Former owners of Sooke Harbour House awarded more than $4M in damages

The former owners of the renowned Sooke Harbour House have been awarded more than $4 million in damages after a lengthy trial in B.C. Supreme Court this year over a share-purchase agreement.

“We are definitely vindicated,” Frederique Philip said Tuesday.

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Despite the court victory, she said, “We lost the Sooke Harbour House and our life savings.”

Lawyer Josh Bloomenthal, who represents the Philips, said, “We are pleased with the outcome which finally vindicates our clients and brings the truth of this matter to light.”

Frederique and Sinclair Philip bought the waterfront hotel in 1976, expanding and building up its reputation. The award-winning hotel became internationally known for fine dining and for its wine cellar.

But the Philips lost control of their hotel to a buyer who had agreed to purchase it and failed to complete the agreement.

The hotel was sold in a ­court-ordered sale to a North Vancouver company this year after foreclosure actions were launched.

A claim by SHH Management Ltd. and SHH Holdings Ltd., was dismissed Tuesday in a 94-page decision by B.C. Supreme Court Justice Jasvinder Basran.

Tim Durkin is a director and operating mind of the companies and represented the companies in court, Basran said.

He awarded the Philips $2.645 million in compensatory damages for SHH Holdings’ breach of the share-purchase agreement of 2014, a subsequent settlement agreement in 2016, and an addendum to the settlement agreement later in 2016.

The judge ordered that 4.75 per cent interest be paid on that amount dating from August 2015.

Another $1.359 million in damages arising from a 2017 injunction order is to be paid to them as well.

However, Durkin told the court he does not have assets.

The 2008 financial crisis hurt the hotel’s revenues largely because of a drop in American clients.

Two potential sales of the hotel did not complete and the Philips had fallen behind on mortgage payments owed to the Business Development Bank of Canada. They wanted to sell and retire, the court decision said.

“In March 2014, they met Timothy Durkin and Rodger Gregory. They thought they had found honest and reputable business people who would comply with their contractual obligations and pay for the hotel,” the decision said.

But Durkin and Gregory, a director of SHH Management and SHH Holdings and representative of the investment syndicate, did not have the means or the intention of paying for the hotel, Basran said.

“Instead, the Philips suffered a six-year odyssey of lies, excuses, threats, intimidation and bullying by both of these individuals.

“In the end, the Philips’ substantial equity in the hotel was entirely dissipated because of the actions of Mr. Durkin and Mr. Gregory.”

Those years saw the situation grow increasingly complex, as multiple delays occurred over closing dates for the agreements and more money was borrowed through private mortgages in early 2017 to pay off outstanding debts.

“The Philips’ reasonable expectation of a comfortable and well-deserved retirement has been effectively stolen from them because they unknowingly put their future in the hands of these two fundamentally dishonest individuals,” the decision said.

SHH Holdings did not carry out its obligations outlined in the agreement and instead blamed the Philips, the decision said. The judge said the Philips bear no responsibility for SHH Holdings’ failure to comply with its obligations under the agreements.

Basran also said that Durkin swore a false affidavit in 2017 in order to obtain an injunction which removed the Philips from the hotel after they had attempted to take it back from Durkin, who had been operating it.

There were numerous instances in which Durkin “lied or deliberately misled the Court,” Basran said.

When Frederique and Sinclair Philips testified in court, “Both were reasonable and reflective witnesses and neither was prone to exaggeration or embellishment,” Basran said.

Basran said that Durkin has no regard for the truth.

“His view of the truth is whatever will serve his interests in the moment. He is entirely unencumbered by ordinary norms of morality, integrity and decency. He is a garden-variety bully who preys upon those whom he perceives to be weaker than himself and vulnerable to his mistruths and manipulation.

“Unfortunately for the Philips, they were victims of Mr. Durkin’s countless lies and deceptions.”

Durkin filed a lawsuit last month against Facebook asking for $50 million, saying the social-media company allowed an imposter page to remain on its network for several months.

Durkin is fighting a 2017 deportation order from the Canada Border Services Agency after being indicted in the U.S. for alleged conspiracy to commit securities and wire fraud, which he has denied. A federal Immigration and Refugee Board admissibility hearing is set for Nov. 4.

cjwilson@timescolonist.com

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