Northwynd Class Action

Background

On December 7, 2018, Burnet, Duckworth & Palmer LLP of Calgary, Alberta ("Class Counsel") filed a proposed class action lawsuit in Alberta on behalf of individuals who held Series A and B trust units in the Northwynd Real Estate Investment Trust (the "Northwynd REIT") for any period of time between June 3, 2014 and the termination of the Northwynd REIT on January 16, 2017.

A "class action" is a lawsuit advanced by one or more persons (called a "representative plaintiff") on their own behalf and on behalf of all others who fit into a defined "class" of persons. Such an action makes it possible to obtain relief for a group of people by litigating a lawsuit advanced by only one or a small number of people. Persons who fit into the defined class are automatically part of the class action and must expressly opt out if they do not wish to be part of the lawsuit.

Before a class action can be advanced, a Court must approve or "certify" the proposed action as a class proceeding, as well as certify the definition of the class, the representative plaintiff(s) representing the class, and the issues common to the class that are to be determined in the class action.

Certification of Class Proceeding

On September 21, 2021, Justice R. A. Neufeld of the Alberta Court of King's Bench issued a Certification Order certifying the proposed class action against the trustees of the Northwynd REIT, various companies that held or managed property for the Northwynd REIT and its unitholders, and certain individuals who ran those companies (the "Class Proceeding").

The Certification Order defines the class as all persons, whether individual persons, corporations, or other associations, who held Series A and B trust units in the Northwynd REIT between June 3, 2014 and January 16, 2017 (the date of the Final Notice of Wind-Up and Termination of the Northwynd REIT) (the "Class").

The Certification Order certified Garfield Ganong, an investor in the Northwynd REIT, as the representative plaintiff for the Class (the "Representative Plaintiff").

The Certification Order approved, among other issues, the following as common issues for the Class Proceeding:

  • Whether the trustees breached any duties to the Class, including contractual duties, fiduciary duties, and a duty of care;
  • Whether the Defendants who received the properties in question were unjustly enriched;
  • Whether the various agreements through which the properties were transferred were void, voidable, or unenforceable by reason of a lack of adequate consideration exchanged for the properties, unconscionability, or illegality;
  • Whether Mr. Kirk Wankel has any personal liability to the Class for the claims; and
  • Whether the conduct of some of all of the Defendants warrants an award of punitive damages.

The Representative Plaintiff is asking the Court to order that, among other things, the Defendants pay damages to the Class and disgorge all profits they made as a result of alleged wrongful transfers of assets properly belonging to the Class. The Representative Plaintiff is also asking the Court to declare that the Northwynd REIT assets are still within the control of the Defendants and are beneficially owned by the Class. 

On January 7, 2022, shortly after the Certification Order was issued, the Defendants sent out a Notice of Certification and Opt-Out Form to the Class. Any Class members who did not wish to be part of the Class Proceeding were directed to return the Opt-Out Form to Class Counsel by March 8, 2022.

Progress of Class Proceeding

The Certification Order requires the parties follow a Litigation Plan that sets out each of the steps and deadlines for the Class Proceeding.

The Class Proceeding will occur in three broad phases: the "pleadings" phase, the "disclosure" phase, and common issues trial.

The current pleadings in the Class Proceedings are:

  • The Representative Plaintiff's Statement of Claim setting out the facts underlying the lawsuit and its legal position on the common issues to be determined in the class action (filed January 5, 2022);
  • The Statement of Defence of the Northwynd Defendants and the Statement of Defence of the 2008164 Alberta Ltd. Defendants (filed January 27, 2022); and
  • The Representative Plaintiff's Replies to the Defences of the Northwynd Defendants and the 2008164 Alberta Ltd. Defendants (filed February 7, 2022).

In October 2023, the Defendants filed amended Statements of Defence:

  • The Northwynd Defendants filed an Amended Statement of Defence on October 4, 2023; and
  • The 2008164 Alberta Ltd. Defendants filed an Amended Statement of Defence on October 12, 2023.

Shortly after the exchange of the pleadings in 2022, the Parties exchanged relevant and material records through Affidavits of Records and began questioning of witnesses. This process of disclosure, which is being overseen by a case management judge, is ongoing.

In early 2024, in an effort to reach a settlement to resolve some or all of the common issues in dispute, the Parties agreed to a mediation. Mediation is a confidential process whereby parties negotiate a settlement with the assistance of a neutral third-party mediator. The mediator does not have the authority to impose a settlement on the Parties, nor does mediation guarantee that the Parties will reach a settlement.

The Parties were unable to reach a settlement through mediation and have resumed work on document disclosure and questioning of witnesses. As of September 2024, the questioning process in the Action is largely complete.

The Representative Plaintiff is in the process of scheduling a case management hearing to set dates for the trial of the Action. Preparation for trial will begin once the Parties have completed their questioning of witnesses and disclosure of documents. It is currently unknown when the trial will commence, as this will be subject to Court availability.

Further Information

If you were an investor in the Northwynd REIT and would like more information on this Class Proceeding, we encourage you to look through the documents that have been filed in this lawsuit. These are available at the links in the list of documents to date.

For more information, please contact Andrew Sunter, Robert Martz, Alison Scott, or Jennie Han at Burnet, Duckworth & Palmer.

Andrew Sunter
Email: asunter@bdplaw.com

Robert Martz
Email: rmartz@bdplaw.com  

Alison Scott
Email: ascott@bdplaw.com           

Jennie Han
Email: jhan@bdplaw.com

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