Executive Summary: Key Legal and Evidentiary Issues

• Genesis Mortgage Investment Corp. loaned $2,400,000 to the respondents for a property redevelopment in Kelowna, secured by mortgages on both the development property and the family home.

• Respondents defaulted on the mortgage, triggering foreclosure proceedings in which Genesis was awarded indemnity costs under the order nisi.

• An associate judge ordered Genesis to submit its legal bills for costs assessment, which was upheld by a Supreme Court judge, raising the tension between solicitor-client privilege and the borrowers' right of redemption.

• The central legal question — whether a lender awarded indemnity costs in foreclosure can be compelled to have those costs assessed during ongoing litigation — has not been previously decided at the appellate level in British Columbia.

• Irreparable harm was identified in the potential loss of solicitor-client privilege, which, once waived, cannot be restored or remedied by a monetary award.

• Leave to appeal and a stay of the lower court orders were both granted by the Court of Appeal, with Genesis making concessions to preserve the respondents' redemption rights pending appeal.

The loan and the properties at the heart of the dispute

Christine de Vries and Sebastien Blais were formerly the joint owners of a property on Fuller Avenue in Kelowna, B.C. (the "Fuller Property"), which they sought to develop as a fourplex. Ms. de Vries also owns a property on Wilson Avenue in Kelowna, B.C. (the "Wilson Property"), which is the couple's family home. To finance the Fuller Property redevelopment, the respondents were granted $2,400,000 from Genesis Mortgage Investment Corp. ("Genesis"). This loan was secured by a mortgage against both the Fuller Property and the Wilson Property.

Default and the commencement of foreclosure

The redevelopment project ran into difficulties, and the respondents defaulted on the mortgage. Genesis commenced foreclosure proceedings in February 2025. On March 26, 2025, it was granted an order nisi, conduct of sale of the Fuller Property, and costs on an indemnity basis up to the order nisi. The court-approved sale of the Fuller Property completed on August 5, 2025.

The dispute over indemnity costs and the redemption amount

Shortly after the sale of the Fuller Property, the respondents' counsel requested an accounting, including a bill of costs, to ascertain the updated amount necessary to exercise the respondents' right of redemption over the Wilson Property. Genesis refused to provide a bill of costs but indicated that the total amount required to redeem the Wilson Property was $443,238.88, plus costs and disbursements claimed in the amount of $104,067.39.

The lower court decisions

On August 29, 2025, the respondents applied to have the indemnity costs and interest under the order nisi determined, or alternatively, for an order setting the redemption amount owing including interest and costs. On October 1, 2025, an associate judge ordered Genesis to file an appointment to have costs assessed, to be heard on a priority basis, with a bill of costs attached. He adjourned Genesis's application for conduct of sale of the Wilson Property to a date following the costs assessment. Genesis appealed the associate judge's order to a Supreme Court judge, who upheld the decision of the associate judge. The judge also ordered that interest would cease to accrue on the indebtedness from October 1, 2025, until the first business day following the assessment of Genesis's indemnity costs. On February 18, 2026, Justice Iyer of the Court of Appeal ordered an interim stay of the orders of the associate judge and the judge pending hearing of the leave to appeal application.

The tension between privilege and the right of redemption

The Supreme Court judge held that when Genesis elected to pursue indemnity costs, as opposed to claiming costs pursuant to the tariff under the Supreme Court Civil Rules, B.C. Reg. 168/2009, Genesis was required to disclose the invoices supporting its indemnity costs to the respondents and was required to submit to an assessment of those costs prior to the expiry of the redemption period. The judge rejected Genesis's argument that it should not be required to waive solicitor-client privilege over its file in order to avail itself of the indemnity costs to which it is entitled. She reasoned that allowing Genesis to avoid an assessment of their indemnity costs until after all litigation was concluded would allow a lender to claim absurdly inflated costs, requiring mortgagors to secure funds far exceeding what they truly owed in order to exercise their right of redemption. The judge also rejected Genesis's argument that the respondents should not be allowed to demand an assessment of its costs without establishing their ability to secure sufficient funds to exercise their right of redemption, holding that Genesis controlled the information necessary for the respondents to determine the actual redemption amount. In the judge's view, Genesis had a choice: if it wanted to claim indemnity costs, it was obligated to provide the necessary accounting despite the waiver of privilege; if it chose to protect privilege, it could elect to claim only costs pursuant to the tariff set forth in the Supreme Court Civil Rules.

The leave to appeal analysis

Genesis required leave to appeal as the order constituted a limited appeal order under Rule 11(a)(ix) and (g) of the Court of Appeal Rules, B.C. Reg. 120/2022. Justice Francis, sitting in chambers, considered the four criteria from Goldman, Sachs & Co. v. Sessions, 2000 BCCA 326, for granting leave from a limited appeal order: whether the point on appeal is of significance to the practice; whether it is of significance to the action itself; whether the appeal is prima facie meritorious or frivolous; and whether the appeal will unduly hinder the progress of the action. The Court found that the issue — which, according to the judge below, had not been judicially considered in this province — could have significant consequences to parties in foreclosure proceedings regardless of the outcome. The Court was also satisfied the proposed appeal was of importance to the parties, noting there was likely a considerable difference between Genesis's indemnity costs and tariff costs, and that for the respondents, the ability to have costs assessed prior to the expiry of the redemption period may be the determinative factor in whether they could afford to redeem the mortgage on their family home. The Court found some merit to the appeal and that the merits threshold for leave had been met.

The stay application and the ruling

The Court assessed the stay application under the three-part test from RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, requiring a showing of some merit, irreparable harm, and a favourable balance of convenience. Justice Francis found that there was a risk of irreparable harm because, absent a stay, Genesis would be required to produce its legal invoices to the respondents immediately and thereby waive solicitor-client privilege; once lost, privilege cannot be restored, nor is it capable of being remedied with a monetary award. On the balance of convenience, the respondents did not stand to suffer significant prejudice, particularly given Genesis's concessions: Genesis agreed that on appeal it would only seek to vary the interest order such that interest restarts the business day after the decision on appeal, and that it would not seek costs of the proceedings below or of the appeal. The Court noted that the delay effectively extended the redemption period, enabling the respondents to have more time to marshal funds to redeem the mortgage. Leave to appeal was granted, and the orders of the judge and the associate judge were stayed pending the determination of the appeal. No final monetary award was determined at this stage, as the decision concerned Genesis's interlocutory leave and stay application; the substantive question of whether a foreclosing lender can be compelled to have its indemnity costs assessed during ongoing litigation remains to be decided by the Court of Appeal.