A B.C. Supreme Court judge ordered a lawsuit involving dual agency and shadow flipping in the sale of a British Properties house to go to full trial instead of a summary hearing “at the earliest possible opportunity,” because it would be unjust otherwise.
In a written April 11 verdict, Justice Nigel Kent decided against defendants Zhixiang Li, Sincere Real Estate Services Ltd. and agent Yi Zhang aka Leo Zhang, who sought a summary hearing on liability issues and dismissal of the case generally.
Plaintiff Wen Hsien Tsai claimed he is elderly and unsophisticated with poor English skills and was the victim of deception and fraud. Tsai accused Li and Zhang of conspiring to induce him to sell his property below market value so they could resell it for a profit. The defendants deny conspiracy or other wrongful conduct.
Plaintiff Tsai agreed to buy 1028 Eyremount Drive in West Vancouver’s British Properties on May 16, 2015 for $5.1 million. Sincere was the broker of the transaction. On the same date and at the same time, Tsai signed an exclusive listing contract with Sincere. He agreed to pay a gross commission of $100,000 and a limited dual agency agreement authorizing Zhang to be agent for both buyer and seller.
Two months later, on July 14, 2015, Li assigned the contract of purchase to a numbered company, 1035566 B.C. Ltd., for $600,000, representing a total purchase price for the property to the assignee of $5.7 million. The next day, Tsai signed an addendum to the deal, extending possession and adjustment dates for the transition from the end of October to the start of December.
“That addendum contained a clause expressly reserving Mr. Li’s right to assign the contract to any third party without notice to Mr. Tsai. Mr. Zhang of Sincere acted as Mr. Li’s broker for the purpose of the assignment and also secured Mr. Tsai’s signature on the Addendum the following day,” Kent wrote.
Tsai received a $5,000 cheque on July 15, drawn from the numbered company’s bank account, with the notation: “For the extension of completion from Oct 30 to Nov 30.” The contract was further assigned by the numbered company to Lian Zhang, who is not related to Sincere’s Zhang, for $6.3 million.
Tsai claimed he was unaware of the assignment transactions until mid-October of that year and filed a lawsuit on Oct. 23, 2015. He refused to complete sale of the property on Nov. 30, 2015. In expert reports to the court, the May 2015 property value was estimated at between $5 million and $5.645 million. BC Assessment set the five-bedroom, five-bathroom house at $6.01 million last year.
Court documents include various WeChat messages between Li and Zhang from March to December 2015. During some of the exchanges they refer to themselves as “brother” or “bro.”
“Some exchanges relate to the property that is the subject matter of the present litigation, as well as to over 40 other properties,” Kent wrote.
“The fact that Mr. Li and Mr. Zhang may have been friends before the transaction with Mr. Tsai may have no legal significance whatsoever. In the context of a dual agency scenario, however, skeptics might suggest otherwise. And it must not be overlooked that Mr. Tsai has sworn under oath that he was effectively deceived by Mr. Zhang. First, he portrays himself as an elderly, retired gentleman with a poor command of the English language and whose cataracts make reading difficult for him in any event. “
New provincial rules to stop shadow flipping and dual agency came into effect across British Columbia last month.
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