AMLC Legal Insights - Gift Letters: When is a “Gift” Not Really a Gift?

By Alex Mok

High housing prices and strained household budgets mean that many younger purchasers cannot buy a home without assistance from their parents. To satisfy a lender, the contributing family member may sign a gift letter confirming that the money advanced for the purchase is a genuine gift and that no repayment is expected.

But is the money truly a gift as between the family members themselves? The recent decision in Kirkwood Estate v. Whitefield, 2026 BCSC 1265, suggests that the answer may depend on the surrounding circumstances, not merely on the label used in a document prepared for mortgage financing.

What is a gift letter?

In the mortgage context, the lender will want to confirm that any contribution from a family member of the borrower is not a loan that could affect the borrower’s ability to repay the mortgage. The lender will also want to ensure that the contributing family member will not assert a beneficial interest in the property and compete with the lender in a foreclosure or bankruptcy.

To address these concerns, the lender will usually require the contributing family member to provide a gift letter. A gift letter will typically identify the transferor and recipient, state the amount being advanced, confirm that the funds are being provided as a genuine gift, and expressly say that the recipient is not required or expected to repay the money.

What happened in Kirkwood Estate?

In Kirkwood Estate, a mother advanced funds to help her son purchase a property. She also signed a gift letter stating that the advance was a genuine gift, which assisted her son in obtaining mortgage financing. She later made additional contributions by helping with some of the mortgage payments.

After the son and his ex-spouse separated, the property was sold. The mother’s estate, supported by the son, claimed an entitlement to a share of the sale proceeds corresponding to the mother’s financial contributions to the property. The ex-spouse opposed the claim, relying primarily on the gift letter as evidence that the mother had intended to make a gift. The court found in favour of the estate and held that it was entitled to a proportionate interest in the equity of the property.

The presumption of resulting trust

The general rule is that when a person transfers property or money to another person without receiving consideration, the recipient is presumed to hold that property or money on resulting trust for the transferor. The recipient has the burden to rebut that presumption by adducing evidence and proving that the transferor intended to make a gift.

While a gift letter may appear to show the transferor’s intention to make a gift to the recipient, that is not conclusive evidence of a gift. Equity looks to substance rather than form — the court will consider the context in which the gift letter was prepared and how it fits with the evidence as a whole.

As noted above, a gift letter serves an important but narrow function: it is directed at addressing the lender’s concerns in mortgage financing. In other words, a gift letter does not necessarily determine the private legal relationship between the transferor and recipient.

Clarity matters

Family members often do not carefully document their financial arrangements. Yet ambiguity can be costly. If an advance is not intended as an outright gift, then both the transferor and the recipient should clearly define the nature of the advance at the outset. Is it a loan, giving rise to merely a right of repayment? Or is it intended to give the transferor a beneficial interest in the property itself? Clear documentation at the outset is not only prudent — it is good practice.

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AMLC Legal Insights - Before You Ask AI: Privilege, Confidentiality, and Waiver in BC

By Alex Mok

Your lawyer gives you legal advice. You trust your lawyer, but you still want to stress-test the advice. So you upload it to an AI platform. The platform identifies a few issues that may not have been addressed. You send those issues back to your lawyer to “perfect” the advice. 

You feel reassured because you have left no stone unturned. Your lawyer may feel differently. Reading your well-paragraphed and carefully formatted email, your lawyer realizes what has happened. The lawyer now has to ask: did uploading the advice to an AI platform waive privilege? And if privilege was waived, could the client be required in litigation to disclose not only that advice, but also related privileged communications?

Privilege, Confidentiality, and Waiver

A lawyer can help clients navigate the complexity of the law and advance their interests only if clients feel they are able to speak candidly with their lawyer in private. Privilege serves that important function; it creates a protected space for open and frank communications between lawyer and client.

The two most common forms of privilege are: (1) solicitor-client privilege which protects confidential communications between lawyer and client made for the purpose of seeking or giving legal advice; and (2) litigation privilege which protects communications and documents created for the dominant purpose of existing, contemplated, or reasonably anticipated litigation. 

Communications must be made in confidence and remain confidential in order to be considered privileged, and therefore protected from disclosure. If the confidentiality of legal advice is lost, the client may be found to have waived privilege. The effect of waiver can be more far-reaching than one might expect. In some circumstances, it may affect not only the specific communication disclosed, but also other related communications and advice concerning the same subject matter. 

Risk of waiver with the use of AI

Although it is not binding on BC courts, a recent U.S. decision illustrates the privilege risks that can arise when third-party AI tools are used in connection with legal matters. In United States v. Heppner, No. 25 Cr. 503 (S.D.N.Y.) the defendant used a publicly available generative AI tool to create documents concerning potential defence strategy and legal arguments. The defendant asserted privilege over those AI-generated materials. 

The court rejected the privilege claim. It emphasized that the AI platform was not counsel, was not part of the lawyer-client relationship, and was not acting as counsel’s agent. The court also considered the platform’s terms and privacy practices in assessing whether there was a reasonable expectation that the information would remain confidential. 

It is not necessary, for present purposes, to debate whether Heppner would be decided the same way in British Columbia. The practical point is narrow but important: where privileged information is voluntarily entered into an AI tool, an opposing party may argue that the information has been disclosed to a third party and that privilege has therefore been waived. Whether that argument succeeds will depend on the circumstances, likely including the platform’s terms of use, data retention practices, confidentiality protections, and the purpose and manner of the AI use. The risk should be addressed before the tool is used, not after a privilege challenge arises. 

Practical safeguard for clients and businesses

Before using AI in connection with legal matters, clients and businesses should first consider whether it is appropriate to do so and what steps are necessary to protect confidentiality and privilege. In particular, they should consider the following: 

• Do not input privileged or confidential information into public AI tools. Use anonymized or hypothetical facts where possible, while recognizing that anonymization may not be sufficient if the information still identifies the matter or reveals strategy. 

• Involve and consult counsel before using AI with legal materials, especially where the materials concern legal advice, litigation strategy, investigations, productions, or settlement positions. 

• Review the AI platform’s terms of use, privacy policy, and data controls, including whether prompts and outputs may be stored, reviewed, used for training, or disclosed. 

• Use approved or enterprise-grade tools where available, particularly tools with appropriate confidentiality settings, no-training controls, and administrative safeguards.

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AMLC Legal Insights - No oppression, no problem – resolving shareholder disputes under s. 324 of the Business Corporations Act

By Bryan Hicks & Luana Kodato

In a recent decision, the British Columbia Court of Appeal (the “Court”) confirmed that the Limitation Act does not apply to shareholder proceedings brought under s. 324 of the Business Corporations Act (“BCA”), unlike claims brought under s. 227 for the oppression remedy. 

Section 324 of the BCA provides that a court may order that a company be liquidated if it is “just and equitable to do so”.  This arises most commonly where the founders of a closely held company have had a falling out to the point where it is no longer viable that they continue to operate the business together.  Importantly, the court has discretion to grant any relief that would be available in oppression proceedings instead of ordering a liquidation (such as a buy-out) where the court is satisfied that it would be just and equitable to order a liquidation. 

This Court decision is a good illustration of why parties in closely held companies should consider seeking relief under s. 324 of the BCA, either instead of or in the alternative to the oppression remedy.

Background​

Golden Spigot Pub Ltd. v. Eddy Ng Management Services Ltd., 2026 BCCA 231 involves a dispute between the two principals of the Six Mile Pub in Victoria. 

Mr. Ng and Mr. Wong incorporated Golden Spigot to acquire the pub.  Although structured as a corporation, the business effectively functioned as a partnership between the two individuals.  Their relationship deteriorated over time.  Mr. Ng became less involved in the operations and was eventually removed as a director. 

Following Mr. Ng’s death, his estate and related companies (the “Petitioners”) sought to sell his shares in Golden Spigot but did not obtain an acceptable offer from the majority shareholders. The Petitioners then commenced litigation seeking relief under s. 227 of the BCA – the oppression remedy – or alternatively, under s. 324 on the basis that it would be just and equitable for the court to order that the company be liquidated. 

The trial judge found that the Petitioners failed to establish oppressive conduct but ordered that the company be liquidated under s. 324 of the BCA.  The majority shareholders appealed the liquidation order and the Petitioners cross appealed the dismissal of their oppression claim. 

The Court upheld the trial judge’s dismissal of the oppression claim and agreed that it was “just and equitable” for the court to grant relief under s. 324.  However, the Court modified the trial judge’s order to give the majority shareholders an opportunity to purchase the Petitioners’ shares at fair market value, failing which the company will be liquidated. 

As part of its analysis, the Court clarified that proceedings under s. 324 of the BCA are not subject to the Limitation Act since they do not constitute “claims” within the meaning of the statute. 

The Court’s decision to provide an opportunity for a buy-out so the business may continue as a going concern rather than proceeding directly to a liquidation is an illustration of the court’s willingness to fashion a practical remedy based on commercial factors where there is a viable business but the principals are no longer able to work together.

​Takeaways

Section 324 of the BCA can be an attractive option for resolving shareholder disputes in closely held companies because: 
‍ ‍
1. such proceedings are not subject to the Limitation Act so relief may be available even where a claim for the oppression remedy is statue barred; 

2. the court has discretion to fashion a practical commercial remedy as an alternative to liquidation; and 

3. the court is not required to make findings of wrongdoing before granting relief under s. 324, which can simplify the process. 

Please contact us if you have questions or would like advice regarding a shareholder dispute. 

Please also see one of our previous Legal Insights for a discussion on court ordered shotgun sales in closely held companies

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AMLC Legal Insights are intended for informational purposes only and do not constitute legal advice or opinion.

AMLC Legal Insights - Certificates of Pending Litigation - to file or not to file

By Bryan Hicks & Noah Faust-Robinson

The recent decision by Supreme Court of British Columbia (the “Court”) in Boston Development Corp. v Takhar, 2026 BCSC 784 (“Boston Development”) is the most recent example of the Court ordering that a certificate of pending litigation (“CPL”) be cancelled because the plaintiff failed to properly claim an interest to land, which is a requirement for filing a CPL under the British Columbia Land Title Act (the “LTA”). 

This case highlights the importance for plaintiffs to properly consider and frame their claim when they intend to tie-up lands by registering a CPL. The decision also provides a useful example of how a CPL may be attacked at an early stage.

Background​

The CPL at issue in Boston Development was filed by Gurdip Takhar as part of an action he and his company commenced against Dave Sidhu, the director of Boston Development Corp. (“BDC”), and others, regarding an alleged business venture to pursue development projects in Surrey and Kelowna (the “CPL Action”). The CPL was registered against lands owned by BDC in Kelowna (the “Kelowna Lands”).  BDC was not named as a defendant in the CPL Action. 

 Mr. Takhar’s primary allegation is that he never received his share of the profits derived from a development project in Surrey, and that Mr. Sidhu used those funds to acquire and improve the Kelowna Lands.  At the hearing to cancel the CPL, Mr. Takhar clarified that he was relying on a claim of substantive constructive trust over the Kelowna Lands as the basis for the CPL. 

 BDC argued that Mr. Takhar’s Notice of Civil Claim is deficient, does not properly set out a claim to an interest in the Kelowna Lands, and the CPL should therefore be canceled.  BDC also argued that, in the alternative, even if the Court found that Mr. Takhar’s pleading met the threshold requirements under the LTA, the CPL should nevertheless be canceled on the basis of hardship and inconvenience upon providing replacement security. 

 The Court agreed with BDC and found that Mr. Takhar had failed to properly claim an interest to the Kelowna Lands and therefore he did not meet the requirements under s. 215 of the LTA for filing a CPL.  The Court decided it was unnecessary to consider BDC’s alternative argument on hardship and inconvenience given the deficient pleading.  In particular, the Court found the Notice of Civil Claim was deficient because it: 

a) did not address legal or beneficial ownership of the Kelowna Lands – Mr. Takhar did not plead that BDC held title in trust for him, or that any of the named defendants had any legal or beneficial interest in the property; 

b) did not contain a pleading that any of Mr. Takhar’s funds were used in the purchase or improvement of the Kelowna Lands; 

c) did not contain any allegation of wrongdoing on the part of BDC, and therefore relief could not be granted against BDC; and 

d) title to the Kelowna Lands could not change as an outcome of the CPL Action since BDC was not named as a defendant. 

​Takeaways

CPLs are an effective and efficient way for plaintiffs to gain leverage since the practical effect of a CPL is to tie-up land and prevent the owner from dealing with the property while the CPL is in place.  CPLs are especially attractive for plaintiffs since they are available at the outset of litigation without the plaintiff having to first prove its claim. 

The ease with which a CPL may be initially obtained creates the opportunity for abuse through the improper registration to stifle an imminent transaction in the hopes of gaining short term tactical advantage.  The risk for such abuse is mitigated by the strict statutory requirements for filing a CPL and the Court’s ability to order that a CPL be immediately canceled where it was improperly filed. 

It is well established that CPLs are an extraordinary pre-trial mechanism to preserve a valid claim to an interest in land.  Courts have held that CPLs should not be used as a method of pre-trial enforcement of a financial claim.  Above all else, a CPL is only available where there is a viable claim to an interest in land, and not merely a claim that relates to land.  Where no such claim is pleaded, the CPL is said to be a “nullity” and should be cancelled. 

The Boston Construction decision is a good illustration of why parties should seek legal advice on the extent to which their claim may support the registration of a CPL, and if so, ensure the originating pleading properly sets out a claim to an interest in land so the CPL will survive scrutiny.  Conversely, property owners facing a CPL should consider whether there is a basis to have the CPL canceled at an early stage of the litigation. 


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AMLC Legal Insights - Protecting Pre-Sale Deposits: BC Court Rules on Late Disclosure Amendments

By Alina Chekh

A 2025 decision of the Supreme Court of British Columbia, Ye v. Vesta Properties (Latimer) Ltd., 2025 BCSC 773, demonstrates how pre-sale purchasers can assert their rights when developers fail to provide timely disclosure. The Court held that purchasers were entitled to rescind their contracts and recover their deposits after the developer failed to promptly notify them of a one-year acceleration in the estimated completion date.

The decision highlights the legal consequences that can arise when developers do not provide timely updates to disclosure statements under the Real Estate Development Marketing Act (“REDMA”).

Background​

​In March 2022, the purchasers entered into contracts to buy six pre-sale strata units in a multi-phased development project in Langley, British Columbia.

The dispute arose when the developer accelerated the estimated completion window by one year. On February 29, 2024, the developer filed an amendment with the Superintendent revising the completion window from October–December 2025 to October–December 2024. However, the amendment was not delivered to the purchasers until August 28, 2024, just over a month before the revised completion window began. As a result, the purchasers had limited time to prepare for early possession and the associated strata fees and carrying costs.

The purchasers commenced an action in October 2024. The developer subsequently issued notices to complete and alleged default after the purchasers refused to close.

​Decision

The Court held that the developer breached section 16 of the REDMA by failing to provide timely notice of a one-year acceleration in the estimated completion date.

The one-year acceleration was a material fact because it directly affected the purchasers’ financial planning, including their ability to prepare for strata fees, mortgage obligations and other carrying costs. The Court confirmed, citing McEachern v. 752265 B.C. Ltd., 2009 BCSC 1290, that significant changes to completion timelines may justify rescission.

Although the developer filed the amendment with the Superintendent within 30 days, it was not delivered to the purchasers for six months. During that period, the purchasers reasonably understood that completion would not occur until October 2025. When the developer later imposed a final completion date on short notice, it did not ameliorate the prejudice caused by the late notice but instead compounded it.

The Court concluded that:

1. The one-year acceleration rendered the original disclosure statement materially false or misleading, triggering the requirement for an amendment under section 16(1)(a)(ii) of the REDMA; and

2. The developer’s failure to provide the amendment to purchasers within a reasonable time, in breach of section 16(1)(b), entitled the purchasers to rescind the contracts under section 23(1) of the REDMA.

Key Takeaways​ for Purchasers

This case illustrates how the REDMA protects purchasers who enter into pre-sale contracts:

· Developers must promptly deliver amendments to disclosure statements when material facts change;

· Significant changes to construction timelines may constitute a “material fact” under the REDMA; and

· When developers fail to comply with the REDMA disclosure obligations, purchasers may be entitled to rescind their contracts and recover their deposits.

If you are a pre-sale purchaser facing unexpected changes to completion dates, undisclosed amendments, or other potential REDMA violations, experienced litigation counsel can help you assess your rights and available remedies.. ​

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AMLC Legal Insights: Two’s a Crowd – court ordered shotgun sales in closely held companies

By Bryan Hicks & Molly Robson (articling student)

In a recent decision, the Supreme Court of British Columbia resolved an impasse between the co-founders and sole shareholders/directors of a currency exchange business by ordering one shareholder to present a “shotgun” offer to purchase the other owner’s shares. It will then be up to the recipient to either accept the offer or turn things around by buying the offeror’s shares for the same price. Either way, one of the shareholders will be bought out leaving the other as the sole owner and director going forward.

Shotgun sales are a useful remedy in closely held companies where the shareholders are stuck in a deadlock and the court is asked to step in. However, the specific structure of a shotgun sale should be tailored to the circumstances of each case. This case is a helpful reminder that shareholders should give careful consideration to how they should structure their shotgun offer to increase the likelihood of getting to the desired outcome.

Emadi v. Soleymani, 2025 BCSC 1178

Pouria Emadi and Reza Soleymani launched VanEx Currency Exchange Inc. (“VanEx”) in 2019. The business operated for several years without major issues, and revenues continued to grow. As of 2023, VanEx had eleven employees and annual revenues of approximately $1.7 million. Mr. Emadi serves as the Company’s President and has managed the business since its founding. Mr. Soleymani has not been directly involved in the Company’s day-to-day affairs.

The relationship between the co-founders started to deteriorate in about May 2024, eventually putting  VanEx in a deadlock. It became apparent to both parties that they could no longer work together and VanEx could not survive the impasse.

Mr. Emadi applied to the Court for a just and equitable winding up of VanEx under section 214 of the Canada Business Corporations Act (the “Act”). Both parties agreed this was an appropriate case for the Court to use its jurisdiction to address the deadlock, but rather than liquidating and dissolving VanEx, the Court should exercise discretion under section 241 of the Act to order that one shareholder buyout the other by way of shotgun purchase.

However, the parties could not agree on various details such as which of them should be required to make the offer, whether the offer should be structured as an offer to purchase or to sell, whether the offer should be for the Company’s assets rather than its shares, and how outstanding shareholder loans owed by VanEx to each of the shareholders should be addressed as part of a shotgun purchase.

The court hearing proceeded in a rushed manner and there was insufficient time to canvass all of the issues raised. Rather than schedule additional hearing time, the Court asked each party to file written arguments for the Court to consider when formulating a resolution to the corporate deadlock.

The Court ultimately ordered that Mr. Emadi is required to make an offer for the purchase of Mr. Soleymani’s shares within 21 days of receipt of certain information from Mr. Soleymani, and the offer must also provide for the repayment of Mr. Soleymani’s shareholder loan. Mr. Soleymani will then have 21 days to accept the offer, failing which he will be required to purchase Mr. Emadi’s shares and provide for the repayment of Mr. Emadi’s shareholder loan on the same terms as Mr. Emadi’s offer.

The Court placed considerable weight on the fact that Mr. Emadi was better positioned to value the Company and run it going forward when structuring the shotgun as an offer to be made by Mr. Emadi for the purchase of Mr. Soleymani’s shares. The Court rejected Mr. Soleymani’s suggestion of an asset purchase rather than a share transaction since it would have been more complicated, less certain, and more likely to result in further disputes.

Takeaways

Shareholders in closely held companies sometimes have a falling-out.  When that happens, it might be appropriate to seek a buyout of one or more shareholders. However, it is important to consider how such offers should be structured. Various factors are often relevant including who is in the best position to run the business going forward, whether one of the parties lacks the resources to complete a purchase, and how to approach the issue of valuation.

Courts have broad discretion to formulate a forced buyout in circumstances where a closely held company is stuck in a deadlock, whether by shotgun sale or with the involvement of a business valuator. Importantly, the court is not required to first make a finding of wrongdoing in deadlock scenarios if it can be shown that the most appropriate solution is for one party to exit the company.

Experienced legal counsel can help navigate these delicate situations and formulate a strategy for achieving a favourable outcome.

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AMLC Legal Insights are intended for informational purposes only and do not constitute legal advice or opinion.