How COVID and wildfires convinced a judge not to foreclose on a Kelowna property
A B.C. judge has granted a Kelowna property owner more time to secure financing after she successfully argued that the COVID pandemic, along with the wildfires and flooding, had devastated her business and caused her to miss mortgage payments.
Supreme Court Justice Gary Weatherill said the case had "unique circumstances" and that to allow the sale of the $3 million property to be sold for $750,000 less than the assessed value would constitute a miscarriage of justice.
The details are laid out in a June 7 B.C. Supreme Court decision and the case dates back to November 2019 when Lorraine Davidson used some inheritance from her mother to purchase the heritage property, the Cadder House, on Pandosy Street, Kelowna.
She paid $2.78 million for the property which consisted of seven townhouse units near the Cancer Clinic.
Davidson's plan was to rent the units on Airbnb would generate "substantial" income largely from people wanting to be close to the Cancer Clinic.
However, just a few months after the purchase, the pandemic hit, followed by wildfires and then later floods that caused road closures which had a significant impact on travel to Kelowna.
Davidson then struggled to rent the units and the two mortgages she held fell behind.
Accepted Financial, which held one of the mortgages, started foreclosure proceedings against Davidson.
Davidson then listed the property for $3.7 million but failed to find a buyer.
The bank then took over the sale and found a buyer, Davara Holdings, with a $2.25 million offer.
However, Davidson wasn't happy with the proposed sale price and headed to court to block the sale.
Much of the court decision is given to finer details of foreclosure law and what rights different parties have when a sale is pending.
Days before the court hearing to block the sale Davidson was told she would receive an MS Teams link to attend her court appearance virtually.
However, Davidson never got the link and missed the hearing.
The court then granted an order approving the sale.
READ MORE: Kamloops Mountie back on the hook over McDonald's burger incident
On May 5, one day before the closing date for the sale, Davidson headed back to court in a last ditch effort to block it.
Davidson argued she was now in a position to bring the mortgage up to date and if the court didn't block the sale she would lose all her mother’s inheritance and all her savings.
The prospective buyer, Davara Holdings, argued Davidson couldn't block the sale as she purposely failed to turn up to the hearing.
However, Justice Weatherill disagreed.
"For reasons beyond her control she could not attend because she did not receive the MS Teams link," the justice said.
The justice continued to say that Davara Holdings stood to gain property at a price well below assessed value, although Davidson was now in a position to bring her mortgages up to date.
"The evidence satisfies me that the unfortunate position Ms. Davidson finds herself in is directly related to unique circumstances beyond her control that significantly curtailed the economy and her ability to rent the property as planned," the justice said.
Justice Weatherill said the pandemic, the wildfires, and the floods had had a "devastating effect" on her business and Davidson had been forced to sell another property to meet her mortgage payments.
The Justice pointed out that by the time the sale was finalized in April 2022, the real estate market had increased and the economy was bustling.
"This is a unique case, and in these rare circumstances, I find that allowing the... sale to stand absent reconsideration would constitute a miscarriage of justice," Justice Weatherill said.
The Justice then gave Davidson a two-week extension to sort out her finances and redeem the property.
While Davidson won the case, the judge said it was "one of those rare cases" where she should pay the legal costs of the mortgage company and the prospective buyer.
READ MORE: Planners for Kelowna’s Tolko site could look to this massive Burnaby project for ideas
To contact a reporter for this story, email Ben Bulmer or call (250) 309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.
We welcome your comments and opinions on our stories but play nice. We won't censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor in the link above.
