Hearts and hands fights back against contempt allegation

Hearts and Hands for Homes is denying Habitat for Humanity Canada’s allegation that two of its directors were acting in contempt of court when the old ReStore was reopened under a new name.

In a response filed this week in B. C. Supreme Court in Vancouver, Hearts and Hands said the move was made in answer to a judge’s July 2015 order that Habitat Canada can take over assets of the local group after all of Hearts and Hands’ debts and liabilities had been paid out.

As a consequence, Hearts and Hands believed the mortgage encumbering the ReStore had to be paid before the land and building, or the net proceeds after the sale of the land, were transferred to Habitat Canada.

In September 2015, following a clearing out sale put on by Habitat Canada, Hearts and Hands changed the locks and alarm codes on the building and in November 2015, put the site up for sale for $599,000, “a price recommended by the listing realtor.”

Habitat Canada has argued list price was inflated and that $325,000 is more reasonable given the building’s state and the fact the 220 Queensway St. property was once home to a gas station, raising concerns about contamination.

That same month, the ReStore was reopened under a new name, the Salvage Store, because it was the only source of funds Hearts and Hands could use to service the mortgage and the other costs related to the property, according to the response.

Hearts and Hands also launched an appeal of the July 2015 decision and if it was successful, the Salvage Store would have remained in its hands, the organization added in the response.

It also said Vivian Pylatuik and Doug Willoughby – the two directors named by Habitat Canada in a February 26 application seeking the contempt order – “had no knowledge” that representatives of Hearts and Hands changed the locks and alarm codes on the building in September 2015.

Instead, it said directors Jo-Anne Pickering and David Duncan reopened the store based on advice from Hearts and Hands’ lawyer that it was still in its name.

“Such actions were not intentionally in violation of the order,” Hearts and Hands said in the response.

Habitat Canada is seeking special costs against Hearts and Hands in part for its “post-judgment conduct” related largely to reopening the ReStore under the new name.

In reply, Hearts and Hands, which is now represented by a new lawyer, is arguing it was acting on advice of its legal counsel “who may not have given accurate or well-reasoned advice.”

Habitat Canada is also seeking special costs from Hearts and Hands for allegedly acting dishonestly and in bad faith during the proceedings leading up to the July 2015 decision, noting the court found Hearts and Hands fabricated evidence and made inappropriate and unfounded accusations against Habitat Canada.

In its filing, Hearts and Hands replied that there is “no evidence of deliberate non-discloure of documents, deceit or attempt to mislead the court.”

And Habitat Canada is seeking special costs against Hearts and Hands for allegedly failing to disclose a mortgage on one of its properties, only learning about it during the disclosure stage before the trial.

In its response, Hearts and Hands said it routinely used money from paid out mortgages to fund operations and Habitat Canada never expressed concerns about the practice.

In the July 2015 decision, B. C. Supreme Court Justice Neena Sharma found Habitat Canada was entitled to disaffiliate the local group because it failed to live up to standards the national organization had in place regarding governance and operations.

The non-profit Habitat movement provides housing, built by volunteers, to low-income families. Habitat Prince George was incorporated in 2001 and following Sharma’s decision, members of the local group founded Hearts and Hands.

The B. C. Court of Appeal dismissed Hearts and Hand’s appeal on Feb. 15, the same day it was heard, with written reason still to be issued. Habitat Canada followed up with its application seeking the contempt order and special costs on Feb. 26 and it’s scheduled to be heard on May 5-6 in Vancouver.