $1,000,000 a  
year, for two years, from this project.  
[10] In 2001 RSK purchased a new commercial property at 266 Third Street,  
Kitimat. This property was larger and could accommodate RSK’s 8-10 pieces of  
heavy equipment, as well as smaller equipment.  
Konicek v. Vantown Infrastructure Invesco Inc.  
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[11] RSK generally operated in the Kitimat/Terrace/Prince Rupert area. Before  
2008, RSK performed a variety of work, including excavating, simple road  
construction, material handling, heavy equipment services, and snow removal. The  
work was low complexity, and fluctuated significantly year to year. Revenue  
fluctuated from a high of approximately $1,000,000 in 2003, to a low of  
approximately $350,000 in 2004. From 2006 to 2008, RSK’s revenues were  
approximately $570,000 each year.  
[12] In 2008 a very significant new project began in Kitimatthe Kitimat  
Modernization Project (“KMP”). The Kitimat smelter was owned and operated by  
Rio Tinto Alcan (“RTA”), and the decision was taken by RTA to upgrade the old  
aluminum smelter. This was a unique mega project with a budget of $4.8 billion  
USD. The project began with site preparation from 2008 to 2011. From 2012 to  
2014, the project was in full swing and, by the fall of 2015, it was starting to wind up.  
Bechtel was retained by RTA as the engineering, procurement and construction  
manager from the inception of the KMP until the project started to wind down in  
2015.  
[13] RSK, and Mr. Konicek, had an excellent relationship with Bechtel and with  
RTA. All of RSK’s contracts relating to the KMP were managed by Bechtel. Any work  
with RTA unrelated to the KMP, was handled by RTA directly.  
[14] RSK performed site preparation work for the KMP between 2008 and 2011,  
and continued with four separate master agreements once the KMP got underway in  
2012. Those agreements were the General Services Agreement, the As and When  
Agreement, the Bussing Agreement, and the KMP Construction Site Snow Removal  
Agreement. All were time and material contracts, and RSK was able to charge  
premium rates under them. In addition, RSK continued to perform a lesser amount of  
work for RTA unrelated to the KMP.  
[15] As a result of the unique opportunity provided by the KMP, RSK’s revenues  
soared. Annual revenue rose from $21 million in 2012 to $55 million in 2015.  
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[16] By 2014, Mr. Konicek decided it was time to sell the company and retire. He  
hired Sequoia Mergers & Acquisitions Corp., a company which assists vendors in  
selling their businesses. Sequoia assisted in marketing RSK and represented  
Mr. Konicek in any sale negotiations. The primary person at Sequoia dealing with  
the RSK sale was Mr. Chris Larmer, although Mr. Andrew Blazenko and Mr. Brent  
Cunningham were also involved.  
[17] In September 2014, Sequoia prepared a confidential information  
memorandum (“CIM”) which was intended to interest potential buyers in the  
purchase of RSK. The CIM expressly stated on its face that it was intended to  
convey preliminary information to potential buyers, and that all prospective buyers  
were responsible for doing their own due diligence before any acquisition. Further,  
the CIM confirmed that Sequoia took no responsibility for the accuracy of the  
information in the CIM, and all representations and warranties “shall be made solely  
by the Company [RSK] in a signed purchase and sale agreement”.  
[18] Mr. John Gordon was introduced to the RSK opportunity in the fall of 2014  
through Mr. Larmer, who is his cousin. Mr. Gordon’s father was a businessman with  
experience in the oil and gas industry. In the fall of 2014, Mr. Gordon met with  
Mr. Konicek, together with Mr. Gordon’s father, to discuss RSK. At that meeting,  
Mr. Konicek showed the Gordons around Kitimat and the RTA sites, as well as the  
RSK shop. By the end of November 2014, Mr. Gordon proposed to Mr. Konicek that  
they work towards negotiating a sale of RSK for between $25,000,000 and  
$28,000,000 to a buyer group called the Sibbick Group, comprised of Mr. Gordon’s  
father and Glen Sibbick.  
[19] In January 2015, a letter of intent was executed between NBC Servco, a  
company owned by Mr. Gordon’s father, and RSK for a sale price of $25,000,000.  
Mr. Gordon was actively involved in the due diligence conducted for NBC Servco.  
[20] Following a request from Mr. Gordon, in February 2015 Mr. Konicek provided  
Mr. Gordon with a letter setting out “current obligations on RTA site (possible  
Konicek v. Vantown Infrastructure Invesco Inc.  
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opportunities) (snow removal, as & when, general services, bussing)”. In this letter,  
Mr. Konicek stated the following potential opportunities with RTA:  
a) There is a great deal of uncertainty about the exact end date for RSK on  
the KMP site. RTA would perhaps issue a contract directly to RSK to  
continue on, i.e. after Bechtel’s contract ended.  
b) Ongoing maintenance to plant and equipment and grounds.  
c) Possibility to secure plant-side snow removal through disgruntlement with  
current snow removal provider (HEL).  
d) Release of ongoing internal projects/tenders from RTA.  
e) Decommissioning and remediation of the current operation portion of the  
RTA smelter.  
[21] In that same February 2015 letter, Mr. Konicek outlined possible opportunities  
with Chevron/Apache’s anticipated LNG project in the area, and possible  
opportunities with Prince Rupert LNG-Lelu Island-Petronas.  
[22] Mr. Konicek stated that the “opportunities are endless and are only limited by  
management’s position on which projects to pursue and what services to provide.”  
Mr. Konicek also included the following critical qualifier:  
Obviously, there are no guarantees past September 30 this year.  
I [personally] am confident that there will be some sort of extension requested  
past September 30 by RTA; the extent of which I cannot comment on. It is my  
opinion that completion dates for all does not look realistic at this point in  
time, and I am unaware of the contract limitations between RTA and Bechtel  
so as to understand what factors or influences are at play.  
The gearing down of this project will give RSK the opportunity to reassess its  
equipment fleet, personnel (identify key personnel and circumvent others)  
and begin to actively pursue other clients (up to and including now. We have  
been unable to do this because we simply cannot take the chance of  
disappointing future clients, by not being able to respond. We are still adding  
manpower to satisfy RTA/Bechtel’s requirements. My own will to expand is  
also not there).  
Konicek v. Vantown Infrastructure Invesco Inc.  
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[23] Mr. Konicek testified that his intention in writing the February 2015 letter was  
to outline the possibilities that existed for future owners, should they wish to pursue  
them. He was not representing that he was intending, on behalf of RSK, to take RSK  
in any particular direction.  
[24] By March 2015 the NBC Servco deal had fallen apart. Through Mr. Larmer,  
Mr. Gordon met with Brian Gessner. Mr. Gessner introduced Mr. Gordon to potential  
investors who might be interested in RSK. Through this relationship, an investor  
known as the Hillcore Group (“Hillcore”) became interested in RSK. Mr. Gordon was  
engaged by Hillcore to provide operational due diligence in relation to RSK.  
[25] Mr. Gordon met with Mr. Konicek in Salmon Arm in May 2015, on behalf of  
Hillcore. Mr. Konicek candidly admitted that he has no recollection of this meeting,  
but did not deny it took place. Mr. Gordon prepared a memo to file following the  
meeting. This memo set out a number of key points.  
[26] The memo discussed Mr. Konicek’s vision for a hand over the company,  
which included showing Mr. Gordon the “ropes” and introducing him to staff and  
clients, and guiding him through general processes and procedures currently  
employed by RSK, followed by Mr. Konicek stepping back and shadowing  
Mr. Gordon. Mr. Konicek and Mr. Gordon would work hand in hand doing business  
development. The memo then summarized discussions about possible new  
business, possible ISO accreditation, and the desire to retain Nathan Medeiros as a  
key employee. In his evidence at trial, Mr. Gordon noted that the discussions were in  
the vein of what Mr. Konicek would do if he was purchasing the company. The  
plaintiffs submit, and I agree, that the nature of these conversations was not what  
Mr. Konicek was planning to do himself with RSK in the future, but rather what a  
purchaser itself could do with RSK.  
[27] Sequoia prepared a virtual data room for potential purchasers, which  
contained documents requested during the due diligence process. Mr. Gordon first  
had access to such a data room when he was investigating RSK for NBC  
Servco/Sibbick. He gained access to a new data room when he began conducting  
Konicek v. Vantown Infrastructure Invesco Inc.  
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due diligence for Hillcore. Mr. Blazenko testified that with each new potential buyer,  
a new data room was created, but his practice was to copy to the new data room the  
documents which had been requested by previous potential buyers.  
[28] Mr. Larmer testified that Sequoia does not suggest offer prices to prospective  
buyers, or suggest what buyers should investigate as part of their due diligence.  
Sequoia’s role is to facilitate a buyer’s due diligence by receiving requests for  
information from the buyer, and passing those requests on the client/vendor or the  
client’s consultants, such as lawyers or accountants, as directed by the client. The  
information received by Sequoia is placed in the data room. It is up to the buyer to its  
own assessment or verification of the data placed in the data room, and Sequoia  
takes no responsibility for such data. Mr. Larmer was clear that due diligence is  
buyer-driven process.  
[29] For Hillcore, Mr. Gordon requested documents, including work requests and  
purchase orders, for both Bechtel (i.e. KMP) work, and non-Bechtel work. The  
plaintiffs submit, and I agree, that through such requests Mr. Gordon was aware of  
the difference between such contracts.  
[30] Mr. Gordon visited Kitimat in June 2015 to meet with Mr. Konicek. Mr. Gordon  
documented the meetings he participated in. He was introduced to Mr. Medeiros to  
discuss his future with RSK. He attended the Premier’s LNG working committee  
meeting, and Mr. Konicek introduced Mr. Gordon to various union representatives.  
Mr. Gordon observed signs around the RTA project indicating the KMP was 95%  
complete, but noted that he felt the 95% figure was overstated. Mr. Gordon met with  
the workforce services supervisor at Bechtel. Following that meeting, Mr. Gordon  
made the following assessment: “My assessment is that there is a very minimum of  
6-9 months work required to complete the KMP. As the catch all contractor RSK will,  
in my opinion, be the last to leave. There is also the possibility that RSK will assume  
further responsibility on site as and when Bechtel and Bantrel complete the project  
and leave site.”  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 11  
[31] Mr. Gordon noted that Mr. Konicek arranged a meeting with RTA to discuss  
direct contracts after KMP. Mr. Sylvain Lemay, the procurement manager, was  
supposed to attend this meeting, but had a family emergency and was unable to  
attend. Mr. Konicek was able, instead, to arrange a meeting with Mr. Dwight Magee,  
from RTA corporate relations. At that meeting, and as confirmed in his testimony at  
trial, Mr. Magee stated that RSK performed well during the KMP. Mr. Magee testified  
that in his role with RTA, he was kept apprised of any difficulties or problems with  
major contractors. He testified that he was never notified of any difficulties with  
respect to RSK. He further confirmed that RTA continued to retain RSK for work  
after the KMP was complete. Mr. Konicek testified that RSK received three  
unsolicited work orders from RTA during the meeting with Mr. Magee. At the  
meeting, Mr. Magee was told that Hillcore would become an equity partner in RSK.  
[32] Mr. Gordon met with Mr. Ritchie, a representative of Bechtel, who discussed  
both the KMP and an upcoming project with Petronas in Prince Rupert.  
[33] Mr. Gordon met with a representative from Shell Canada regarding a planned  
LNG facility. Mr. Gordon was of the view that RSK was well positioned for work with  
Shell.  
[34] Following his meetings in Kitimat in June 2015, Hillcore withdrew its interest  
due in part to its “inability to confirm the outlook for revenues for RSK beyond the  
imminent contract”.  
[35] By September 2015, Mr. Gordon was again conducting due diligence on  
RSK, this time for a group called Orestone. In October 2015, Orestone expressed  
interest in purchasing RSK for $8,500,000. The opportunity with Orestone did not  
proceed.  
[36] In October 2015, Mr. Gordon was also in communication with a  
representative of Adaptable Investments regarding the potential purchase of RSK.  
On behalf of Adaptable, Mr. Gordon sought information from Mr. Larmer regarding  
the value of opportunities for RSK, and the competitors with RSK. Mr. Larmer replied  
Konicek v. Vantown Infrastructure Invesco Inc.  
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to Mr. Gordon, “If they are focussing on RTA as the upside for the future of RSK,  
they’re barking up the wrong tree. I would say that Shell would be a better place to  
focus energy.” On October 30, 2015, Mr. Kai Chen of Adaptable wrote to Mr. Gordon  
indicating that it was not likely that either Shell or PetroChina would have interest in  
mega projects in the LNG sector, and that there was a 14-year oversupply of LNG  
around the globe which would create financial stress on LNG players. As a result,  
Adaptable declined to make an offer for RSK.  
[37] In December 2015, Mr. Gordon was introduced to Mr. Leung through contacts  
of Mr. Gessner. Mr. Leung described Mr. Gessner as a senior vice president of  
private banking at the Bank of Montreal, and a person for whom he had a great deal  
of respect and admiration. Mr. Gessner had passed away by the time of trial.  
Mr. Leung had a background in accounting and computer science. He was looking to  
RSK as an investment which would create a revenue stream for him and his family.  
He was not knowledgeable about the kind of business RSK was engaged in.  
[38] On December 17, 2015, Mr. Gessner emailed a letter of intent to Mr. Larmer,  
copied to Mr. Leung and Mr. Gordon. Mr. Gessner, Mr. Leung, and Mr. Gordon  
would ultimately form Vantown for the purpose of purchasing the shares in RSK. The  
highlights of the proposed letter of intent were summarized by Mr. Gessner in his  
email as follows:  
Here is the final LOI for presentation to Ralph. Ralph should know:  
1. We will have $600,000 working capital.  
2. We hope to close earlier than February 28 if possible.  
3. Our due diligence in principle is complete.  
4. We will cover Ralph’s closing costs.  
5. The $3 million VTB is well secured with Residential Home consisting of  
$5M equity plus tail end equity on Equipment and Land & Building value  
about $1.8 M. VTB $3M vs asset valuation $7.8M : LTV 39%  
6. VTB could be repaid as early as 6 months from completion date.  
Hope everyone is onside let me know. Chris would like to present to Ralph on  
Friday before he goes out of town.  
Konicek v. Vantown Infrastructure Invesco Inc.  
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[39] Negotiations on the letter of intent carried on through January and February  
2016. Key information was exchanged, as follows:  
a) On January 11, 2016, Mr. Larmer advised Mr. Leung that “RSK has never  
recorded financial data (in an accounting program) on a monthly basis, to  
produce monthly income statements and balance sheets”.  
b) On January 11, 2016, Mr. Leung asked for RSK’s monthly operating  
expense summary for October to December 2015. Mr. Larmer advised  
Mr. Leung that RSK “historically had to send the physical data (i.e. bill  
statements, invoices, etc.) to their accountant in Terrace for review and  
reporting.”  
c) On January 18, 2016, Mr. Leung asked Mr. Larmer how RSK’s  
performance was warranted, and whether Mr. Konicek would warrant the  
RSK would have at least $1,800,000 in monthly revenue. Mr. Larmer  
responded:  
Per our conversation just now, Ralph makes no warranties about  
future revenue for the company. Given that you are getting the  
business for just over its orderly liquidat-able value, financial  
performance wouldn’t be a determinant in a valuation for the  
company. If it were and we were basing it on revenue of $1.8MM per  
month (at 20% EBITDA margins), the value of the company would far  
exceed what is being paid.  
There are many opportunities to drive revenue up in the area and  
RSK has a good reputation, so I expect that you should do very well.  
d) On January 20, 2016, Mr. Leung wrote to Mr. Larmer confirming, “we have  
done only limited due diligence on RSK and like you said there is no  
warrants on performance from revenue to EBITDA.”  
e) On January 28, 2016, Mr. Leung wrote to his business partners,  
Mr. Gessner and Mr. Gordon, copy to his wife, setting out his concerns  
including:  
Here are the concerns from my wife and myself as well:  
Konicek v. Vantown Infrastructure Invesco Inc.  
1. There is no warrant on the revenue and EBITDA from the  
Page 14  
vendor.  
2. The accounting system cannot provide monthly financials  
for us to analyse their monthly revenue vs expense, business  
cycles and trends.  
3. There are no contracts with any customers to guarantee  
some amount of revenue over a period of time.  
4. We rely on the due diligence from the other buyers that  
failed to close the deal.  
[40] On January 29, 2016, Mr. Leung wrote to Mr. Larmer regarding issues with  
the letter of intent. In this email he acknowledged, I hope Ralph can also see it from  
our perspective, there is no protection on our end that his business will maintain  
certain minimum revenue and EBITDA.”  
[41] On February 18, 2016, the plaintiffs signed a letter of intent wherein Vantown  
would purchase all the shares in RSK for $7,900,000. $5,000,000 would be paid on  
closing, and the remaining $2,900,000 would be secured by a vendor take back  
loan, to be paid in six equal quarterly installments, bearing interest at 4.5% (the  
DPLA). The DPLA would be further secured by a personal guarantee from Mr.  
Leung and a mortgage on Mr. and Mrs. Leung’s home.  
[42] The letter of intent contained a condition precedent that RSK would retain  
Mr. Gordon to provide business development services until the closing date or the  
termination of the letter of intent.  
[43] The letter of intent proposed that a definitive agreement would be entered into  
by March 31, 2016, and the closing date would be April 15, 2016. If the definitive  
agreement was not executed by March 31, 2016, the letter of intent would terminate.  
Vantown also had the right to terminate the letter of intent if on or before March 31,  
2016, it advised the plaintiffs that “the results obtained from its due diligence review,  
including the review of RSK’s financial statements, 2015 tax returns and Notice of  
Assessment from CRA, demonstrate that the actual business, operations, assets or  
financial condition of RSK are different from its understanding”.  
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[44] On March 2, 2016 Vantown was incorporated. Mr. Gordon, Mr. Leung and  
Mrs. Leung were directors on incorporation.  
[45] On March 8, 2016, Vantown and Mr. Leung executed the letter of intent to  
purchase the shares of RSK.  
[46] Vantown had access to the data room maintained by Sequoia throughout  
2016 prior to the SPA being executed. The data room was updated with new  
information requested by Vantown, including a 2016 list of receivables. The 2016  
receivables list and invoice log were provided to the lawyers for Vantown, and  
Mr. Leung confirmed under cross-examination that he received these documents.  
[47] On April 2, 2016, Mr. Gordon wrote to Mr. Konicek seeking to restructure the  
deal to allow for adequate working capital during “this downturn period”. Essentially,  
he sought to reduce the payment on closing, and to defer a further $1,900,000 for  
approximately six months. Mr. Gordon acknowledged under cross-examination that  
he made this proposal in light of the fact that RSK’s revenue had dropped below the  
operating expenses of $250,000 per month. In an email dated April 3, 2016,  
Mr. Gordon acknowledged that revenue had diminished so much that they were  
concerned they were undercapitalized.  
[48] Mr. Konicek testified that he had numerous discussions with Mr. Gordon in  
which he confirmed that the revenues in RSK were dropping off and there was not  
much work on the horizon, and in which Mr. Gordon confirmed that he was buying  
RSK for its future potential, not its present work.  
[49] Mr. Larmer had a conversation with Mr. Leung on April 4, 2016, where  
Mr. Leung expressed concern with the financial status of RSK in January, February,  
and March 2016, and stated his view that RSK was not a going concern. Mr. Larmer  
told Mr. Leung that he had been told all along that the buyers could not rely on any  
revenue from any of the existing projects of RSK. Mr. Leung testified that he had no  
recollection of this conversation. However, I accept the evidence of Mr. Larmer and  
find that this conversation did take place.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 16  
[50] On April 4, 2016, Mr. Leung wrote to Mr. Larmer acknowledging that revenue  
in RSK dropped to $60,000 in March 2016, and that the buyers would need a  
nine-month runway to rebuild the business of RSK. Mr. Larmer replied to Mr. Leung  
the same day, with the following:  
As discussed and agreed on the phone this morning, we were transparent  
with you all the way along that the business revenue was on a steady decline  
and that at some point soon, the RTA project would come to a conclusion.  
You accepted this from the beginning and nothing has changed on our end.  
[51] In the same email to Mr. Leung dated April 4, 2016, Mr. Larmer told the  
buyers that the SPA was not signed by March 31, 2016 and, therefore, the letter of  
intent had expired. Nevertheless, he expressed Mr. Konicek’s willingness to close  
the transaction on the terms set out in the letter of intent, by April 15, 2016, and  
asked Mr. Leung to respond if the buyers wished to proceed.  
[52] On April 10, 2016, Mr. Gordon wrote to Mr. Larmer proposing the first DPLA  
payment under the DPLA should be deferred until December 31, 2016. Mr. Larmer  
responded that Mr. Konicek would agree to defer the first payment until  
December 31, 2016, provided the SPA was signed that week (of April 10, 2016).  
[53] On Monday, April 12, 2016, Mr. Larmer wrote to Mr. Leung, Mr. Gessner, and  
Mr. Gordon advising them of RSK’s position at that time with respect to future work.  
In particular, Mr. Larmer advised:  
Ralph said that RSK is not on the list for the RTA plant decommissioning  
project, since he didn’t think the deal was going to happen with you guys. If  
he had put in for the tender, he would have been obligated for future work  
and since he is retiring, this wasn’t in line with his personal objectives.  
Ralph mentioned to me again this morning to make clear to you guys that he  
has plans put in place that will not be reversible after Friday and that this deal  
will not be possible after this Friday if we do not have a signed SPA. This is  
not a posturing, it is a fact and he wants to make sure that you know this is  
the case.  
[54] The SPA was not finalized and signed by the parties by Friday, April 15,  
2016.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 17  
[55] On April 22, 2016, Mr. Gessner wrote to Mr. Larmer regarding financing  
issues, and confirmed that he understood that they were buying a business with no  
customers, “just forecasts and future considerations”, and that there would be no  
revenue for the first six months after closing.  
[56] On Monday, April 25, 2016, Mr. Gordon wrote to Mr. Larmer confirming that  
he had spoken to Mr. Konicek the previous Saturday. Mr. Konicek was frustrated  
and described his options to Mr. Gordon as including a sale to Vantown, liquidating  
the company and winding it up, or allowing the key employees of RSK to operate the  
company to see if they could manage it. Mr. Gordon stated to Mr. Larmer:  
The reality is that RSK is a difficult sale due to the economic downturn in  
Kitimat. The entire north-west BC region is in a state of flux and waiting on  
LNG or another major project to kick off. The local commercial and residential  
real estate market are very soft for this same reason. Every lender but one  
has turned down the mortgage opportunity due to the location being Kitimat.  
[57] Mr. Gordon also told Mr. Larmer that he had no doubt that Mr. Konicek would  
realize more value on the disposal of the equipment but it would take considerable  
time and energy to do so. Mr. Larmer stated in his email that he believed $600,000  
was enough capital to run the company with zero revenue for approximately  
six months.  
[58] On April 27, 2016, Mr. Konicek and his holding company, Jennic, entered into  
the SPA with Vantown and Mr. Leung, pursuant to which they sold all their RSK  
shares. The closing date was May 13, 2016. The first payment under the DPLA was  
required on January 1, 2017.  
[59] Following the execution of the SPA, the plaintiffs continued to provide  
information to buyers regarding the business and operations of RSK.  
[60] On June 10, 2016, the parties entered into an extension agreement,  
extending the closing date to June 22, 2016.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 18  
[61] Over the fall of 2016 and the first half of 2017, the parties exchanged email  
regarding the accounting with respect to working capital and amounts payable post  
closing, which were required to confirm the final amount owning under the SPA.  
[62] No payment was made under the DPLA in January 2017, or at all. On  
February 2, 2017, counsel for the plaintiffs gave notice of default to counsel for  
Vantown, in accordance with the DPLA.  
[63] On February 14, 2017, Mr. Konicek wrote to Mr. Leung confirming that  
$2,900,000 pursuant to the DPLA was due and payable, and that he expected a  
payment proposal from Vantown’s lawyer within the next two days. Also on February  
14, 2017, Mr. Gordon replied to Mr. Konicek’s email confirming that their lawyers  
were preparing a formal proposal, which Mr. Konicek could expect by February 17,  
2017.  
[64] On February 17, 2017, counsel for Vantown wrote to counsel for the plaintiffs  
setting their client’s proposal, namely:  
1. The VTB of $2.9m would be paid out in full and Ralph would release all  
existing security.  
2. The receivable note would be amended or replaced to be payable in full (to  
the extent collected as at such date) on what would have been the final  
payment date of the VTB and would be secured against the Kitimat Land &  
Buildings.  
[65] This proposal was not accepted.  
[66] On June 19, 2017, almost a year after the deal closed, Vantown took the  
position with the plaintiffs that they had breached the representations, warranties  
and conditions which required RSK to remain a going concern in continuous  
operation at times material to the sale and, as a result, the defendants owed nothing  
under the DPLA.  
III.  
ISSUES  
[67] In this litigation, the plaintiffs seek declarations that the DPLA is in default and  
as to the amount owing pursuant to the loan, together with various remedies in  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 19  
relation to the alleged breach of loan. The defendants seek judgment on various  
losses which they say arise from the plaintiffs’ breach of covenants and  
misrepresentations in relation to the SPA, and seek to set off such losses against  
any amounts owing to the plaintiffs.  
[68] I will address the issues raised by the defendants first, before determining the  
loan amounts, if any, owning to the plaintiffs. As such, this litigation raised for  
determination the following issues:  
a) Did the plaintiffs breach the SPA and its associated agreements?  
b) Did the plaintiffs make any fraudulent misrepresentations in relation to the  
SPA and its associated agreements?  
c) Are the plaintiffs liable in equitable fraud?  
d) Did the plaintiffs breach a duty of good faith owed to the defendants?  
e) Are the defendants entitled to any damages which must be set off against  
amounts owing to the plaintiffs under the SPA and its associated  
agreements?  
f) What amounts, if any, remain payable by Vantown to the plaintiffs under  
the SPA and its associated agreements?  
g) Are the guarantees granted by RSK and Paul Leung, and the mortgage  
granted by Paul and Amy Leung, valid?  
h) Are any costs payable to any of the parties?  
A.  
Credibility  
[69] Credibility issues were raised by all parties in this litigation. For the reasons  
discussed below, and as referenced throughout my reasons, I found the witnesses  
for the plaintiffs to be credible witnesses. I found the evidence of Mr. Gordon,  
Mr. Leung, and Mr. Medeiros to raise significant adverse credibility issues.  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 20  
[70] The law as it relates to the assessment of the credibility and reliability of the  
evidence of a witness is not controversial. In Bradshaw v. Stenner, 2010 BCSC 1398  
at paras. 186187, Madam Justice Dillon provides a very useful summary of the  
principles engaged in a credibility analysis. Some of these factors include the  
witness’ “. . . ability and opportunity to observe events, the firmness of his memory,  
the ability to resist the influence of interest to modify his recollection, whether the  
witness’ evidence harmonizes with independent evidence that has been accepted,  
whether the witness changes his testimony during direct and cross-examination,  
whether the witness’ testimony seems unreasonable, impossible, or unlikely,  
whether a witness has a motive to lie, and the demeanour of a witness generally”.  
[71] I have governed my assessment of the credibility of the witnesses in  
accordance with the principles summarized in Bradshaw.  
[72] In addition, it is important to consider the reliability of a witness’ evidence. For  
example, there may be instances where a witness is an honest credible witness, but  
specific pieces of evidence are not reliable due to the passage of time, or other  
factors affecting the witness’ memory.  
[73] Mr. Konicek candidly admitted that his memory of certain events was not  
entirely accurate or reliable. He explained that he was getting older and was taking  
some medication which, he suggested, may have affected his memory of specific  
dates and some events. As an example of his memory difficulties, Mr. Konicek  
admitted that he did not have a memory of a meeting held between him and  
Mr. Gordon at his home in Salmon Arm in May 2015. He did not deny the meeting  
took place, and he agreed that Mr. Gordon prepared a memo of that meeting that  
likely reflected what was discussed. I am satisfied that Mr. Konicek was an honest  
forthright witness, who readily admitted when his memory of specific events was  
unreliable. However, I also accept that when his memory of an event was clear, his  
evidence was credible and reliable.  
[74] Mr. Gordon, on the other hand, gave evidence which was exaggerated and at  
times at odds with the documentary evidence and evidence of other reliable  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 21  
witnesses. Examples of credibility concerns with Mr. Gordon are detailed throughout  
my reasons. However, specific examples are set out below.  
[75] At trial, Mr. Gordon testified he was shocked that prior to the closing  
Mr. Konicek sold two trucks that were part of the inventory of assets of RSK. In his  
direct evidence, Mr. Gordon stated that he was only told days before the closing that  
Mr. Konicek had sold the trucks, and Mr. Konicek only let him know in a throw away  
line.  
[76] In fact, the documents show that Mr. Gordon and Mr. Konicek had discussed  
the sale of this retired equipment as far back as April 2016 and, in fact, Mr. Gordon  
supported the idea as the proceeds from the sale of the trucks would reduce the  
financing needed by the purchasers. On May 17, 2016, Mr. Larmer wrote to Mr.  
Gordon and Mr. Leung confirming the following:  
Thank you for your confirmation that Ralph (on behalf of RSK) is authorized  
to sell the two pieces of equipment (specifically, D250E Articulated End  
Dump Truck with serial #4P500740 and D250E Articulated End Dump Truck  
with serial #5TN01623) prior to the Closing Date for not less than $120,000  
plus any applicable taxes.  
Pertaining to this potential sale of the two D250 Articulating Rock Trucks, you  
agree that should this sale of equipment take place, the Share Purchase  
Agreement (SPA) is amended by deleting these Vehicles from the Equipment  
set out in Schedule 3.35 of the SPA.  
Both you (as Purchaser) and Ralph (as Vendor) agree that the proceeds of  
the sale of the Vehicles will be held by RSK and, upon Closing, will be paid  
by RSK to Travelers Finance Ltd. in partial repayment of the loan from  
Travelers Finance Ltd. to RSK.  
[77] The plaintiffs submit that Mr. Gordon’s evidence of being shocked about the  
sale of the trucks, and only learning about the sale days before the closing at the  
end of June 2016 demonstrated “a willingness to misreport events in an effort to cast  
a bad light on Mr. Konicek.” I agree.  
[78] Mr. Gordon testified that the plaintiffs received a general security agreement  
over the property of the corporate defendants. This statement was not supported by  
any documents at trial, and the SPA does not refer to any such agreement as a form  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 22  
of security. I find Mr. Gordon was careless in testifying, rendering his evidence less  
reliable.  
[79] Mr. Gordon testified at trial that he made only two or three trips to Kitimat prior  
to the closing date. On discovery he agreed that he made at least six trips to Kitimat,  
and possibly more. The email and other documents entered at trial support a finding  
that he made more than three trips to Kitimat. The plaintiffs argue that Mr. Gordon  
was attempting to minimize knowledge of and familiarity with RSK. I agree and find  
that he was either careless or untruthful in his evidence, both of which impact his  
credibility.  
[80] In addition, throughout his testimony Mr. Gordon asserted his understanding  
of commercial issues, such as costing formulae, pre-qualification processes,  
accounting practices, and equipment maintenance records, as examples of what  
was expected and agreed to between the parties. However, he did so in the absence  
of any evidence that such matters were raised with Mr. Konicek before the sale (or  
after the sale), or were even the subject of the due diligence by Vantown. I find this  
evidence of Mr. Gordon to be a gross exaggeration of the mutual understanding of  
the parties to the SPA, which severely undermined his credibility.  
[81] Mr. Medeiros overstated his evidence in chief. Under cross-examination he  
admitted the limited personal knowledge he had of certain broad statements he had  
made. In addition, Mr. Medeiros swore an earlier affidavit in these proceedings,  
which was the subject of cross-examination. In the affidavit, Mr. Medeiros similarly  
overstated his personal knowledge and made a number of exaggerations and mis-  
statements. While many of the mis-statements were not material, such as the  
incorrect date set out for the commencement of the KMP, others were significant  
and material. Mr. Medeiros made material mis-statements with respect to the  
profitability of RSK, Mr. Konicek’s efforts to obtain work, the competitiveness of bids  
made by RSK, the alleged termination of the working relationship between RTA and  
RSK, the state of the equipment in the yard, the number of hours worked by Mr.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 23  
Johnstone, and Mr. Konicek’s alleged free and open conversations with clients about  
liquidating the company.  
[82] Under cross-examination, it became clear that Mr. Medeiros simply had no  
direct knowledge of most of these material mis-statements, or his actual knowledge  
contradicted the statements made in his affidavit. In the result, I have serious  
credibility and reliability concerns with the evidence of Mr. Medeiros in chief. To the  
extent his evidence was tested under cross-examination, I do accept some of his  
evidence as is referred to in these reasons.  
[83] Mr. Coleman’s testimony must also be approached with caution. Like  
Mr. Medeiros, he swore an affidavit previously in this litigation, large portions of  
which he resiled from at trial. Like Mr. Medeiros’ affidavit, the affidavit of  
Mr. Coleman contained inaccuracies, exaggerations, mis-statements, and  
generalizations for which Mr. Coleman had no personal knowledge. Mr. Coleman  
testified that he continued working for RSK after the sale, and felt pressured by the  
management of RSK to swear the affidavit and so he did, even though it was not  
accurate. I accept this evidence of Mr. Coleman.  
[84] The defendants subpoenaed Mr. Coleman, and sought leave to cross  
examine him as an adverse witness. While being cross-examined by counsel for the  
defendants, Mr. Coleman would often agree to things he did not recall. He would  
give answers like “I am not sure, so I will say yes”. I place no weight on such  
answers which appeared to me to be brought about by the stress he felt under  
cross-examination, and not because the answers were in fact true.  
[85] I am satisfied that under cross-examination by counsel for the plaintiffs, where  
he was given an opportunity to answer questions without pressure, using his own  
words and to the best of his recollection, Mr. Coleman gave credible and reliable  
answers, which evidence I generally accept as referred to in these reasons.  
[86] Mr. Leung’s evidence was often not credible and entirely self serving. His  
evidence must also be approached with caution. For the most part, unless his  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 24  
evidence was corroborated by documentary evidence, or the evidence of a credible  
witness, I have placed little weight on it.  
[87] Examples of Mr. Leung’s unreliable evidence include his testimony that the  
buyers did not know until late in the process that Mr. Konicek had insufficient  
insurance on the equipment, which was contradicted by an email from Mr. Gordon in  
June 2016 stating that they knew all along Mr. Konicek was self insured and carried  
no insurance. Another example was Mr. Leung’s evidence that Mr. Konicek was  
rushing them to complete the transaction, which was contradicted by the  
documentary evidence which established that the letter of intent was signed two  
months later than Mr. Leung originally intended, the SPA was executed almost one  
month after the date specified in the letter of intent, and the closing happened more  
than two months after the date specified in the letter of intent.  
[88] The more significant areas where I find Mr. Leung lacked credibility relate to  
the execution of the agreements associated with the SPA, including the promissory  
notes, the guarantees and the DLPA, and the information he shared with his wife  
regarding their obligations under the agreements.  
[89] At trial, Mr. Leung gave specific evidence of what happened during the  
meeting with the lawyers when the agreements were executed, testifying that the  
documents were not explained to him and his wife and they were not given an  
opportunity to seek legal advice. However, when he was discovered, Mr. Leung  
stated that he could not remember anything about the meeting. The documentary  
evidence at trial, including email sent before and after the meeting, supports a  
finding that the documents were explained to Mr. and Mrs. Leung, and they were  
given an opportunity to seek independent legal advice. Frans Lotz, one of the  
lawyers who witnessed the execution of the documents, had an independent  
memory of the meeting and confirmed the documents were explained to the Leungs,  
and they were given an opportunity to seek legal advice. I find the evidence of  
Mr. Leung at trial with respect to this meeting is not credible or reliable.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 25  
[90] With respect to whether he had discussions with his wife prior to the  
execution of the documents, Mr. Leung at trial denied he had any discussions about  
the guarantees and mortgage granted over their home. The documentary evidence  
produced from that time frame, including many email, contradicts Mr. Leung’s  
testimony at trial. I do not accept Mr. Leung’s testimony in this respect as credible.  
B.  
Did the plaintiffs breach the SPA and its associated agreements?  
[91] The SPA contains the following clauses, which are relevant to the issues  
raised in this litigation:  
1.6 Entire Agreement  
This Agreement and the agreements entered into between the Parties and  
delivered in connection with Closing constitute the entire agreement between  
the Parties with respect to the subject matter hereof and supersedes all prior  
agreements, understandings, negotiations and discussions, whether written  
or oral. There are no conditions, covenants, agreements, representations,  
warranties or other provisions, express or implied, collateral, statutory or  
otherwise, relating to the subject matter hereof except as herein provided.  
3.32 No Changes  
Except as set out in Schedule 3.32 and Schedule 3.37 (and, as contemplated  
herein, RSK is proposing to enter into the RSK Guarantee and RSK  
Mortgage, and, as contemplated in Section 2.4(e), RSK may declare and pay  
dividends, or repay loans owed to the Vendors), since the Interim Statement  
Date, the Business, as conducted by RSK, has been carried on only in the  
ordinary and normal course consistent with past practice and there has not  
been:  
(a) any material adverse change in the condition (financial or otherwise),  
assets, liabilities, operations, earnings or Business of RSK;  
. . .  
3.37 Customers and Suppliers  
(a) Schedule 3.37 sets out all customers of RSK since March 31, 2014 which  
have purchased $25,000 goods or services from RSK and, except as  
disclosed in Schedule [3.37], since March 31, 2014:  
(i) there has not been any material change in the business  
relationship between any such customer and RSK and to the  
knowledge of the Vendors no such customer intends to materially  
change its business relationship with RSK;  
(ii) there have been no material disputes between RSK and any such  
customer; nor is RSK involved in any material disputes with other  
customers which would reasonably be expected to be material; to the  
knowledge of the Vendors there are no disputes between RSK any  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
such customers or any other customers which would reasonably be  
Page 26  
expected to be material; and  
(iii) no such customer has terminated, cancelled, materially modified  
or altered, or notified RSK or, to the knowledge of the Vendors,  
otherwise intends to terminate, cancel, materially modify or alter its  
relationship with RSK or to effect a change in its operations and/or  
facilities which would reasonably result in the termination or material  
alteration of the such customer’s relationship with RSK.  
(b) Schedule 3.37 sets out all suppliers of RSK since March 31, 2004 which  
have provided supplies to RSK in excess of $5,000 and, except as disclosed  
in Schedule [3.37], since March 31, 2014:  
(i) there has not been any material change in the business  
relationship between any such supplier and RSK and to the  
knowledge of the Vendors no such supplier intends to materially  
change its business relationship with RSK;  
(ii) there have been no material disputes between RSK and any such  
supplier; nor is RSK involved in any disputes with other suppliers  
which would reasonably be expected to be material; to the knowledge  
of the Vendors there are no disputes between RSK any such  
suppliers or any other suppliers which would reasonably be expected  
to be material; and  
(iii) no such supplier has terminated or materially altered, or notified  
RSK or, to the knowledge of the Vendors, otherwise intends to  
terminate or materially alter its relationship with RSK or to effect a  
change in its operations and/or facilities which would reasonably  
result in the termination or material alteration of the such supplier’s  
relationship with RSK.  
[92] Schedule 3.37 sets out the following information regarding customers:  
Customers  
Subsequent to March 31, 2014, RSK provided goods and services to the  
following customers. RSK currently has no ongoing commitments to provide  
goods or services to the following customers or any other person.  
1. ABB Inc.  
2. Bechtel Canada Co.  
3. Lander Gen. Power  
4. Rio Tinto Alcan  
[93] With respect to suppliers, Schedule 3.37 states:  
Suppliers  
Subsequent to March 31, 2014, RSK acquired supplies from the following  
suppliers. RSK currently has no commitments to purchase supplies from the  
following suppliers or any other person.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 27  
[94] Following the above prefatory statements, Schedule 3.37 then lists  
53 different suppliers to RSK.  
[95] The defendants submit that the plaintiffs breached the following  
representations:  
a) RSK had been operated only in the ordinary and normal course consistent  
with past practice (clause 3.32);  
b) There had been no material adverse change in the condition (financial or  
otherwise), assets, liabilities, operations, earnings or business of RSK  
(clause 3.32(a)); and  
c) There has not been any material change in the business relationship  
between any customer listed in Schedule 3.37 of the SPA and RSK  
(clause 3.37).  
[96] The defendants argue that RSK ceased operating in the ordinary and normal  
course consistent with past practice. In particular, they submit that RSK essentially  
“downed tools” and stop taking on new work. The defendants argue that rather than  
obtaining a “turn key” operation, they obtained a mothballed shop with few  
employees and no work. The defendants make the following specific allegations of  
breaches on the part of Mr. Konicek:  
a) Failed to satisfactorily maintain ongoing good faith relationships with  
customers and clients;  
b) Failed to qualify or register RSK for work projects;  
c) Failed to bid competitively;  
d) Failed to pursue and secure projects;  
e) Failed to pursue and secure as and when work;  
f) Failed to satisfactorily maintain key equipment;  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 28  
g) Published his intention to retire and his belief Vantown would not complete  
the transaction;  
h) Failed to properly maintain and hand-over financial and business records;  
and  
i) Failed to deliver RSK as a “turn-key” operation.  
[97] Many of these allegations relate to opinions held by Mr. Gordon or Mr. Leung  
as to what they felt ought to have been the state of RSK at the time of transfer.  
However, the difficulty with many of these propositions is that they are either  
unsupported by any evidence, or are directly contradicted by the evidence and the  
contract documents themselves.  
1.  
Failed to satisfactorily maintain ongoing good faith  
relationships with customers and clients  
[98] Mr. Gordon testified that Mr. Konicek had soured relations with many of  
RSK’s customers and clients at some point before the transfer. However, he  
produced no actual evidence of this. He referred to various hearsay comments about  
how RSK had not maintained relationships in the community, but gave no specifics  
as to who made the comments and no witnesses were called to corroborate such  
statements.  
[99] The only specific example Mr. Gordon gave of Mr. Konicek’s alleged  
destruction of a relationship was with respect to RTA. Mr. Gordon referred to a big  
disagreement Mr. Konicek had with RTA regarding a snow removal contract, which  
resulted in RTA not wanting to do business with RSK any longer. The difficulty with  
this evidence is that it is hearsay. No representative of RTA testified to the  
breakdown of the relationship between RSK and RTA. To the contrary, Mr. Magee,  
who was employed by RTA before and after the sale of RSK, testified that there  
were no ongoing problems with RSK from the perspective of RTA, and RSK  
continued to get work from RTA in 2016 and following. This is echoed in a memo to  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 29  
file Mr. Gordon prepared following his meeting with Mr. Magee in 2015, where he  
wrote:  
It was explained to me that RSK have performed well during the KMP and  
had provided a solid backbone to the project as a whole. Dwight [Magee]  
mentioned that RSK had been one of the most reliable and professional  
contractors on site. While we were in the meeting Dwight gave Ralph three  
work orders that had been unsolicited. It was clear that RSK are leaned on by  
RTA to 'get it done'.  
[100] Mr. Gordon had no personal knowledge of the alleged meeting regarding the  
snow removal contract, and relied on what he was told by an RSK employee,  
Mr. Medeiros, who also was not present in the meeting. Mr. Gordon suggested that  
the meeting happened after March 31, 2014, and therefore Mr. Konicek was in  
breach of Article 3.37(a) of the SPA.  
[101] Mr. Konicek agreed that he had a disagreement with RTA regarding a snow  
removal contract, where he felt RTA underpaid him for work completed prior to a  
purchase order being issued. However, he also testified that the disagreement  
happened in 2013, and did not result in any disruption in the normal pattern of work  
RSK continued to do for RTA. Mr. Konicek testified that he and a member of his  
staff, Mr. Coleman, went to a meeting at RTA to discuss Mr. Konicek’s concerns.  
The value of the disputed work was $200,000, and was significant to RSK. Both  
Mr. Konicek and Mr. Coleman testified about the meeting. Mr. Coleman agreed that  
Mr. Konicek was assertive and upset, but testified that Mr. Konicek was not  
disrespectful. He agreed that Mr. Konicek did not demand payment “on the spot”.  
Mr. Coleman said he would not describe the meeting as an explosive argument.  
Mr. Coleman also confirmed that the meeting happened in 2013 and stated that his  
affidavit evidence in which he placed the meeting in 2015 was incorrect.  
[102] Following the meeting, RTA invited RSK to bid on the operating plant snow  
removal contract for the three-year period of 2013-2016. In that invitation, RTA  
stated to Mr. Konicek that “RTA would like to reiterate that your excellent  
performance of the services during the contract term had been highly commended  
by RTA management and employees”, and that RTA looked forward to a continued  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 30  
working relationship. RSK did bid on that contract, but the contract was awarded to  
Hoban Construction.  
[103] In June 2015 RTA approached RSK regarding back-up support for Hoban’s  
snow removal work. Mr. Konicek expressed his concern that, because his staff was  
not involved in marking hazards on the site, his staff would not have the required  
familiarity with the hazard locations to safely provide services. In addition, his  
equipment would have to be insured and ready to be mobilized on an emergency  
basis, which was not financially viable for RSK. Mr. Konicek testified that he had an  
amicable conversation with RTA regarding his concerns and that he advised  
Mr. Gordon of the outcome of his meeting with RTA.  
[104] Mr. Medeiros and Mr. Gordon testified that after the sale they met with  
Mr. Lemay from RTA. Mr. Gordon testified that Mr. Lemay referred to contentious  
moments with Mr. Konicek, made it clear that he would not work with Mr. Konicek,  
and wanted to know that Mr. Konicek was no longer with RSK. This evidence was  
contradicted by Mr. Medeiros. Under cross-examination, Mr. Medeiros confirmed  
that Mr. Lemay asked them if Mr. Konicek was still with RSK, but made no  
statements beyond that. Mr. Lemay was not called to confirm the content of any  
conversation with Mr. Gordon, or to confirm the suggestion that he was dissatisfied  
with Mr. Konicek. I reject the evidence of Mr. Gordon with respect to the hearsay  
evidence of Mr. Lemay regarding RTA’s dissatisfaction with Mr. Konicek.  
[105] I accept the evidence of Mr. Konicek, and find that the dispute with RTA about  
the snow removal occurred in 2013, and also did not interrupt the ongoing business  
relationship between RTA and RSK.  
[106] I find that the defendants have not proven that Mr. Konicek failed to maintain  
good faith relationships with customers and clients.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 31  
2.  
Failed to qualify or register RSK for work projects  
[107] Similar to the allegation regarding failed business relationships, the  
defendants produced no evidence to support the allegation that Mr. Konicek failed to  
qualify or register RSK for projects.  
[108] Mr. Gordon testified that RSK was not preregistered with Chevron, LNG  
Canada/Shell, or Coastal Gas Link, but that after the sale Mr. Gordon took steps to  
complete preregistrations with these companies.  
[109] Mr. Konicek testified that for many potential projects, the opportunity to  
pre-qualify had not arisen before the closing date under the SPA. With respect to  
Shell, RSK did produce an early introductory letter to LNG Canada (Shell) sent on  
April 7, 2015. Mr. Konicek testified that after he provided preliminary documentation  
to RSK, employees began performing work on the LNG Canada (Shell) site in  
January, February and May 2016.  
[110] Mr. Konicek testified that not every big client required pre-qualification before  
bids could be submitted, and this was confirmed by Mr. Medeiros.  
[111] Ms. Crewe was the office administrator for RSK both before and after the  
sale. Her responsibilities included general administration, payroll, maintaining  
contracts, and dealing with receivables and payables. Ms. Crewe testified that in  
2015 and 2016 RSK received approaches from Fluor and Petronas, seeking  
confidential information exchange in relation to proposed projects. RSK responded  
with the requested information, but the opportunities fizzled out, which I understood  
to mean the companies did not proceed with the anticipated projects. Ms. Crewe  
testified that the companies did not express dissatisfaction with the paperwork  
submitted by RSK. Copies of the paperwork submitted remained in the office of RSK  
after the sale. Ms. Crewe also testified that the financial investment announcement  
for the Fluor project did not occur until 2019, well after the sale.  
[112] Mr. Gordon testified that he met with Graham Cambray at RTA who told him  
he had only met Mr. Konicek once. Mr. Gordon said he had to re-introduce RSK to  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 32  
RTA and let it be known RSK was still operating, not liquidated, and Mr. Gordon was  
intent on growing the company. Mr. Gordon testified that after the meeting, work  
began to snowball with RTA. Mr. Gordon agreed under cross-examination that after  
the sale of RSK, because there had been a change in ownership, RTA required RSK  
to requalify again.  
[113] It was not clear when the conversation with Mr. Cambray was alleged to have  
taken place, and Mr. Cambray was not called to testify. Therefore, I cannot attribute  
much weight to the statements attributed to Mr. Cambray. What I do take from this  
evidence is that because RSK had new ownership, it was required to requalify with  
RTA, and that once that requalification with RTA was complete, RSK began  
receiving ample work from RTA.  
[114] With respect to the suggestion that RTA did not know much about RSK and  
thought it was not operating, I do not accept that to be a truthful statement in  
accordance with the evidence of Mr. Magee of RTA, who did testify, and the  
evidence that RSK continued to receive tenders from RTA and work from RTA in  
2015 and 2016.  
[115] The defendants produced no evidence that, before the closing date, bid  
opportunities were available to RSK, to which RSK failed to respond. The  
defendants produced no evidence that RSK failed to get work because RSK did not  
pre-qualify with any company prior to the closing date.  
[116] During the due diligence period Mr. Gordon did not ask to review any of the  
pre-qualification documents RSK prepared for any potential projects, and did not ask  
to review any pre-qualification documents RSK had prepared on previous projects.  
[117] Mr. Gordon testified that pre-qualification documents were complicated and  
when he took over it was a lengthy process to assemble the required documents to  
support a pre-qualification package. However, at trial Mr. Konicek was not  
questioned about whether the pre-qualification package prepared by Mr. Gordon  
was anything like the package he would have prepared for RSK.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 33  
[118] Further, pursuant to the letter of intent, Mr. Gordon had the right to provide  
RSK with business development services during the due diligence period.  
Mr. Gordon agreed that this right allowed him to go out and speak to people in the  
community, and allowed him to pre-qualify RSK for projects. Mr. Gordon did not take  
any steps pursuant to this right given to him under the letter of intent.  
[119] I find that the defendants have not proven that Mr. Konicek failed to qualify or  
register RSK for work projects.  
3.  
Failed to bid competitively/ Failed to pursue and secure  
projects  
[120] There is no evidence that RSK failed to bid competitively from March 2014 to  
the closing date. RSK did get work in 2015 and 2016. Mr. Konicek testified that  
historically RSK did not bid on every project that came along. In the data room kept  
by Sequoia for the benefit of Vantown’s due diligence process, Vantown was  
advised that RSK’s marketing approach was to pursue opportunities that were within  
RSK’s capabilities and desired profit margins. Mr. Konicek testified that his preferred  
contracts were time and material based, rather than fixed price. RSK continued to  
work for RTA on such contracts up until the closing date.  
[121] Mr. Medeiros testified that RTA and the District of Kitimat put out many  
tenders, and RSK made no efforts to bid for them in late 2015 and 2016. However,  
he gave no specifics of what opportunities were available that RSK did not bid on.  
His evidence is contradicted by the documentary evidence from RTA. Mr. Medeiros  
obtained a list of four tenders released by RTA to RSK in 2015 and 2016. In January  
2016, RSK responded with a bid for the crucible cleaning project. Mr. Konicek could  
not confirm whether the last two tenders were issued prior to the closing date. The  
defendants produced no evidence to establish when the last two tenders were  
released.  
[122] Ms. Crewe testified that she did not recall Mr. Konicek refusing to tender on  
projects that were suitable for RSK. She did not recall any opportunities coming from  
the District of Kitimat in 2016 prior to the closing date. Ms. Crewe also testified that  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 34  
RSK continued to look for bid opportunities on the “Ariba” bidding system used by  
RTA as the work on KMP reduced.  
[123] While Mr. Medeiros initially testified that Mr. Konicek was reluctant to bid  
competitively, under cross-examination he agreed that he had no knowledge of the  
rate structure used by RSK or what rates would be competitive.  
[124] The allegation that RSK did not bid competitively was not borne out in the  
evidence at trial. For the RTA crucible cleaning project, which RSK bid on at the end  
of the KMP, RSK proposed rates which were approximately 82% of the rates RSK  
received on the KMP. Similarly, on an excavator contract in the fall of 2015, RSK  
received rates well below the rates it was able to charge on the KMP. I find the  
evidence does not support the allegation that RSK failed to bid competitively on jobs  
once KMP started to wind down.  
[125] Mr. Gordon discussed a project to decommission the RTA site as something  
RSK could have done. However, the defendants produced no evidence as to  
whether that project had been made available to bidders prior to the closing, or  
whether the scope of work would have been suitable for RSK, or whether the project  
in fact proceeded.  
[126] The letter of intent expired because the SPA was not completed by March 31,  
2016. On Monday April 12, 2016, Mr. Larmer wrote to Mr. Leung, Mr. Gessner and  
Mr. Gordon advising them that RSK was not on the list for the RTA decommissioning  
plant because he did not think the SPA with Vantown would be completed. The  
deadline for completing the SPA pursuant to the letter of intent had been almost two  
weeks prior. Mr. Larmer advised that taking on the responsibility of the  
decommissioning project did not align with Mr. Konicek’s personal objectives. In  
other words, Mr. Konicek made it clear that he was not prepared to take on work he  
was not able to perform and, because the parties still had not reached terms on a  
SPA, he was not prepared to put RSK on the list as he could not be sure that a sale  
to Vantown would actually be completed.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 35  
[127] In the face of the information provided by Mr. Larmer as to the RTA  
decommissioning project, namely that because the SPA was not completed by the  
deadline set out in the letter of intent, RSK did not ask to be put on the list for the  
project, Vantown continued to work with Mr. Konicek to complete the SPA. It is  
simply not open to Vantown to complain now that RSK’s failure to put itself on the list  
for the RTA decommissioning project is a breach of the SPA.  
[128] In any event, the defendants have not established that the RTA  
decommissioning project was ever tendered or awarded. Ms. Crewe provided  
photographic evidence that in the summer of 2021, some five years after the RSK  
deal closed, the buildings on the old RTA site remain standing.  
[129] The defendants rely heavily on the CIM in arguing that the CIM set out all  
kinds of opportunities that RSK failed to pursue. However, the CIM was not a  
contractual document in this deal. It was intended to introduce potential buyers to  
the opportunities that might be available to them in operating RSK. It cannot be read  
as a commitment by RSK to pursue all such opportunities for the benefit of potential  
buyers. It expressly states that all representations and warranties shall be solely  
made by RSK in a signed purchase and sale agreement.  
[130] The CIM sets out major projects that, in 2014, were planned for the Kitimat  
area. There is no guarantee that any or all of them would proceed, or that any of the  
projects would make work available to RSK at all, or on any specific timeline. Rather,  
it is intended to provide some background to potential buyers to assist them in their  
own due diligence.  
[131] Mr. Gordon was very argumentative under cross-examination in respect of  
potential work opportunities in the Kitimat area. However, he did agree that the  
Petronas project ultimately did not happen. When presented with the negative  
comments regarding the future of LNG in the Kitimat area made by Adaptable, a  
potential buyer Mr. Gordon was assisting, Mr. Gordon made it clear that the  
opportunities he saw in the area were based on his own experience and  
assessment, not on anything being told to him by others.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 36  
[132] Mr. Coleman confirmed the evidence of Ms. Crewe and Mr. Konicek, namely  
that as KMP shut down there was a dearth of work in the Kitimat area. While some  
new projects may go forward at some point in the future, such projects had not  
developed to the point of creating opportunities which could keep RSK working at  
anywhere close to the levels it had been working in 2014 or 2015.  
[133] Mr. Gordon was critical of Mr. Konicek’s failure to register with the chamber of  
commerce. He testified that when he went to a meeting at the chamber of commerce  
after the sale and met with (unnamed) representatives of various (unnamed)  
companies, the representatives told him that RSK had not pre-qualified with them or  
expressed any interest in their work, and they did not know who RSK was. This  
evidence of Mr. Gordon is entirely unreliable hearsay. No specifics of who made the  
alleged statements was provided, and no representatives of any companies testified  
that they had projects available to RSK in 2016 which RSK failed to express interest  
in. There is no evidence that Mr. Konicek ever registered RSK with the chamber of  
commerce during the history of the company, and there was no obligation under the  
SPA for Mr. Konicek to change his historical business practices to comply with what  
Mr. Gordon felt was appropriate.  
[134] The defendants have not proven that there was work available to RSK, which  
RSK failed to bid on, or on which RSK failed to bid competitively. The argument of  
the defendants seems to be nothing more than: we thought RSK would have more  
work, and because it doesn’t have the work we thought it should have, it must follow  
that RSK failed to pursue such work properly. I do not agree. If there is no work to be  
had, RSK cannot be faulted for not having more contracts than it did, particularly in  
light of the express representations in the SPA that RSK had no ongoing contracts.  
[135] I find the defendants have not proven that Mr. Konicek failed to cause RSK to  
bid competitively on projects available to it prior to the closing date, or failed to  
pursue and secure projects in the ordinary course.  
Konicek v. Vantown Infrastructure Invesco Inc.  
4. Failed to pursue and secure as and whenwork  
Page 37  
[136] The defendants argue that RSK historically received significant revenues from  
“as and when” relationships with clients, which they argue is work done without a  
pre-existing contract in place. They argue that Mr. Konicek failed to pursue such  
work and, due to his “misconduct”, was no longer approached for such work. The  
allegations with respect to the “as and when” work appear to be directed primarily  
towards work with RTA.  
[137] For the reasons already expressed, I do not accept that RSK failed to obtain  
work that was available to it, or that Mr. Konicek had acted in a way that disinclined  
RTA to hire RSK.  
[138] Mr. Konicek agreed that RSK would be approached to do work prior to a  
purchase order being issued. Once RSK agreed to do the work, a purchase order  
would be issued and that purchase order would govern the work. For example, the  
work done by RSK for RTA in 2016 was generally work done under purchase orders.  
This was explained by Ms. Crewe who reviewed the multiple invoices issued in 2015  
and 2016 and confirmed that they were not one-off invoices, but were in fact issued  
pursuant to specific overarching purchase orders for barge ramps, janitorial work,  
support services for the mobile cool room and L16 complex, and janitorial services at  
the support office.  
[139] The defendants argue that RSK took on work historically without a formal  
contract in place. I do not agree. A purchase order is a form of contract which  
controls the work undertaken.  
[140] I find the defendants have not proven that RK failed to pursue and secure “as  
and when” work on behalf of RSK.  
5.  
Failed to satisfactorily maintain key equipment  
[141] Mr. Gordon testified that when he went to the RSK site following the sale, he  
was surprised to see all of the heavy equipment “stacked” in the yard, and difficult to  
access due to the large volume of equipment. He testified that the equipment was  
   
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 38  
not in working order, had not been maintained, and no service or maintenance  
records were kept.  
[142] Mr. Gordon gave extensive evidence about what maintenance he assumed  
would be done on the equipment, based on his experience in other companies.  
However, he confirmed that he had no discussions with anyone at RSK about the  
kinds of records they kept. He simply assumed they kept maintenance records in  
line with his prior personal experience.  
[143] Mr. Leung testified that when he saw the equipment shortly after the sale  
closed, he saw rust on the tracks of some equipment and felt that only cosmetic  
work had been done on the machinery.  
[144] The evidence of the defendants was vague and generalized regarding the  
state of the equipment. The defendants produced no evidence of repairs they were  
required to do on the equipment after the sale. They produced no photographs of the  
equipment at the time of sale demonstrating that it was not in a proper or expected  
state. Neither Mr. Gordon nor Mr. Leung are mechanics and they cannot speak to  
the mechanical state of the equipment. Mr. Gordon testified that they had to go  
through each piece of equipment to assess the operability and state of repair. No  
records of this assessment were produced in evidence. Therefore, I cannot conclude  
that the assessment performed by the defendants, if it happened at all, established  
that the equipment was not in an expected state at the time of sale. Mr. Konicek and  
Ms. Crewe testified that they were not notified by the purchasers of any concerns  
relating to the equipment after the sale completed, which I find is consistent with a  
finding that the equipment was in an acceptable state at the time of transfer.  
[145] Mr. Medeiros testified that during Mr. Konicek’s ownership, RSK did not keep  
any real records for repairs or maintenance, other than a checklist which was kept in  
most pieces of equipment and was filled out by the operators. He agreed under  
cross-examination that nothing changed at RSK with respect to paper work for the  
equipment from the time before the sale until the sale completed in June 2016.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 39  
[146] Mr. Medeiros testified that Mr. Konicek had no desire to spend money on the  
equipment doing routine maintenance. He testified that Mr. Johnstone, a mechanic  
hired by RSK, did low level work on the equipment, such as oil changes, light bulb  
changes, and cosmetic work. He testified that Mr. Johnstone worked part-time, only  
three days a week, and there was no urgency to the work he was doing. I do not  
accept this evidence of Mr. Medeiros which was contradicted by himself under  
cross-examination, by financial, employee, and other records, and by the evidence  
of Mr. Coleman and Mr. Konicek, whose evidence I do accept.  
[147] Mr. Medeiros confirmed under cross-examination that he did not personally  
monitor the work that was done on the equipment, did not know any details about  
what work was done, had no documents that demonstrated the required work was  
not done, and did not know how much money was spent on equipment maintenance  
before the closing date of the sale in June 2016.  
[148] Mr. Medeiros testified that the equipment returned to the RSK site after the  
KMP wound down was “stacked” in the yard. Some were operational on short notice,  
but some were not. Under cross-examination, Mr. Medeiros agreed that RSK  
equipment was in active use on jobs in 2016, including in June 2016. He also agreed  
that loaders, trucks and excavators were ready to be mobilized at the time of the  
sale. He stated that 25% of the equipment were ready to be used on jobs, and the  
rest were “stacked” in the yard and would take some effort to bring them out.  
[149] Ms. Crewe and Mr. Coleman agreed that the yard was very crowded, due to  
the wind up of the KMP and equipment being returned to the RSK site.  
[150] Mr. Coleman testified that he did not remember maintenance logs being kept  
for the equipment, but said he did do repair work on the equipment. Mr. Coleman  
agreed that by June 2016, some of the equipment had been in the yard since it  
came off the KMP. He stated that some equipment needed work, and some did not.  
RSK had equipment ready to be used, including loaders, excavators, and rock  
trucks. Mr. Coleman agreed that some equipment showed signs of rust, but  
explained that due to the amount of sulphur in the air from the smelter, exposed  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 40  
metal rusts within days of exposure. He confirmed that signs of rust are not  
indicative of a lack of maintenance.  
[151] Under cross-examination, Mr. Coleman testified that he observed  
Mr. Johnson doing maintenance on heavy equipment. He understood Mr. Johnson  
was qualified to clean out the cabs, grease the machines, perform oil changes,  
replace fan belts, lights, and broken mirrors, and do anything else that did not  
require a heavy-duty mechanic ticket. Mr. Coleman disagreed that Mr. Johnson was  
performing only cosmetic work on the equipment.  
[152] Mr. Konicek testified that as KMP wound down, equipment was returned to  
the RSK site and RSK continued its normal practice of performing maintenance and  
repairs. He testified that Mr. Johnstone was a mechanic hired by RSK to do  
servicing and minor repairs on the equipment, and that such work was also done by  
Mr. Konicek himself and others such as Mr. Coleman and other operators.  
Mr. Johnstone worked approximately 30 hours per week from March 24, 2016 to the  
closing date performing maintenance and repair work on the equipment.  
[153] Mr. Konicek testified that any major repairs were set out to external shops for  
servicing, including Kitimat Iron, Zanron, John Deere, and Finning. Mr. Konicek  
testified that RSK’s highway trucks were inspected biannually by an independent  
certified inspector.  
[154] In the fiscal year ending May 31, 2016 RSK spent $203,036 on repairs and  
maintenance, and in the period June 1, 2016 to June 24, 2016, RSK spent $38,882  
on repairs and maintenance. Mr. Konicek testified that these amounts excluded  
labour provided by employees of RSK.  
[155] Mr. Konicek confirmed that the practices of RSK with respect to maintenance  
and repairs did not change following the SPA. Mr. Konicek testified that a  
handwritten notebook was kept to document service done on the equipment. In  
addition, a daily inspection clipboard was kept in each machine where the operators  
recorded their daily inspections. This was confirmed by Mr. Coleman and Mr.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 41  
Medeiros, although Mr. Medeiros stated the operators were not always diligent in  
filling out the reports.  
[156] Mr. Gordon admitted he did not review equipment maintenance records prior  
to the sale. He testified as to what he thinks good practice is for record keeping in  
the industry. However, the SPA does not warrant that the maintenance records for  
the equipment will be kept in accordance with the standards suggested by  
Mr. Gordon.  
[157] Mr. Gordon was on site in the week leading up to the closing date. Mr.  
Konicek testified that Mr. Gordon was on site and that they walked through the  
“stacked” equipment. Mr. Gordon did not express any concern with how the  
equipment was stored. Ms. Crewe also testified that she did not recall Mr. Gordon  
expressing any concern with the equipment in the week before the sale closed.  
[158] I find the defendants have not proven that RSK failed to maintain key  
equipment prior to the closing of the transaction, and have failed to prove that RSK’s  
approach to maintenance and record keeping changed at any time during  
Mr. Konicek’s ownership right up to the closing date.  
6.  
Published his intention to retire and his belief Vantown  
would not complete the transaction;  
[159] The defendants argue that Mr. Konicek published within the local construction  
industry and the local Kitimat community that he was intending to retire, that  
Vantown was unlikely to complete the purchase, and that he was contemplating  
liquidating RSK’s assets and closing down the business. There was simply no  
admissible evidence called by the defendants to support such a proposition.  
[160] There is no question that Mr. Konicek was intending to retire and was trying to  
sell RSK. Mr. Konicek took Mr. Gordon, on behalf of Hillcore, to meet with RTA in  
2015 and advised RTA that Hillcore was intending to be brought into the business.  
Mr. Konicek introduced Mr. Gordon to various contacts in the months leading up to  
the SPA. There is also no question that Mr. Konicek considered that he had three  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 42  
options when deciding how he could retire. He described these options as selling the  
business to a new purchaser, turning the operations over to existing employees, or  
liquidating the business entirely. However, it is also clear from all of the evidence  
that Mr. Konicek’s first choice was to sell the business to a new purchaser, and from  
January 2016 onwards that purchaser was Vantown.  
[161] Mr. Gordon testified that evidence of Mr. Konicek’s intention to liquidate the  
company was Mr. Konicek’s decision to sell two trucks prior to the closing. I have  
already expressed my finding that Mr. Gordon’s evidence in relation to the sale of  
the trucks is not credible and I do not accept it.  
[162] On April 22, 2016, Mr. Konicek expressed his frustration to Mr. Gordon that  
the parties had still not finalized the SPA. The letter of intent expired on March 31,  
2016, but the parties were still trying to agree on wording for a sale of RSK. At that  
point, Mr. Konicek told Mr. Gordon that he had the three options of selling to  
Vantown, turning the business over to the employees, or liquidating the assets.  
However, I do not agree that the fact Mr. Konicek acknowledged these options at a  
time where he must have wondered if he would be able to reach agreement with  
Vantown on the terms of the sale is the same as Mr. Konicek telling people all over  
town that he was planning to liquidate the company.  
[163] The defendants rely on the vague, generalized evidence of Mr. Medeiros, to  
the effect that he spoke to (unnamed) colleagues, friends and competitors, that  
many people knew Mr. Konicek was selling RSK, and that he had overheard Mr.  
Konicek say he was getting out of the business. Mr. Medeiros also points to the fact  
that he and Mr. Konicek had discussed how Mr. Konicek would be selling everything  
and moving to Salmon Arm. I find that the hearsay evidence proffered by Mr.  
Medeiros is not reliable, and I decline to accept it.  
[164] With respect to Mr. Medeiros’ evidence that he overheard Mr. Konicek  
speaking about his plans, under cross-examination it became clear that this  
conversation was much more limited than suggested in his direct evidence. Mr.  
Medeiros agreed that he heard Mr. Konicek and a close friend, Barry Nedland, have  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 43  
a discussion once where Mr. Konicek told his friend he was tired, wanted to retire  
and was looking at his options. This was the only conversation Mr. Medeiros actually  
overheard. Mr. Nedland owned Lander General Power, a company which did  
business with RSK. Mr. Medeiros agreed he did not hear Mr. Nedland say Lander  
would not do business with RSK in the future. In fact, the 2017 financial statements  
of RSK show that by May 31, 2017 Lander General Power was under common  
control with RSK, along with a number of other companies. Mr. Medeiros could not  
point to any other conversation Mr. Konicek had with any other person regarding his  
plans for RSK.  
[165] Mr. Konicek was clear in his testimony that he did not broadcast around the  
community that he was intending to liquidate the company. His testimony was clear  
that if someone asked him directly, he would have told them that he had a buyer  
lined up to purchase RSK, but if that sale did not complete for some reason, he  
would consider liquidating the company. He said he did not volunteer that  
information, but would not be untruthful if asked directly. He also could not identify  
any person he made such a statement to. He did not agree that he knew of any  
customers switching to the competition because of any statements he made.  
[166] Mr. Konicek agreed that if he told customers he was planning to liquidate, it  
would have had a chilling effect on them. However, he did not agree that he actually  
told customers that he was planning to liquidate.  
[167] I find the defendants have not proven that Mr. Konicek published within the  
local construction industry and the local Kitimat community that he was intending to  
retire, that Vantown was unlikely to complete the purchase, and that he was  
contemplating liquidating RSK’s assets and closing down the business.  
7.  
Failed to properly maintain and hand-over financial and  
business records  
[168] The defendants argue that Mr. Konicek improperly removed from the RSK  
offices financial and business records, including equipment service records,  
business performance records, and costing records.  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 44  
[169] The plaintiffs agree Mr. Konicek took certain records on or around the closing  
date, but say they did so with the consent of Mr. Gordon.  
[170] Pursuant to Article 8.1 of the SPA, the vendors are responsible for pre-closing  
liabilities. Therefore, Mr. Konicek understood that he was liable for all payables,  
including tax liabilities, arising before the closing date. CRA could audit RSK for tax  
filings in the previous six years, for which Mr. Konicek would be responsible. As a  
result, Mr. Konicek testified that he preferred to keep the financial records with him  
and make them available to Mr. Gordon if he needed them. Mr. Konicek testified that  
Mr. Gordon agreed to this.  
[171] Mr. Konicek testified that he took with him accounting records, such as  
receipts, invoices, and other documents related to CRA filings. He testified that he  
left all other documents at the RSK office, including daily maintenance logs,  
insurance documents, safety records, hard copies of contracts from the KMP, and  
paper files relating to Petronas business opportunities. Mr. Konicek testified that no  
request for any documents was made to him by the purchasers after closing.  
[172] Mr. Gordon agreed that he consented to Mr. Konicek taking the financial  
records with him. Mr. Gordon expressed surprise that Mr. Konicek took close to 40  
boxes of documents with him.  
[173] Mr. Konicek explained that the invoices for the KMP were often extremely  
lengthy. Ms. Crewe confirmed that the invoices on the KMP could be up to six inches  
thick as they included all backup documents, including sub contractor and supplier  
invoices.  
[174] In this litigation, the defendants had access to all 35 boxes of documents  
retained by Mr. Konicek. No evidence was led by the defendants to contradict the  
evidence of Mr. Konicek that he only took accounting records.  
[175] Ms. Crewe testified that due to occasional power surges that could damage  
computers, she occasionally made backups of data from her computer onto CDs.  
She confirmed that she did not delete the data from the computer when she took the  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 45  
snapshot backups. Ms. Crewe would make two backups and would leave one in her  
desk and would take one home for safekeeping. Ms. Crewe testified that the data on  
the computer, which were also found on the CDs, covered the period from 2009 up  
to the closing date. Ms. Crewe continued working for RSK until 2018. The data on  
the computers and CDs was available to RSK following the closing date. Ms. Crewe  
testified that she gave the office copies of the CDs to Mr. Medeiros in 2018 when  
she stopped working for RSK. This was denied by Mr. Medeiros; however, where the  
evidence of Mr. Medeiros and Ms. Crewe is in conflict, I prefer the evidence of Ms.  
Crewe.  
[176] Mr. Gordon testified extensively about the costing documents he expected to  
find in the RSK files. He testified that costing is made up of costs which are common  
to all bidders, such as union rates and government burdens like EI and CPP, but the  
“secret sauce” developed by companies when developing bids is what is important.  
A company will have its own calculation as to what goes into the rates which form  
part of the bid and these will include the costs of consumables, indirect costs, fixed  
operational costs, and the profit margin. Through that formulation, the company is  
able to establish a profitable bid. Mr. Gordon testified that in his practice he creates  
a detailed spreadsheet to develop rates. Mr. Gordon testified that he could not find  
any documents related to how RSK developed its rates when he looked through the  
documents left behind by Mr. Konicek. The defendants allege that Mr. Konicek  
deliberately destroyed or took with him the documents which would have assisted  
RSK in creating the rates it set in its contracts.  
[177] The difficulty with the argument advanced by the defendants is that there is  
no evidence that Mr. Konicek ever used the sophisticated kind of system in  
developing rates which Mr. Gordon described. Mr. Konicek was not cross-examined  
on his method to develop rates. Neither Mr. Medeiros or Mr. Coleman were involved  
in developing rates for RSK contracts. Ms. Crewe testified that paper copies of the  
four KMP agreements RSK had were moved to the RSK main office from the KMP  
site office in the fall of 2015, and they were still there after the closing. Ms. Crewe  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 46  
recalls the binders being placed in boxes when the RSK office moved to trailers  
behind the shop at some point after the closing date.  
[178] There is no actual evidence that Mr. Konicek withheld anything from Vantown  
as it relates to costing. There is simply an assumption on the part of Mr. Gordon that  
Mr. Konicek must have done his costing in the same way Mr. Gordon did. In the  
absence of any evidence that Mr. Konicek did an elaborate costing analysis, I am  
not prepared to make a finding that Mr. Konicek withheld such costing documents  
from the defendants. In my view, it is just as likely and, having seen Mr. Konicek  
testify for a number of days, perhaps more likely, that Mr. Konicek had been  
developing costing in his mind for 30 years, had a good idea about what he needed  
to charge to make a profit, and simply translated his instinct and experience into a  
rate on a job proposal, without undertaking any kind of elaborate costing exercise.  
[179] I find the defendants have not proven that Mr. Konicek took any RSK  
documents without the consent and knowledge of Mr. Gordon, and have not proven  
that Mr. Konicek failed to disclose any financial or other business records.  
[180] The defendants also argue that Mr. Konicek wrongfully continued to operate  
an RSK bank account after the closing date, and wilfully retained a significant CRA  
refund that ought to have been received by RSK after the sale completed.  
[181] Mr. Konicek continued to operate Envision account 189001 after the closing.  
Mr. Konicek testified that Mr. Gordon agreed that Mr. Konicek could operate the old  
account to allow him to pay pre-closing supplier invoices. Mr. Konicek opened a new  
bank account for the new operators to use for the ongoing business of RSK, and  
made sure that they had cheques ready for use on that account when they took  
over.  
[182] Mr. Gordon testified that he did not agree Mr. Konicek could continue to  
operate an RSK bank account. He said that it was not appropriate for Mr. Konicek to  
have access to an RSK account after the closing, when he was no longer a director  
or shareholder of the company. Mr. Gordon testified that he contacted the account  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 47  
manager at Envision numerous times in an attempt to get the account shut down  
and ultimately, he had to threaten Mr. Konicek with legal action in order to get it shut  
down. The account manager was not called as a witness to corroborate this  
evidence, and no documents were produced which corroborated this evidence.  
[183] Mr. Leung testified he also spoke to the Envision account manager, but again  
his evidence was not corroborated by the account manager or any documentary  
evidence.  
[184] The version of events recounted by Mr. Konicek, however, is corroborated by  
documentary evidence. In July 2016, Mr. Leung wrote to Mr. Larmer expressing  
concern that if RK continued to use the RSK account, Mr. Leung would have  
difficulty accounting for activities in the account and making adjustments. In an email  
dated July 7, 2016, Mr. Larmer replied to Mr. Gordon and Mr. Leung as follows:  
If you remember, Ralph had left the original RSK bank account in operation  
and opened a separate new checking account for you, so as to simplify the  
accounting for old vs new AR and AP, taxes payable/ receivable, etc.  
Is this something that the bank has an issue with? If we can discuss, in order  
that I can properly explain the issue to Ralph, I will be happy to help.  
[185] The email from Mr. Larmer supports Mr. Konicek’s evidence that his use of  
the account was discussed with Mr. Gordon, and Mr. Gordon agreed with it. Further,  
there were no more email or other documents produced indicating that either Mr.  
Gordon or Mr. Leung had an issue with Mr. Konicek using the account, following Mr.  
Larmer’s explanation in July 2016. The only other email in evidence which mentions  
the Envision account is from Mr. Konicek to Mr. Gordon on October 19, 2016, where  
Mr. Konicek advises he has closed the old Envision account, which had a zero  
balance and no further transactions as of the latest bank statement.  
[186] With respect to the CRA refund, on September 21, 2016 a CRA refund in the  
amount of $549,697.23 was deposited to the Envision account 189001. At trial the  
defendants raised an issue with respect to Mr. Konicek’s receipt of this tax refund.  
No issue was raised in the pleadings regarding the tax refund, and Mr. Gordon  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 48  
under cross-examination could not identify any documents where a concern about  
the tax refund had been raised at any point.  
[187] Mr. Konicek testified that he understood the tax refund related to pre-closing  
tax and he was entitled to receive it. On June 24, 2016 the parties entered into a  
further agreement with respect to issues arising on the closing of the transaction. In  
that agreement, the parties acknowledged that RSK would declare a dividend  
payable to the plaintiffs in the amount of $427,029, which would be payable either 90  
days after closing or on the date RSK received its tax refund for the year ended May  
31, 2016.  
[188] In the final days before closing, the parties exchanged email discussing  
various matters, including tax liabilities and pre-closing liabilities. Mr. Larmer  
indicated to Mr. Leung and Mr. Gordon that the 90-day true-up period was intended  
to give time for all pre-closing liabilities and receivables to be addressed, and any  
final adjustments to the purchase price to be made.  
[189] On June 22, 2016 Mr. Gordon wrote to Mr. Larmer, copying Mr. Leung and  
the accountants Wolrige Mahon, stating:  
Should the 90 day post closing figures (or any bills presented prior to the 90  
days) reveal there is a liability for pre-closing activities then Ralph will be  
responsible for their immediate payment. If there is a surplus then in the  
same manner Ralph will receive the refund.  
[190] The email from Mr. Gordon is consistent with an understanding that the tax  
refund would be available to Mr. Konicek as part of the reconciliation process.  
[191] It is clear that the defendants knew the tax refund had been deposited, at  
least by November 21, 2016. On that date, Wolrige Mahon, the accountants  
engaged to assist in the true-up calculations required under the SPA, sent draft  
calculations to Mr. Leung which reflected the deposit of the tax refund to the  
vendors’ bank account. On December 22, 2016 Mr. Gessner wrote to Mr. Konicek  
attaching draft true-up calculations which included the same information about the  
tax refund. Mr. Gessner did not take issue with Mr. Konicek’s receipt of the tax  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 49  
refund. Rather, it was simply added to the calculations whereby the parties agreed to  
make any adjustments to the purchase price as set out in the SPA.  
[192] On February 3, 2017 Mr. Konicek wrote to Mr. Leung and Mr. Gordon  
regarding the net amount owing and stated:  
(d) I received the tax refund that was paid to RSK post closing, in the amount  
of $549,697.23, which exceeded the dividend payable ($427,029) and  
shareholder loan ($6,359) (total $433,388) which was payable to me or  
Jennic #60.  
(e) I understand that a total of $374,852 of closing date accounts receivable  
have been collected by RSK since Closing, and should have been paid to  
me. I have not received any of those amounts receivable. However, as the  
tax refund amount I received exceeded the dividend payable and shareholder  
loans payable to me (including my additional post-closing loan of $19,376),  
the excess amount of the tax refund can be set off against some of these  
accounts receivable, reducing the total amount of accounts receivable still  
payable to me.  
As a result, Vantown Invesco currently owes me $247,509. Also, once the  
additional $37,738 accounts receivable is collected by RSK, Vantown Invesco  
and RSK will owe me a net amount of $285,247, as set out in the "Schedule  
1" spreadsheet attached.  
[193] This email makes it clear that the receipt of the tax refund by Mr. Konicek was  
accepted by the parties and was added to the mix in determining the exact amounts  
owing to the plaintiffs under the SPA.  
[194] There is nothing in the evidence to support the assertion of Mr. Gordon and  
Mr. Leung that RSK was entitled to take the tax refund and add it to the working  
capital of RSK after the closing.  
[195] I find the position of the defendants in relation to the tax refund to be  
unsupported by the evidence, and simply a red herring introduced at trial.  
8.  
Failed to deliver RSK as a “turn-key” operation  
[196] The defendants argue that Mr. Konicek failed to deliver to Vantown a turn-key  
operation, and that RSK was not in a position to respond to even “as and when”  
enquiries for work, due to unsatisfactory maintenance of key equipment, lack of  
records, and the way the equipment was stored in the yard.  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 50  
[197] For the reasons already expressed, I do not agree that the defendants have  
proven the equipment was not in a reasonable state at the time of closing. I am also  
not satisfied the defendants have proven Mr. Konicek failed to ensure appropriate  
records were available for the new owners. I am not satisfied the defendants have  
proven the equipment was stored in an unreasonable manner, given the large  
volume of equipment returned to the site following the wind down of the KMP.  
[198] Work was being done by RSK, albeit at a much lesser volume than in years  
previously. However, that fact was known to the defendants at the time of purchase.  
RSK had a business office, a yard, a large volume of equipment, a strong  
relationship with RTA and other companies in the area, a small core of full-time  
employees, and access to a large number of staff which could be engaged if  
needed.  
[199] Mr. Leung testified that in the CIM, RSK was described as a turn-key  
platform, which he understood to mean the buyers would just walk in the door and  
“turn up the heat”. I do not accept that representations in the CIM are binding on the  
plaintiffs. The CIM expressly states that all representations will be made by RSK  
solely in a signed SPA. There is no reference to the term “turn-key” in the SPA or  
any of the associated contractual documents.  
[200] Further, Mr. Leung appears to have had no understanding of the business he  
was investing in. He appears to have assumed he was buying an operation not  
unlike a sandwich chain, with a ready market and customers lining up. What he was  
buying was a company that had the ability to bid on contracts in the future, in  
industries and regions where no business was guaranteed. RSK provided a platform  
for new business, but the new owners had to go out and get that new business. At  
no time did Mr. Konicek represent that any work was guaranteed for RSK.  
[201] I find that there was no enforceable representation made to the defendants  
that Mr. Konicek would deliver RSK as a “turn-key” operation. I am satisfied that  
RSK was a functioning business at the time of transfer.  
Konicek v. Vantown Infrastructure Invesco Inc.  
9. Conclusion on breaches of SPA  
Page 51  
[202] As discussed above, the defendants have not proven the facts necessary to  
support a finding that the plaintiffs breached the SPA.  
[203] Pursuant to Article 3.32 of the SPA, the plaintiffs warranted that, since the  
interim statement date (defined in the SPA as February 29, 2016) they carried out  
the business in the ordinary and normal course consistent with past practices, and  
there has not been a material adverse change in the business of RSK. This  
provision, however, is subject to the representations set out in Schedules 3.32 and  
3.37.  
[204] Article 3.37 of the SPA states that Schedule 3.37 sets out customers of RSK  
which purchased $25,000 of good or services, and suppliers which have provided  
supplies to RSK in excess of $5,000, all since March 31, 2014, and except as  
disclosed in Schedule 3.37 there has not been any material change in the business  
relationships with RSK.  
[205] Schedule 3.37 is the critical schedule with respect to the issues in this lawsuit.  
It sets out the customers and suppliers of RSK since March 31, 2014. This schedule  
clearly and unequivocally states:  
Customers  
Subsequent to March 31, 2014, RSK provided goods and services to the  
following customers. RSK currently has no ongoing commitments to  
provide goods or services to the following customers or any other  
person.  
1. ABB Inc.  
2. Bechtel Canada Co.  
3. Lander Gen. Power  
4. Rio Tinto Alcan  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 52  
Suppliers  
Subsequent to March 31, 2014, RSK acquired supplies from the following  
suppliers. RSK currently has no commitments to purchase supplies from  
the following suppliers or any other person.  
[List of 53 suppliers]  
[206] In addition to Schedule 3.37, Article 3.31 of the SPA expressly stated that  
RSK had no contract or arrangement for the provision or purchase of materials,  
supplies, equipment or services involving more than $5,000.  
[207] I find that the SPA was explicit on its face that RSK had no ongoing work with  
any person or customer at the time of sale.  
[208] The defendants seek to argue that the SPA can be read to represent to the  
buyers that there had been no material adverse change to the relationships RSK  
had with ABB Inc., Bechtel Canada Co., Lander General Power, and RTA since  
March 31, 2014. This is simply a construction of the SPA which cannot be borne out  
on the plain language of the agreement. Schedule 3.37 identifies those four  
companies as companies RSK worked with since March 31, 2014, but it also  
explicitly states that RSK has no current ongoing commitments to provide goods or  
services to any of them.  
[209] The defendants rely on Sattva Capital Corp. v. Creston Moly Corp., 2014  
SCC 53 [Sattva] for the proposition that the modern approach to contractual  
interpretation allows the court to look to the surrounding circumstances, or factual  
matrix, in which the contract was entered into. In particular, the defendants argue  
that the court ought to take into consideration the following in interpreting the SPA  
a) The SPA was for the purchase of the shares in RSK, not for the purchase  
of the assets of RSK;  
b) The Purchase Price significantly exceeded the value of the RSK assets;  
c) Mr. Konicek was expressly made aware that the Transaction was a highly  
leveraged acquisition;  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 53  
d) The underlying rationale behind the structure of the payment of the  
Purchase Price and the Deferred Payment Loan Agreement was that after  
the Closing Date, RSK would be generating enough revenue to enable  
Vantown to pay the Balance;  
e) RSK was promoted and represented as being a going concern and a  
turn-key operation, ideally positioned to take advantage of upcoming work  
projects;  
f) In the Vantown Letter of Intent, the purchase was subject to the condition  
precedent that there would be no material adverse change in the affairs of  
RSK after February 17, 2016;  
g) It was known to both parties that while Vantown did not expect KMP level  
revenues, they expected and would rely on revenues in the amount of at  
least pre-KMP levels;  
h) It was known to both parties that RSK had historically generated  
significant revenue from “as and when” work and that Vantown intended to  
rely on the same after the Closing Date.  
[210] While the court may look to the surrounding circumstances and  
considerations in the creation of an agreement, this does not mean that the court  
can elevate the subjective understandings and expectations of one party to the point  
that they override the plain language of the agreement. The court must strive to  
determine the mutual and objective understandings of the parties as expressed in  
the words of the agreement.  
[211] There is no dispute that the parties agreed to a share purchase, and not an  
asset purchase. However, there is no evidence that the purchase price far exceeded  
the asset value of RSK. While RSK was actively working on the KMP, it entered into  
preliminary discussions with a number of potential buyers, all of which engaged  
Mr. Gordon in one way or another. Mr. Gordon would have known that the purchase  
price offered by Sibbick Group in November 2014 of $25,000,000 to $28,000,000,  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 54  
followed by an offer from NBC Servco in January 2015 of $25,000,000, which then  
dropped to $18,000,000 with Hillcore in May 2015, and then dropped to $11,500,000  
in August 2015 with Orestone, and dropped further with Orestone in October 2015 to  
$8,500,000.  
[212] When Vantown made the offer of $7,900,000 it was a fraction of the value of  
the offers from Sibbick and NBC Servco in 2014 and early 2015 when RSK was  
earning significant revenue from the KMP.  
[213] Mr. Konicek testified that in his opinion the value of the RSK assets was  
approximately $7,900,000. He referred to an asset list he prepared on March 1,  
2016 which valued the assets at $7,890,000, and a December 1, 2015 asset list  
which valued the assets at $7,880,000. The defendants produced no evidence to  
contradict the values asserted by Mr. Konicek. The reasonableness of the  
equipment values Mr. Konicek set out on the asset list was demonstrated by the sale  
of two large trucks in 2016 for amounts slightly higher than the values attributed by  
Mr. Konicek on his asset list.  
[214] The defendants have not proven that the purchase price under the SPA  
significantly exceeded the value of RSK assets.  
[215] The circumstances which the defendants outline relating to the highly  
leveraged nature of the transaction, and the rationale under the DPLA that RSK  
would earn sufficient revenue to pay the remainder of the purchase price when it  
became due are, in my view, considerations internal to the buyers. It is not  
incumbent on the vendor to protect the buyers from the financial decisions they  
made when buying the business. The vendor is entitled to assume that the buyer  
has done its due diligence and assessed it has the ability to make good on its  
obligations. I do not agree the evidence supports a finding that the plaintiffs agreed  
they had an obligation to ensure that RSK had sufficient future revenue to allow the  
defendants to meet the financial obligations they agreed to in the SPA.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 55  
[216] I have earlier dismissed the defendants’ allegation that RSK was represented  
as a “turn-key” operation in the SPA.  
[217] The defendants rely on language in the letter of intent to argue that there was  
a representation that there was no material adverse change in the operations of  
RSK since February 17, 2016. However, the letter of intent expired March 31, 2016  
and is not a relevant agreement for that reason alone. In addition, the letter of intent  
is expressly superseded by the SPA pursuant to Article 1.6 of the SPA, and the clear  
language of the SPA states that there is no work with any of the four large  
companies RSK previously contracted with, and no arrangements for any provision  
of goods and services over the value of $5,000. I find the defendants are not entitled  
to rely on the letter of intent to override the clear language of the SPA.  
[218] With respect to the circumstances outlined by the defendants in relation to  
their reliance on revenue at pre-KMP levels, and significant as and whenwork,  
such assertions are contradicted by the plain language of the SPA, and I decline to  
give any weight to them.  
[219] I conclude that the plain language of the SPA governs the obligations  
between the parties. In coming to this conclusion, I reject the circumstances relied  
on by the defendants which are either purely the subjective understandings and  
intentions of the defendants, or are contradictory to the plain language of the SPA. I  
also take into consideration the relevant circumstances which are consistent with the  
plain language of the SPA and the clear objective understandings and intentions of  
all parties to the agreement. These circumstances are referred to throughout these  
reasons, and include the following:  
a) On January 18, 2016 Mr. Larmer wrote to Mr. Leung, Mr. Gessner and  
Mr. Gordon advising:  
Ralph makes no warranties about future revenue for the company. Given  
that you are getting the business for just over its orderly liquidat-able  
value, financial performance wouldn’t be a determinant in a valuation for  
the company. If it were and we were basing it on revenue of $1.8MM per  
month (at 20% EBITDA margins), the value of the company would far  
exceed what is being paid.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 56  
b) On January 20, 2016 Mr. Leung wrote to Mr. Larmer, copying Mr. Gessner  
and Mr. Gordon, stating:  
…we have done only limited due diligence on RSK and like you said  
there is no warrants on performance from revenue to EBITDA.  
c) On January 26, 2016 Mr. Leung wrote to Mr. Gessner and Mr. Gordon,  
copying his wife, stating:  
1. There is no warrant on the revenue and EBITDA from the vendor.  
2. The accounting system cannot provide monthly financials for us to  
analyse their monthly revenue vs expense, business cycles and trends.  
3. There are no contracts with any customers to guarantee some amount  
of revenue over a period of time.  
4. We rely on the due diligence from the other buyers that failed to close  
the deal.  
d) On April 2, 2016 Mr. Gordon wrote to Mr. Larmer seeking to restructure  
the deal to “allow adequate working capital to grow the company in this  
downturn period.”  
e) On April 3, 2016 (three weeks before the SPA was made) Mr. Gordon  
wrote to Mr. Konicek and Mr. Cunningham of Sequoia, copying  
Mr. Gessner and Mr. Leung, stating,  
Due to recently learning that the revenue has diminished so much we now  
feel that we are undercapitalized. We could not have anticipated this  
before seeing the figures when the SPA schedules were presented.  
We need to keep our immediate repayments to a minimum to close the  
gap over the next six months, hence the need for us to present the new  
structure to you.  
f) On April 12, 2016 (two weeks before the SPA was made), Mr. Leung  
wrote to Mr. Larmer, copying Mr. Gordon and Mr. Gessner expressing his  
view that Mr. Konicek violated the letter of intent (which had expired on  
March 31, 2016) because revenues had fallen so dramatically, stating that  
the “RSK lawyer disclosed the operation basically is shut”, and stating,  
It was through the disclosure requirements from our lawyer to know RSK  
revenue dropped to a meagre $60,000 revenue figure from $400K+ in  
Feb.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 57  
g) On April 21, 2016 (six days before the SPA was made), in discussing the  
anticipated revenue from the sale of the two trucks and the freeing up of  
$300,000 in capital, Mr. Gordon stated to Mr. Larmer,  
The extra $300k gives us an essential addition to our working capital pool  
and thus more stability for the company in these slower months.  
h) On April 22, 2016 (five days before the SPA was made), Mr. Gessner  
wrote to Mr. Larmer addressing some last-minute negotiations regarding  
where the proceeds of the sale of the trucks would be directed, and  
whether the whole deal was no longer on the table. Mr. Gessner ended  
the email chain stating,  
If the equipment was off the table before I can't see why it can't be off  
again. I guess you are dealing with principles but I'm dealing with  
business [survival]. It's scary business no customers just forecasts [and]  
future considerations. I [am] trying to get us through for the first 6 months  
with an assumption of no income hence it means we all [inject] personal  
cash resources.  
[220] I also take into account the undisputed evidence that at no time before June  
19, 2017, almost one year after the defendants took over RSK, did any of the  
defendants raise any concerns with the operations of RSK, the records of RSK, the  
process of the true-up accounting, or the obligation of the defendants to pay the  
outstanding purchase price.  
[221] I find that the defendants knew before they entered into the SPA that the  
volume of work with RSK had dramatically dropped off since prior years, that there  
were no ongoing agreements or arrangements to provide services to any person,  
including the major prior customers of RSK, that there were no arrangements in  
place to provide services over $5,000 to any person, and the defendants executed  
the SPA knowing that there was a possibility of no revenue from the business at all  
for at least six months.  
[222] I find that the plaintiffs did not breach the SPA as alleged by the defendants,  
or at all.  
Konicek v. Vantown Infrastructure Invesco Inc.  
C. Did Mr. Konicek make any fraudulent misrepresentations?  
Page 58  
[223] The defendants allege numerous false representations of fact in their closing  
submissions. The plaintiffs argue that the defendants are foreclosed from raising  
many of the allegations as they were not pleaded by Vantown. The plaintiffs refer to  
an agreement reached between counsel wherein they agreed that, following delivery  
of demands for particulars, the scope of the defence and counterclaim would be  
narrowed as set out in the responses to those demands. I was provided with an  
exchange between counsel which I agree confirms the agreement reached.  
[224] I find that the defendants cannot raise in argument any allegations of false  
representations which were not articulated before trial in accordance with the  
agreement of counsel. While counsel for the defendants made a valiant attempt to  
bring the alleged false misrepresentations within the pleadings, I cannot agree with  
most of his submissions. As a result, the defendants may only raise the following  
allegations of false representations of fact:  
a) RSK had been operated only in the ordinary and normal course consistent  
with past practice (SPA Article 3.32),  
b) There had been no material adverse change in the condition (financial or  
otherwise), assets, liabilities, operations, earnings or Business of RSK  
(SPA Article 3.37),  
c) There has not been any material adverse change in the business  
relationship between any customer listed in Schedule 3.37 of the SPA and  
RSK (SPA Article 3.37), and  
d) RSK’s equipment was ready to roll on short notice.  
[225] As I have already determined that the plaintiffs did not breach the above  
noted provisions of the SPA, it follows that I also find that the plaintiffs did not make  
the alleged false representations of fact.  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 59  
[226] With respect to the allegation that RSK’s equipment was not “ready to roll on  
short notice”, I have already found that the defendants have not proven the  
equipment was not in a proper state of at the time of sale. The evidence was that the  
equipment was being maintained in the ordinary course, and equipment was  
operational and being used on jobs at the time of closing. I find that the plaintiffs  
made no false representations of fact in relation to the equipment.  
[227] The defendants also argue that the plaintiffs were required to disclose a  
number of specific facts to correct a false impression. These submissions relate to  
the allegation that the plaintiffs made fraudulent misrepresentations through  
omission. Again, the defendants are restricted in raising new issues that were not  
raised in their pleadings. In argument the defendants allege the following facts which  
could arguably fall within their pleadings:  
a) Mr. Konicek had not taken, and did not intend to take, any steps to have  
RSK pre-qualified or pre-registered for projects advertised as potentially  
available in the CIM and the Current Obligations/Opportunities Letter,  
b) In 2016, not only did RSK only have 3 “employees”, RSK also did not have  
any craft labourers or any personnel qualified to operate machinery, and  
c) Generally, that RSK would not be a turn-key operation at the Closing  
Date.  
[228] I have already addressed the allegation that Mr. Konicek did not take steps to  
pre-register for projects and I determined that Mr. Konicek did in fact pre-register for  
opportunities that were available to RSK.  
[229] The SPA clearly stated that there were only three employees in RSK at the  
time of the sale. Two weeks before the SPA was made, Mr. Gordon was sent the  
employee list for RSK which identified 3 daily workers, 14 “sporadic” workers, and up  
to 40 workers that were available to be brought back to operate equipment and  
provide labour as required. Mr. Konicek testified that his normal practice was to hire  
for jobs as they came up from his list of past workers, and RSK did not maintain a  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 60  
large full-time staff. I find that Mr. Konicek properly disclosed the employees of RSK  
to the defendants.  
[230] There is no allegation in the pleadings that RSK would be a “turn-key”  
operation. However, the pleadings allege that the plaintiffs represented RSK was a  
“going concern” operation.  
[231] The defendants rely on several answers given by Mr. Konicek in his  
examinations for discovery where he agreed with a question put to him to the effect  
that as of the closing date RSK was not a going concern. Mr. Konicek explained at  
trial that he understood the phrase “going concern” to mean a “profitable” company.  
Mr. Konicek agreed at trial that “the business of the company was not going in the  
direction of being profitable at the time of the sale” to Vantown. This admission by  
Mr. Konicek does not negate the fact that the financial situation of RSK in 2016 was  
made clear to Vantown repeatedly, as documented in the many email which discuss  
the downturn in revenue and the fact that the SPA was explicit that there were no  
contracts for ongoing work.  
[232] While the exact intended meaning of “going concern” in the pleadings is not  
clear, I have determined that RSK was a functioning business at the time of the  
transfer. It was a company which had just completed a substantial project and was  
available for new work. I am satisfied that RSK provided the buyers with a strong  
platform to grow their business, but that the responsibility of obtaining work  
consistent with their vision fell to the buyers, and not the vendors. RSK and  
Mr. Konicek had no control over which third-party projects would proceed, or how  
quickly such projects would proceed. There was no evidence that work that was  
available to RSK was not pursued by Mr. Konicek.  
[233] While I have not addressed many of the failures to disclose alleged by the  
defendants, I agree with the submission of the plaintiffs to the effect that the due  
diligence process managed by Sequoia was driven by the buyers. It was up to the  
buyers to ask Sequoia to obtain all the information they deemed necessary to  
assess the history and performance of RSK. There was no evidence that the  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 61  
plaintiffs withheld any information when such requests were made during the due  
diligence process.  
[234] I find that the defendants have not established that any fraudulent  
representations were made by the plaintiffs, either by commission or by omission. A  
finding that a party made a representation which is false in fact is a prerequisite to  
any finding of fraudulent misrepresentation. Having found that no such false  
representations were made by the plaintiffs, it is not necessary to engage in an  
analysis of the remaining elements of the claim.  
D.  
Are the plaintiffs liable in equitable fraud?  
[235] The defendants alleged no additional facts to support a claim in equitable  
fraud beyond those facts alleged in relation to fraudulent misrepresentation. I find no  
basis upon which the defendants have established a claim in equitable fraud.  
E.  
Did the plaintiffs breach a duty of good faith owed to the  
defendants?  
[236] The defendants argue that the plaintiffs breached the duty of good faith owed  
to them as a contracting party by failing to disclose material facts and by deceiving  
or misleading Vantown with respect to the status of the ongoing operations of RSK.  
The particulars of the alleged dishonesty are the same as have already been  
referred to in relation to the other claims discussed above. For the reasons I have  
already given, I find the defendants have not proven any of the allegations which are  
foundational to the claim of breach of duty of good faith. As such, I find no basis  
upon which the defendants have established a claim in a breach of duty of good  
faith.  
F.  
Are the defendants entitled to any damages which must be set off  
against amounts owing to the plaintiffs under the SPA and its  
associated agreements?  
[237] Having found no breaches of the SPA, no fraudulent misrepresentations, no  
equitable fraud, and no breach of a duty of good faith, there is no basis upon which  
the defendants would be entitled to damages.  
     
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 62  
[238] In addition, the defendants have failed to provide any evidence which would  
support a claim in damages. The defendants have not established the revenue  
earned from RSK operations in the year following the transfer. Mr. Medeiros  
confirmed that RSK continued to get work after the transfer, and Mr. Gordon testified  
that the work from RTA “snow balled”. No documents relating to such work were  
provided in evidence. Without knowing what RSK earned, the court is not in a  
position to determine if RSK suffered any loss.  
[239] The defendants did provide financial statements prepared by Mr. El-Bakri of  
Ernst & Young, but these financial statements were produced on a  
review-engagement basis, attaching management-prepared financial statements. I  
was not satisfied with the answers provided by Mr. El-Bakri as to the work he did. He  
was not responsive to questions asked regarding the steps he took to review the  
management-prepared information. He was unable to comment on the accuracy of  
the figures set out in the financial statements.  
[240] The business of RSK was described on the financial statements as  
“excavation rentals, providing the other companies within the Servco Canada Group  
access to a large, modern and well-maintained fleet of equipment”, which  
Mr. El-Bakri understood to describe the business of RSK from June 24, 2016 to May  
31, 2018.  
[241] Further, the financial statements describe Lander General Power &  
Equipment Ltd., along with the Servco entities, as related parties such that the value  
of transactions between them are not necessarily at fair market value.  
[242] Given that the business of RSK is described as providing services to related  
parties, and there is no requirement that related party transactions reflect fair market  
value, the usefulness of the RSK financial statements post the transfer is limited.  
[243] No witnesses for the management of RSK testified as to the actual revenue or  
contracts entered into by RSK, or the truth of the management-prepared financial  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 63  
statements. As such, if damages were to be assessed, I would place little to no  
weight on the financial statements prepared by Ernst & Young.  
[244] The defendants produced a schedule of monthly revenue and gross profit for  
the 12 months after closing. No back up documents were provided and, therefore,  
an assessment of the sources of revenue, including the underlying contracts or  
projects, cannot be assessed. Further, the revenue and profit figures are subject to  
the same frailties discussed above in relation to the financial statements. However,  
even if these figures were accepted on their face, they show monthly revenues  
exceeded $200,000 by December 2016, and by April 2017 monthly revenues were  
close to $600,000. These figures do not support the assertions of the defendants  
that there was no work at all for RSK following the transfer to the new owners.  
[245] The defendants also failed to prove that there were market opportunities  
which RSK ought to have bid for, but did not, due to a failure on the part of  
Mr. Konicek, or as a result of not having the manpower, equipment, or any other  
feature of the business which the defendants say they bargained for.  
G.  
What amounts, if any, remain payable by Vantown to the plaintiffs  
under the SPA and its associated agreements?  
[246] Pursuant to the SPA, the consideration payable by the purchaser was:  
a) $7,900,000, and  
b) An amount equal to the Accounts Receivable at the Closing Time.  
[247] The consideration was subject to a further adjustment on account of working  
capital and indebtedness of RSK on the closing date, and on account of accounts  
receivable assigned to the vendors.  
[248] $5,000,000 was paid on the closing date. The remaining $2,900,000, plus any  
working capital adjustment, would be the “deferred payment amount” which would  
be payable under a deferred payment promissory note (“Note”) and DPLA. The Note  
confirmed the obligation of Vantown to pay $2,900,000 plus interest of 4.5% per  
 
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 64  
annum, compounded monthly, and it was subject to the DPLA. A second promissory  
note secured the accounts receivable owing to the plaintiffs.  
[249] The DPLA was executed by both plaintiffs, and Vantown, RSK and  
Mr. Leung. It required six quarterly payments of principal in the amount of  
$483,333.33, beginning on January 1, 2017. Accrued unpaid interest was payable  
with each quarterly payment of principal.  
[250] Vantown made no payments of principal or interest under the DPLA at any  
time.  
[251] At trial, the parties agreed that the working capital adjustment under the SPA  
resulted in an additional payment to the plaintiffs of $69,021.75. They also agreed  
that RSK owed the plaintiffs $427,029 in relation to a dividend declared prior to the  
closing, and $6,359 in relation to a shareholder loan amount owing to the plaintiffs.  
[252] The plaintiffs claim $1,575 is owing to them in relation to costs incurred in  
preparing the June 24, 2016 financial statements. The purchaser had the obligation  
under the SPA to deliver a final statement pursuant to Article 2.4(f). The final  
statement referred to in the SPA was to set out a detailed calculation of all  
adjustments to the purchase price. I am satisfied that the creation of financial  
statements as at the date of closing were necessary to complete the final statement  
referred to in Article 2.4(f). I agree with the plaintiffs that this cost is to be borne by  
Vantown.  
[253] On May 17, 2016 Vantown and the plaintiffs agreed that Mr. Konicek/RSK  
was authorized to sell two trucks which had been listed as assets of RSK. The  
parties agreed that the two trucks would be removed from the list of equipment in  
Schedule 3.35 of the SPA. The parties agreed that the plaintiffs would pay to  
Vantown the values for the trucks as listed in the SPA, namely $120,000, plus 5%  
representing GST, for a total of $128,325. The plaintiffs would assume the risk on  
the sale of the trucks and receive the full value received on the sale. I agree with the  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 65  
plaintiffs that $6,675 on the sale of the trucks, as received by RSK on the completion  
of the sales, was owed to the plaintiffs.  
[254] The closing accounts receivable balance under the SPA, owing to the  
plaintiffs as of April 12, 2021 was $311,362.32, as agreed between the parties.  
[255] Following the closing, Mr. Konicek maintained the RSK account 189001 at  
Envision until November 2016. Over that period of time, RK received a net amount  
of $557,717.91 on account of post-closing transactions. The plaintiffs agree that  
these funds must be taken into account in determining the final amounts owing.  
[256] The plaintiffs argue the following amounts totalling $510,659.75, owing to the  
plaintiffs by the defendants, ought to be credited against the $557,717.91 received in  
account 189001. I agree. From the $557,717.91 the following will be credited:  
a) Working capital: $69,021.75  
b) Dividend declared in favour of Jennic prior to closing: $427,029  
c) Shareholder loan payment: $6,359  
d) Cost of preparing the June 24, 2016 financial statements: $1,575  
e) Outstanding payment in relation to the two trucks: $6,675  
[257] Once these deductions have been made, $47,058.16 remains owing to  
Vantown from the $557,717.91 received by the plaintiffs into the Envision account.  
[258] The accounts receivable balance owing by Vantown to the plaintiffs is agreed  
to be $311,362.32. The plaintiffs submit that the $47,058.16 owing to Vantown ought  
to be credited against the accounts receivable balance. I agree. This leaves  
$264,304.16 in accounts receivable owing by Vantown to the plaintiffs.  
[259] In the result, Vantown is liable to pay the following to the plaintiffs:  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 66  
a) $2,900,000 plus interest at 4.5% per annum, compounded monthly, from  
June 24, 2016 to the date of judgment; and  
b) $264,304.16 of accounts receivable, plus interest pursuant to the Court  
Order Interest Act, R.S.B.C. 1996, c. 79, from January 1, 2017 to the date  
of judgment (the “Redemption Amount”).  
H.  
Are the guarantees granted by RSK and Paul Leung, and the  
mortgage granted by Paul and Amy Leung, valid?  
1.  
RSK/Paul Leung Guarantees  
[260] Both RSK and Mr. Leung executed separate, but identical guarantees  
containing the following language:  
1.01 Guarantee  
The Guarantor hereby unconditionally and irrevocably guarantees payment of  
all the debts and liabilities, present or future, direct or indirect, absolute or  
contingent, matured or not, at any time owing by the Obligor [Vantown] to the  
Lenders [the plaintiffs] or remaining unpaid by the Obligor to the Lenders  
pursuant to the deferred payment loan agreement made as of June 24, 2016,  
as amended from time to time (the "Deferred Payment Loan Agreement"),  
between, inter alia, the Obligor and the Lenders and pursuant to each of the  
security documents and other documents from time to time delivered to the  
Lenders in connection with the Deferred Payment Loan Agreement (together  
with the Deferred Payment Loan Agreement, the "Finance Documents"),  
including the amount of any judgment or award made against the Obligor for  
the benefit of the Lenders in connection with the Finance Documents  
(collectively, the "Obligations").  
[261] It is clear that the SPA is a document delivered in connection with the DPLA.  
The DPLA secures an obligation set out in the SPA itself, the DPLA is a schedule to  
the SPA, the recitals in the DPLA refer to the SPA, and the DPLA adopts terms from  
the SPA. Any other interpretation would be nonsensical. I find the SPA is a Finance  
Document, as defined in s. 1.01 of the RSK and Leung guarantees.  
[262] RSK did not argue that the RSK guarantee was invalid, or secured some  
obligation unrelated to the SPA. I find RSK is liable to pay the Redemption Amount.  
[263] Mr. Leung argues that the solicitors for the plaintiffs prepared the guarantee,  
and had an obligation to obtain a certificate of independent legal advice ensuring  
   
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 67  
that Mr. Leung understood the nature of the obligations contained in the guarantee.  
In the absence of such a certificate, Mr. Leung argues the guarantee is not valid. In  
addition, Mr. Leung argues that he was induced to enter into the transaction by the  
fraudulent misrepresentations made by Mr. Konicek, and therefore the entire  
transaction including the guarantee should be invalidated and cancelled by the court.  
Mr. Leung made a number of submissions in relation to unconscionability and undue  
influence. Other than the allegation that Mr. Konicek made false representations,  
none of these submissions are founded on Mr. Leung’s pleadings. Parties are not  
entitled to raise entirely new defences at trial. Nevertheless, the evidence at trial  
would not support these submissions, even if they could be advanced.  
[264] In June 2016 Mr. Leung was directly involved in reviewing the guarantee with  
the solicitors for Vantown. He reviewed drafts of both the RSK guarantee and the  
Leung guarantee. At no point did he appear to misunderstand what was being  
presented to him. He raised concerns and received black lined documents reflecting  
various changes.  
[265] On June 21, 2016, Mr. and Mrs. Leung attended at the offices of the solicitors  
for Vantown to execute all documents required by the transaction, including the  
guarantee signed by Mr. Leung. The senior lawyer was Mr. Gangji, and the junior  
lawyer was Mr. Lotz. Mr. Lotz testified that at that meeting, the need for independent  
legal advice was raised with the Leungs by Mr. Gangji. Both lawyers confirmed they  
acted for Vantown, and not the Leungs personally. Mr. Lotz recalled Mr. Gangji  
advising the Leungs that they should get independent legal advice, but if they did not  
a waiver would be required.  
[266] Mr. Leung testified that he did not recall any discussion at the meeting about  
independent legal advice. He initially testified about various memories about the  
meeting, but then when presented with his discovery transcript where he stated he  
had no memory of the meeting, Mr. Leung conceded that he remembered no details  
about the meeting.  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 68  
[267] On June 22, 2016, Mr. Ganji wrote an email to Mr. Leung stating:  
Paul and Amy,  
As we have discussed, while we have been involved in the negotiation of the  
Deferred Payment Loan Agreement, the Leung Guarantee and the Leung  
Mortgage and other matters related to the Deferred Payment Loan  
Agreement we have only represented Vantown Infrastructure Invesco Inc.  
(the Company”) and the interests of the Company. We have not represented  
either of you in this transaction personally. As a result, and as has been  
previously discussed (including yesterday) and included on the Agenda,  
Vendors’ counsel would like for both of you to obtain certificates of  
independent legal advice. This would involve having both of you sit down with  
another lawyer, whom we can connect you with, and having them walk you  
through what you are agreeing to as a part of the transaction involving the  
purchase of RSK by the Company. We understand that you would like to  
push back on this front and not obtain a Certificate of Independent Legal  
Advice and would instead like to sign a waiver. Please confirm this is your  
position and that you would like us to convey this to Vendors’ counsel.  
As we have discussed before, you should obtain independent legal advice  
before entering into the Deferred Payment Loan Agreement, the Leung  
Mortgage and the Leung Guarantee in order to make sure their terms are  
reasonable, and to among other things, ensure that you are familiar with the  
rights and liabilities thereunder. We can prepare waivers indicating that you  
have been advised as such and that you have had the opportunity to seek  
independent legal advice and have either done so or decided to proceed  
without doing so.  
Happy to discuss should you have any questions.  
[268] In a second email the same day, Mr. Ganji wrote to Mr. Leung sending forms  
of waivers of independent legal advice, and advising that it was still open to the  
Leungs to seek independent legal advice before signing the waivers.  
[269] On June 23, 2016, Mr. Leung wrote to the plaintiffs’ representative, Mr. Chris  
Larmer, the following:  
There is no need for independent advice. Amy and I both are on the board of  
director of Vantown, the acquisition vehicle. Also she is the director and CFO  
and I am the Chairman and CEO of Empower Technologies Corporation, a  
TSXV listed company. Thanks.  
[270] I am satisfied that Mr. Leung was well aware of the opportunity to obtain  
independent legal advice, having been advised of that right in various email and by  
the Vantown lawyers before the documents were signed on June 21, 2016.  
Mr. Leung chose to waive that opportunity. While he did not sign the form of waiver  
prepared by counsel, I am satisfied that in his email of June 23, 2016 Mr. Leung  
Konicek v. Vantown Infrastructure Invesco Inc.  
Page 69  
clearly expressed his waiver of independent legal advice on his part and on the part  
of Mrs. Leung.  
[271] For the reasons already expressed, I do not find that Mr. Konicek obtained  
Mr. Leung’s consent to the transaction through fraudulent misrepresentations or  
equitable fraud. I find the Leung guarantee is enforceable against Mr. Leung for the  
Redemption Amount.  
2.  
The Leung Mortgage  
[272] The Leung guarantee is secured by a mortgage over the family home owned  
in joint tenancy by Mr. and Mrs. Leung.  
[273] Mrs. Leung did not provide a personal guarantee for any obligations  
contained in the SPA or its related financial documents. Her only obligation in this  
litigation arises from the mortgage she executed on June 21, 2016 before Mr. Lotz.  
The only recourse the plaintiffs have against Mrs. Leung is with respect to her  
interest in the family home.  
[274] Mrs. Leung argues that she was not provided with all relevant documents at  
the time she executed the mortgage, that she was under undue influence when she  
signed the mortgage, and that she did not have the opportunity to seek independent  
legal advice. Mrs. Leung did not plead that she was unduly influenced to sign the  
mortgage, or that she did not have the opportunity to seek independent legal advice,  
and she cannot raise these issues for the first time at trial. Nevertheless, the  
evidence would not support such defences.  
[275] Mrs. Leung has a bachelor’s degree in accounting, and speaks and  
understands English. After she obtained her degree, she worked in accounting for a  
number of years at different companies, although she does not have an accounting  
designation. In 2003 she was appointed a director of a company known as Empower  
Technologies Corporation. On March 2, 2016 she became a director of Vantown,  
along with Mr. Leung and Mr. Gordon.