I don’t know enough about golf to begin with an appropriate golf reference, so please insert whatever the golf equivalent of “catch-up football” is here, because that’s what I’m playing—I missed the Notice of Defence filed by the defendants in a lawsuit launched by the Atlantic Canadian Opportunities Agency (ACOA) back in June.
ACOA is suing Ben Eoin Golf Club Limited and 3324714 NS Limited, a company connected to Ben Eoin Development Group Inc (BEDGInc), saying it never approved the sale of The Lakes Golf Club to BEDGInc and, as a result, is entitled to redeem its remaining Class “A” preference shares in the club and collect arrears worth $61,077.86 for “overdue redemption and dividend amounts based on the distributable income for 2016 and 2018.” The total sought is $3,494,972.66.
The Lakes at Ben Eoin, Hole 17. (Source: The Lakes at Ben Eoin)
I wrote about the lawsuit in exhaustive detail back in July, but was prompted to go back and inquire if the defendants had filed a Notice of Defence by a reader who’d heard a rumor the case had been settled out of court. ACOA refused to comment on that rumor, saying the matter remains before the courts (which would seem to suggest it hasn’t been settled out of court, but I wouldn’t take that as definitive). Typically, I’m told, when a lawsuit is settled, the Plaintiff files a Notice of Discontinuance, and as of this week, none had been filed.
But the Notice of Defence was (I’ve attached it below) and it’s worth a look.
Undue delay?
It was filed on 15 August 2022 by Tony W. Mozvik of The Breton Law Group (now McInnes Cooper) on behalf of Ben Eoin Golf Club Limited (“Defendant #1”) and 3324714 NS Limited (“Defendant #2”).
The boards of the two companies are the same, they look like this:
- Rodney Colbourne
- Mike Kenny
- Siva Thanamayooran
- Troy Wilson
- Steve MacDougall
According to Mozvik’s version of the story, in late December 2019, Colbourne et al informed ACOA that the golf course’s shareholders had agreed to give them ownership of the course in return for their taking over all the course’s liabilities.
The new owners “repeatedly” offered ACOA the same “equity position” it had held in the golf club under the original owners, but “the plaintiff would not agree” to this proposal.
They went ahead with the deal anyway, without permission from ACOA because:
Clause 14 [of the Equity Investment Agreement between ACOA and the original golf club owners] permits for a transfer of Assets without the written consent of the Plaintiff where the Assets were immediately replaced by comparable Assets of equal or greater value.
Mozvik argues that the new owners’ “capital infusion” into an “otherwise bankrupt business” improved ACOA’s position with respect to its preferential shares, so there was no violation of any agreement between the parties.
The document then accuses ACOA of acting in bad faith:
They were offered the same equity position in a better funded company and decided not to cooperate.
Finally, Mozvik argues that because the transaction took place on 29 May 2020 and ACOA didn’t file its Statement of Claim until 2 June 2022, the agency violated the Limitation of Actions Act. (The original Notice of Defence dated the Statement of Claim to 2 June 2021 but Mozvik filed an amended notice with the correct date.)
Mozvik then writes:
Defendant #1 and Defendant #2 rely and plead the doctrine of latches.
I found this very confusing and even when I realized “latches” was a typo—it’s the doctrine of laches—I still had to resort to Google to discover that it refers to an “undue delay in asserting a legal right or privilege” or a “failure to bring a legal claim in the proper, or a reasonable, time.” (If this were a TV courtroom drama, I bet that typo would be enough to sink the defendants’ case, but as this is real life, I’m guessing it’s not.)
Mozvik ends by asking the court to dismiss the claim against the defendants “with costs directed towards the Plaintiff.”
But wait…
On 26 August 2022, ACOA amended its Notice of Action, adding the following line:
33. ACOA pleads and relies upon the Limitations of Actions Act, S.N.S. 2014.c.35. and more particularly sections 5, 8, 9, and 10 thereto.
Section 8 of the Act states that, “unless otherwise provided,” a claim may not be brought after the earlier of:
(a) two years from the day on which the claim is discovered; and
(b) fifteen years from the day on which the act or omission on which the claim is based occurred.
But Section 10 deals with exceptions to these general limitation periods and states that Section 8 does not apply to a proceeding:
(a) to recover money owing to Her Majesty in respect of
(i) fines, taxes or penalties, or
(ii) interest on fines taxes or penalties
(b) commenced by Her Majesty or an agent of Her Majesty in respect of a claim relating to the administration of a social, health or economic program; or
(c) commenced by Her Majesty or an agent of Her Majesty to recover money owing in respect of student loans, awards or grants.
It will be interesting to see how a judge rules on this, if the lawsuit actually does go to court, but as of Monday, there were no scheduled court dates in this matter. It’s worth bearing in mind, though, that this is public money we’re discussing—ACOA’s shares in the Ben Eoin Golf Club were purchased with public money and public money is funding this lawsuit.
I don’t know about you, but I can think of a lot better uses for public money.
Amended Notice of Defence
