It’s been a rough few weeks for Helen Chan Sun.
Last month, one B.C. Supreme Court judge jailed the Vancouver developer for civil contempt. This week, even as Sun remained behind bars, another judge from the same court declared the former multimillionaire bankrupt, paving the way for a trustee to oversee her finances.
Multimillionaire Vancouver developer jailed for ignoring court orders
“The debtor has a history of financial shenanigans that have been exposed in various proceedings before this court,” Justice Gordon Weatherill said Tuesday as he granted an order demanded by creditors who claim Sun owes them more than $45 million.
The judge’s orders followed an unexpected day of legal intrigue after a last-minute request from Sun’s lawyer to delay the proceedings.
Douglas Hyndman told Weatherill he had received information at 4 p.m. the previous day that could put him and his firm in a conflict of interest.
The lawyer didn’t say exactly what the information was, but said it could mean his firm might no longer be able to act for Sun.
Weatherill grappled with a way to delay a set of proceedings that have already stretched out for months, while ensuring assets from the one viable project left in Sun’s once-considerable real estate portfolio don’t wind up in her pocket.
At times bemused and irritated — not least by the expression “to be honest with you, Justice” — Weatherill endeavoured to find out if Sun was still, in fact, the sole shareholder of the real estate company she purportedly heads.
But none of the five lawyers in the courtroom were able to tell him.
“Something’s afoot and my antenna is sky high,” Weatherill told the lawyers at one point. “I can tell you that.”
As recently as last January, Sun claimed to be the sole shareholder and chief executive officer of Landmark Premiere Properties — a company which, in turn, creates other corporations to buy and manage land identified for future development.
Once boasting a personal net worth of $94 million, she invested heavily in properties located along Vancouver’s once red-hot Cambie Street corridor. But a market downturn forced some of Landmark’s signature properties into receivership.
Creditors have obtained judgments worth more than $115 million against both Sun and her companies.
She wound up behind bars as the result of a separate, multi-year proceeding arising from her failure to make good on the guarantee of a $4.5-million mortgage loan.
Sun has continually locked horns with the lawyer for the creditor in that case — Ravi Hira — as the veteran litigator contrasted her unpaid debts with an ongoing love of designer clothes, spa treatments and luxury vehicles.
The battle culminated in Justice Richard Fowler ordering sheriffs to take Sun out of a courtroom in handcuffs last month to begin serving a 40-day sentence for behaviour the judge called “reprehensible.”
Last week, Sun filed an appeal of both Fowler’s civil contempt order and the length of her sentence.
In an affidavit written from Alouette Correctional Centre in Maple Ridge, she said she faces “considerable financial challenges generally and seek my release in part so I can attempt to raise funds to satisfy all creditors.”
“I have no criminal record and have never been incarcerated before. Incarceration has had a powerful effect on me. It is my sincere hope that I can obtain my release pending appeal and avoid future incarceration,” Sun wrote.
“I cannot raise funds while in custody.”
One of the central questions surrounding Tuesday’s bankruptcy proceedings concerned the fate of Foster Martin, a multi-tower, multi-phase White Rock condo project which Sun claimed in an affidavit would generate “significant cash proceeds” on completion.
The lawyer for one of Sun’s creditors — Lanyard Investments — told Weatherill that occupancy permits for the second phase of the development are expected any day, meaning the developer will be in a position to close on pre-sale contracts.
About 93 of Foster Martin’s 128 units have been pre-sold, representing a pre-sale gross of about $131 million, less deposits, commissions, and builders liens.
Lanyard’s lawyer — Joseph Romanoski — said Sun’s contempt proceedings gave rise to “very serious concerns about financial circumstances.”
At one point, Romanoski noted that Sun’s creditors might prefer seeing her finances placed in the hands of a trustee — as opposed to the inmate of a female correctional centre.
“There are concerns about a lack of information, questionable transactions. There are statements about Ms. Sun spending a significant amount of money, living without paying rent in a large West Vancouver home,” Romanoski said.
“And so the benefit of a trustee is … the trustee has a significant power of investigation and control over Ms. Sun’s estate.”
Sun’s lawyer said all the proceeds from the sales will go to a secured creditor, who still won’t get all of their money back.
But Weatherill wanted certainty.
“The question really is, what assurance do I have that Ms. Sun or someone on her behalf doesn’t redirect the purchase proceeds to some other lawyer?” the judge asked.
The other issue hovering over the proceedings was the possibility that a bankruptcy order could trigger disclosure that would give pre-sale buyers at Foster Martin the right to rescind their contracts.
It’s a question with implications beyond Sun’s developments, as pre-sale purchasers in other financially challenged condo buildings have recently gone to court trying to use B.C.’s Real Estate Development Marketing Act as a tool to get out of their units.
But Weatherill assessed the risk as low.
Documents filed with the court last week showed that while Sun is still the president and secretary of Landmark Premiere Properties, she is no longer a director of the company.
The judge initially appeared inclined to craft an order that would have protected assets controlled by the companies developing Foster Martin while Hyndman figured out whether he could continue to represent her.
But that hope dissolved when Weatherill asked whether — given the change in her status as a director — Sun was still a shareholder of those companies.
“I don’t really want to go down that path,” Hyndman told the judge.
“It’s the reason that I’m asking for an adjournment.”
Weatherill gave Hyndman until after the lunch break to speak with his client and provide some kind of evidence as to who the current shareholders of Landmark Premiere Properties are.
Hyndman returned from lunch resigned to his fate.
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“Ms. Sun is in jail, so I can’t get in touch with her to ask her about the ownership,” he told Weatherill.
“I’m between a rock and a hard place.”
Given those circumstances, Weatherill said he didn’t think granting another adjournment “would have the desired effect of ensuring the preservation of the debtor’s assets.”
He issued the bankruptcy order, which was signed by all five lawyers.
Sun still faces another bankruptcy proceeding in the coming weeks initiated by another creditor over a $67-million loan.
Her appeal court date is set for next Monday.
