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Court awards $1.8 million in West Vancouver real estate fraud case

Homes in West Vancouver's British Properties development are seen from above in this undated photo from Homes in West Vancouver's British Properties development are seen from above in this undated photo from

A dispute between real estate development partners over a pair of planned luxury homes in West Vancouver's British Properties has resulted in more than $1.8 million in damages for civil fraud.

B.C. Supreme Court Justice Janet Winteringham ruled on the dispute Thursday, and her decision was posted online Friday

In it, she found that the plaintiff, Jeana Ventures Ltd., had successfully proven, on the balance of probabilities, three instances of civil fraud by the defendants, Phil Garrow and several companies he owned or co-owned.

Winteringham's 71-page decision begins by describing the case as a dispute between Garrow and Les Sallay, the owner of Jeana. The men, "through their closely held companies," invested in two properties in West Vancouver on which they intended to build and sell luxury homes, the judge writes.

"Through various investments vehicles, they both contributed cash to the projects," Winteringham writes. "The business relationship ended badly. Both lost portions of their investments and any hope of realizing the anticipated profits from the projects. They now sue one another, each blaming the other for the failings of the projects."

While the judge found that Sallay and Jeana had proven parts of their case, she dismissed Garrow's counterclaims.


The parties acquired two properties – 1103 Gilston Rd. and 1449 Sandhurst Pl. – through holding companies associated with each address.

In each case, both parties contributed a portion of the purchase price, and mortgages were also acquired against the property.

On Gilston Road, a luxury home was built, "though with considerable financial challenges," according to the decision.

The B.C. Supreme Court placed the Gilston holding company under the control of a receiver manager, who sold the property for a little more than $7.2 million, plus GST.

Though plans were made to build a home on the Sandhurst Place property, nothing was ever built.

The Sandhurst holding company was also placed under control of a receiver manager, and the undeveloped land was resold before the company declared bankruptcy.

The plaintiff alleged that the defendants "created fraudulent documents, engaged in fraudulent claims and actions, and fraudulently did not disclose key pieces of information in the performance of their contractual obligations" regarding each property, according to Winteringham's decision.

For their part, the defendants counter-claimed that Sallay and Jeana had breached the buy-sell provisions – also known as "shotgun clauses" – regarding each property.


Winteringham's decision notes that, although many documents were submitted as evidence in the case, the absence of agreement between the parties on the facts of what happened meant witness credibility was "crucial" in determining the outcome.

The judge found Sallay to be a much more credible witness than Garrow.

As an example, she cited an instance in which Garrow was supposed to pay $400,000 toward a prior mortgage on the Gilston property, but the payment was never applied to the mortgage.

Garrow provided Sallay with a copy of a cheque to prove that the transfer had taken place.

"The cheque never cleared and Mr. Garrow never disclosed that fact to Mr. Sallay," Winteringham's decision reads.

"The importance of this example is that Mr. Sallay was not simply assuming that Mr. Garrow was fulfilling his part of the contractual bargain; rather, Mr. Garrow actively provided evidence to Mr. Sallay of his contractual compliance. This is not the only such example where Mr. Garrow actively provided 'proof' of contractual compliance that held no weight."

In a similar vein, the judge found Garrow's testimony to be "flawed in many respects." She described him as "quarrelsome and antagonistic" during cross-examination and noted that he "tended to obfuscate his responses to avoid providing an answer to the question asked."

"Beyond his demeanour, three characteristics of Mr. Garrow’s testimony negatively impacted my credibility analysis and revealed dishonesty," Winteringham's decision reads.

"First, I have found Mr. Garrow blatantly lied about the production of a document critical to this litigation. Second, Mr. Garrow repeatedly relied on having provided proof of contractual adherence where, in reality, he engaged in no such adherence. And third, Mr. Garrow relied repeatedly—and caused Mr. Sallay to rely on—faulty accounting information that was faulty due to his own method of accounting."


The $400,000 cheque example was one of the fraud claims that the judge found to be substantiated.

Garrow described the situation as an oversight, in which he misinterpreted information shown on his company's Vancity bank statements as indicating that the $400,000 had been paid.

The mortgage holder that was supposed to have received the payment never credited $400,000 toward the account, but Garrow continued to maintain – in a 2019 Form B document and a 2021 affidavit – that the $400,000 had been paid.

"I am satisfied that Mr. Garrow knew this statement was false," Winteringham's decision reads, adding that the plaintiff suffered a loss because it acted based on Garrow's false representation.

Two other instances of fraud involved the Sandhurst property.

One of these related to a $765,000 contribution Garrow's company was supposed to make toward its $1.2 million investment in the property.

According to the decision, Garrow sent Sallay a screenshot of his company's Vancity bank account, which purported to show that $765,000 had been transferred "or would transfer the following day" into the account for the Sandhurst property.

However, a representative from Vancity testified that the account in question never had a balance of $765,000, and no such transfer was ever made.

"I am troubled by the fact Mr. Garrow was unable to corroborate his characterization of the transaction by reference to his company’s bank statements," Winteringham's decision reads.

"If $765,000 had been deposited, as he said he believed, he should have been able to point to bank statements demonstrating the deposit, then the transfer out to ADC Holdings. He never did. In addition, he attempted to characterize the screenshots as official banking documents. And they were not."

The judge accepted the plaintiff's submission that Garrow knew the payment had not been made because he never intended to make it.

"Mr. Garrow emailed a screenshot of a bank account balance that he knew to be a false representation of his part of the agreement," the decision reads. "He wanted to show Mr. Sallay that he was contributing $765,000. He did not have $765,000 to contribute in his account. By emailing the screenshot to Mr. Sallay, he intended Mr. Sallay to act on it. Mr. Sallay was induced to contract in respect of the Sandhurst project, and to perform upon the relevant contracts, on the basis of this misrepresentation."

The other substantiated fraud claim regarding the Sandhurst property related to a $300,000 "assignment fee" that Garrow applied toward his company's required $1.2 million contribution to the purchase.

Garrow initially purchased the property through one of his companies during a court-ordered sale, according to the decision. Having acquired the property for less than its appraised value, when he was bringing Sallay into the project as an investor, he sought to include credit for the roughly $300,000 in equity he claimed to have gained by underpaying for the property.

While Garrow claimed to have told Sallay about this arrangement, Sallay maintained that he did not learn of the $300,000 until well after he had entered the Sandhurst agreement.

After weighing the evidence, Winteringham concluded it was "more likely than not" that Garrow had withheld the information.

"I am satisfied that the plaintiff has proven civil fraud on a balance of probabilities regarding the $300,000 representation," the judge's decision reads.

"The funds themselves were never contributed, Mr. Garrow knew the funds were never contributed and made efforts to obscure this fact, the plaintiff acted upon the representation by contracting with defendants and continuing contractual performance, and the plaintiff ultimately suffered losses on account of its reliance."


Both the Gilston and the Sandhurst agreements contained "buy-sell" or "shotgun" clauses, allowing one party to offer to buy out the other as a way of ending the contract.

As the business relationship between Garrow and Sallay was breaking down in September 2020, Garrow did just that, offering Sallay $900,000 for Jeana's shares of the Gilston company and $800,000 for Jeana's shares of the Sandhurst company.

According to the agreements, if 30 days passed without a response from the party receiving the offer, that party would be obligated to instead buy the offerer's shares for the same price.

"It was Mr. Sallay’s evidence that around this time he suspected Mr. Garrow was defrauding him," the decision reads.

"Therefore, Mr. Sallay believed that he could not adequately assess the value of his interest in either project. He also believed that since Jeana had put a disproportionate share of the funds into both projects, then the funds ADC Holdings would use to pay him for his interest in the projects would be the money he had contributed."

Sallay and his company ultimately refused to comply with the shotgun clauses, neither selling their shares to Garrow nor buying his for the price specified.

Garrow's counterclaim sought damages for Sallay's company's breach of the contract, but Winteringham dismissed the claim for a few reasons.

In the case of the Gilston shotgun clause, the judge dismissed the claim because the letter triggering the clause was sent by ADC Holdings, one of Garrow's companies that was not actually a party to the Gilston agreement.

ADC Projects – a separate entity – was party to the Gilston agreement, and should have been the party to trigger the clause, the judge concluded.

Moreover, during the trial, Garrow produced a document purporting to be a trust agreement showing that ADC Projects held the shares of the Sandhurst company in trust for ADC Holdings, thus making ADC Holding's attempt to trigger the shotgun clause valid.

This document, Winteringham concluded, was fake.

"Mr. Garrow created the trust document," the decision reads. "He then lied about what he did, producing the trust document in the middle of a trial. His conduct required the plaintiff to seek leave to call a rebuttal witness. Mr. Garrow’s conduct, producing an inauthentic document and then lying about it, weighs heavily on my credibility assessment of his evidence overall."

With regard to the Sandhurst company, the judge found that – while ADC Holdings was a party to the contract and had standing to trigger the shotgun clause – the fraudulent conduct it and Garrow had engaged in constituted a fundamental breach of the agreement containing the shotgun clause, thus making it unenforceable.

Winteringham dismissed the counterclaim and ordered the defendants to pay $1,835,410.24 to the plaintiff, representing the amount of Jeana's investment in the two projects, plus interest, less amounts already paid back through proceeds of the receivership sales.

The judge also gave the plaintiff 30 days to notify the court if it intends to pursue aggravated or punitive damages against Garrow and his companies. Top Stories


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