Sooke Harbour House for sale amid legal wrangling

Sooke Harbour House is on the market for $5.6 million under a court-ordered foreclosure sale and is also the subject of several lawsuits.

Another foreclosure action was started last year and the waterfront property is at the centre of a battle for ownership before B.C. Supreme Court. Both those files are ongoing.

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As well, Timothy Durkin, one of the parties in the ownership issues, has been fighting deportation from Canada, launched in 2017 by Canada Border Services Agency. A British citizen, Durkin was indicted by a grand jury in Alabama, with three others, in 2013 for an alleged conspiracy to commit securities and wire fraud. He has denied he was part of any criminal activity.

It is unclear where that matter stands today. Calls made to federal court offices, which are short-staffed because of the pandemic, were not returned on Tuesday. Durkin could not be immediately reached.

Frederique and Sinclair Philip bought the waterfront restaurant and hotel in 1979. They expanded, renovated and earned international accolades for their food, wine cellar and hospitality. The Philips were early adopters of the movement to grow their own food and support local farmers.

Honoured many times, Sooke Harbour House’s wine collection won a Grand Award in 2000 from Wine Spectator magazine. The New York Times rated it among the top six Canadian restaurants that year. Visitors have included movie stars and its picturesque setting saw it used as a location for the 1994 romantic comedy movie Sleeping with Strangers.

But these days, legal wrangling and money woes are at the forefront.

The 2.5-acre property at 1528 and 1529 Whiffin Spit Rd. was listed this month with NAI Commercial after Steven and Nancy Fogliato, of 1147547 B.C. Ltd., were granted an order in B.C. Supreme Court in mid-March allowing them to list it for sale to redeem monies owed on a second mortgage.

According to a March 12 court document, $722,084 is owed on the mortgage, plus interest.

NAI’s J.D. Murray said Tuesday that he’s heard from sophisticated hospitality investors interested in what he describes as a “trophy” property.

There is development potential for the site, Murray said, noting that plans for other development options, including 21 condominium units, were drawn up. Rooms were upgraded a few years ago and each one is different, he said.

Victoria hospitality consultant Frank Bourree expects the market will be interested in the property despite the coronovirus pandemic.

A buyer with deep pockets who is prepared to invest in upgrading the building and land could refurbish it, he said.

“Often the best opportunities come at the least opportune time.”

The Philips put Sooke Harbour House up for sale in 2012 and asked $5.6 million. It did not sell. At that time, Sinclair Philip pointed to a decline in the tourism sector.

In 2015, the Business Development Bank of Canada started a foreclosure action, stating it was owed $2.9 million on a 1997 mortgage.

The Philips came to an agreement, which is now in dispute, with new investors to buy the property and pay the Development Bank mortgage. That mortgage was eventually paid off.

Current disputes involve three companies with similar names. Sooke Harbour House Inc. was established by the Philips and the Philips Family Trust. Durkin and Rodger Gregory are directors of SHH Holdings Ltd. and SHH Management Ltd.

The new investors went to court in 2017, where they were successful in winning the right to manage Sooke Harbour House, instead of the Philips. Durkin has been its manager.

Three additional mortgages were taken out on the property in 2017, court documents state. The first is the subject of the foreclosure launched by T.M. Thorpe Holdings Ltd. and Cathedral Capital Ltd., which said in May 2019 that the amount owing totalled $2.99 million on a loan with 18 per cent interest compounded monthly.

The second is the Fogliatos, which is driving the sale. The third is a smaller loan held jointly by three parties.

The Philips have been at odds with Durkin and Gregory over ownership of the property.

A trial over the ownership issue started in January of this year and ran for six weeks. Another two weeks were scheduled but the pandemic has limited court operations, leaving the trial still to be completed.

That means that Sooke Harbour House is going up for sale while its ownership is still an issue before the courts.

It is up to the B.C. Supreme Court to evaluate any offers and decide whether to approve them.

An accepted offer would be requried to pay off monies owed to lenders, and well as any other claims.

cjwilson@timescolonist.com

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