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West Vancouver developer must pay $75K on top of $1.8M for civil fraud ruling

The developer’s behaviour was ‘reprehensible’ and deserved to be condemned by the courts
A file image shows the entrance to a property on Sandhurst Place in West Vancouver’s British Properies that was the subject of a lawsuit in B.C. Supreme Court. | Google Earth

A West Vancouver developer already ordered to pay $1.8 million for civil fraud must now pony up another $75,000 in punitive damages, the B.C. Supreme Court has ruled.

Jeana Ventures Ltd. sued Phil Garrow and several of his companies, including ADC Projects Ltd. and ADC Holdings Ltd., in 2021 after their plan to develop houses in the British Properties fell apart.

After a trial, the court found Garrow had committed several instances of civil fraud, including attempting to pass off a copy of a $400,000 cheque to their mortgage broker and screengrab of a pending money transfer of $765,000 to their joint account as legit, when in fact Garrow had no intentions of contributing his share to fund construction. The judge also found that Garrow added an addendum to contract to the purchase of one of the properties, giving his company a $300,000 assignment fee, which he never disclosed was to be part of his contribution to the venture.

The court ordered Garrow to pay Jeana a little over $1.83 million to cover the company’s losses, plus interest.

Jeana’s lawyers returned to court in December asking that Garrow also be forced to pay $500,000 in aggravated damages plus punitive damages in the range of $175,000 to $185,000.

Under Canadian law, aggravated damages and punitive damages have similar but distinct roles. Aggravated damages are meant to serve as compensation for a wronged party’s distress, while punitive damages are intended specifically to be punishment for a defendant’s egregious behaviour.

Jeana’s principal Les Sallay argued that beyond financial losses, he suffered distress, anguish, grief, humiliation, damaged self-pride, and loss of dignity because of Garrow, and that he should be compensated.

In a decision handed down on Jan. 9, Justice Janet Winteringham, however, determined aggravated damages would not be the appropriate remedy.

“I accept that [Sallay] had to initiate his own investigation to try to uncover Mr. Garrow’s fraud. I accept as well that this business relationship was an incredibly stressful one wherein Mr. Garrow led him down a road that was confusing, precarious, and ultimately, disappointing,” she wrote. “With that said, I am not satisfied that Mr. Sallay has established that he suffered more than the ordinary distress that one can expect in a failed investment opportunity, even where the other side has been found to have engaged in fraud.”

Garrow’s lawyer argued his client should also not face punitive damages because he too suffered catastrophic losses as a result of the failed investment.

Winteringham rejected that, however, and reasoned that Garrow’s behaviour must be condemned by the courts, ordering him to pay $75,000 in punitive damages.

“Mr. Garrow engaged in fraudulent conduct on three occasions that enticed Mr. Sallay to continue their relationship and, at times, to deliver more funds,” she wrote, adding later: “I find Mr. Garrow’s conduct was reprehensible. He was in a position to control and disburse Mr. Sallay’s considerable investment and he did so without accurate accounting and without being forthright to him.”

Winteringham also drew attention to Garrow’s conduct during the trial. In an attempt to countersue Sallay, Garrow produced a trust document that would have assisted his case but Winteringham concluded that it too had been "manufactured" by Garrow.

Winteringham also ordered Garrow to cover a significant portion of Jeana’s legal costs racked up during the protracted trial.

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