Executive Summary: Key Legal and Evidentiary Issues

• Whether the Substitution Order of July 10, 2025, replacing BCMP with Altin as petitioner, can be set aside on grounds of material non-disclosure.
• Classification of the July 10, 2025 hearing as ex parte where the Main Street Arts respondents had not filed any petition response.
• Court's jurisdiction to vary or set aside the Substitution Order under Rules 3-8(11), 8-5(8), and 22-1(3), or in its inherent jurisdiction.
• Legality of substituting a party in respect of the in personam aspect of a foreclosure proceeding after judgment has been granted on that aspect.
• Whether an order absolute of foreclosure should be granted given the deficiencies in the pleadings flowing from the Substitution Order.
• Main Street Arts' request for a six-month extension of the redemption period to pursue rezoning and refinancing of the Lands.

Facts of the case This matter is a foreclosure proceeding in the Supreme Court of British Columbia concerning three commercial parcels of land located at 1940 Main Street, Vancouver (the "Lands"). The petitioner, Altin Capital Limited ("Altin"), is the first and second mortgagee in respect of the Lands. When proceedings were commenced, BCMP Mortgage Investment Corporation ("BCMP") held the first mortgage and Altin held the second. By an assignment agreement dated January 20, 2022, BCMP assigned to Altin all of its interest in the foreclosure proceeding. The loans secured against the Lands have been in default since January 2021. Mr. Macario Teodoro (Tobi) Reyes is the director and sole shareholder of the corporate entities that constitute the Main Street Arts respondents. MIB Enterprises Ltd. ("MIB") is the third mortgagee, having advanced funds to Main Street 2 Arts Investment Development Limited Partnership in December 2021 and registered its mortgage in January 2022. ABC Main Auto Centre (Holdings) Ltd. and Propane Depot Inc. are tenants on the Lands and did not participate in the application.

Procedural history BCMP commenced foreclosure proceedings by filing the petition on February 16, 2021, and Altin filed its response to the petition on April 9, 2021. None of the Main Street Arts respondents have filed a response to the petition. On April 13, 2021, BCMP obtained an Order Nisi of Foreclosure providing for a three-month redemption period and judgment against the Main Street Arts respondents in the sum of $17,291,680.17, plus interest at 18% per annum compounded monthly, resulting in a daily rate of $8,477.24. At that time, the amount owing to Altin as second mortgagee was approximately $7,048,909.10, and Altin was granted exclusive conduct of sale of the Lands for 90 days. The redemption period and Altin's conduct of sale period, originally ending July 12, 2021, were extended by consent order to August 5, 2021. The mortgage was not redeemed, and BCMP obtained an order for conduct of sale on August 21, 2021. MIB filed its response to the petition on October 3, 2024. On July 10, 2025, Altin obtained an order substituting it as petitioner in the proceedings (the "Substitution Order"). The Main Street Arts respondents were not given notice of the application, which was heard in general chambers. As of December 15, 2025, more than $30 million was owing under the first mortgage and more than $15 million under the second mortgage. An appraisal dated July 23, 2025 from Ryan ULC valued the Lands at $22,200,000 as of December 4, 2024, and the BC Assessment value as of July 1, 2024 was $23,715,000. In November 2025, Altin caused a payment of $479,131.13 to be made to the City of Vancouver to settle the 2024 property tax arrears and prevent a tax sale. Mr. Reyes deposed that since 2021 he has been working with Altin to address the outstanding debt, with a plan to develop the Lands to include a 30-story tower with a large hotel and a cultural centre for the Filipino community. On December 10, 2025, Vancouver City Council unanimously passed a motion directing City staff to prioritize and expedite review of the project, and evidence was provided that the Lands could be valued at approximately $53 million if rezoning and development approval are obtained.

The applications before the court Altin's Notice of Application for an order absolute was filed on July 31, 2025, and was originally scheduled for hearing in general chambers but was delayed until January 7, 2026. The hearing was adjourned in the afternoon due to counsel's illness and rescheduled to February 6, 2026. On January 29, 2026, Main Street Arts filed a Notice of Application seeking to set aside the Substitution Order, which Altin opposed by Application Response filed February 4, 2026. At the February 6, 2026 hearing, the parties took the position that the applications should be heard together, and the matter was adjourned to March 27, 2026. Main Street Arts opposed the order absolute application and sought a six-month extension of the redemption period.

Parties' positions on the Substitution Order Main Street Arts sought to set aside the Substitution Order, which they characterized as ex parte, on the grounds of material non-disclosure and that the court was misled. They submitted that Altin had failed to advise the court of the body of law preventing the substitution of a party after judgment, and that the only order possibly available was one substituting Altin as petitioner in respect of the in rem aspects of the proceeding, as judgment had not yet been granted on those aspects whereas it had been granted on the in personam aspects. Main Street Arts also argued that Altin failed to advise the court that, although it had not filed a response in this proceeding, it had filed a response in a sister foreclosure and appeared at the hearing of the application for an order for conduct of sale, and that the assignment agreement required Altin to give notice of the assignment to all parties, which they said was not done. Altin submitted that it was not required to serve the Substitution Order Notice of Application on Main Street Arts and that the hearing was not ex parte. Relying on Rule 8-1(7) and Matthes v. Manufacturers Life Insurance Company, 2008 BCSC 6, Altin argued that respondents who do not file appearances do not become parties of record and are not entitled to notice of hearings. Altin further argued that the court lacked jurisdiction to set aside or vary the Substitution Order, as none of the circumstances covered by Rules 3-8(11), 8-5(8), or 22-1(3) applied, rendering the court functus. In the alternative, Altin argued that if the hearing was ex parte, the proper test was the three-part Miracle Feeds test, which Main Street Arts could not satisfy.

Analysis and findings Justice Morishita held that Mr. Justice Macaulay's reasoning in Matthes applied. As the Main Street Arts respondents did not file petition responses, they were not parties of record, and Altin was not required to serve them with the Substitution Order Notice of Application; the July 10, 2025 hearing was therefore not ex parte. The Court agreed with Altin that none of the circumstances covered by Rules 3-8(11), 8-5(8), or 22-1(3) applied, and that once the order was entered, the court was functus, with power to vary the judgment only in the limited circumstances set out in the Rules. The Court rejected the submission that there had been material non-disclosure, finding that while the chambers judge had not been provided with the applicable law, it appeared more likely that both counsel and the court were unaware that the order being sought was incorrect in law. The Court held that the remedy was to appeal the order rather than to vary or set it aside. Justice Morishita also observed that Main Street Arts had been aware of the assignment prior to the July 10, 2025 hearing, and in any event would have been aware of the Substitution Order when served with the Notice of Application seeking an order absolute filed July 31, 2025, yet did not file the application to set it aside until five months later, on January 29, 2026.

Outcome By the March 27, 2026 hearing, both parties agreed that the substitution of the in personam aspect of the proceeding was incorrect in law. Altin urged the court to proceed because if the order absolute were granted, the in personam relief would be moot, or alternatively to vary the Substitution Order to apply only to the in rem claim. Main Street Arts submitted that Altin should be required to "start over" by seeking an order substituting it as petitioner for the in rem aspects of the petition. Justice Morishita held that it would be inappropriate to consider the merits of the application for an order absolute at this stage given the state of the pleadings, and that the court lacked jurisdiction to vary the Substitution Order to indicate that it applied only to the in rem claim. The Court adjourned Altin's application for an order absolute for three months to give the parties an opportunity to address the Substitution Order, either through Main Street Arts attempting to appeal it or through Altin bringing an application, or both. The Court emphasized that the Main Street Arts respondents must act with haste if they intend to bring an appeal, as Altin would suffer greater prejudice with further delay. Justice Morishita indicated she would be seized of the proceeding to assist the parties in obtaining a timely resolution. No party was declared the successful party in this decision and no monetary award, damages, or costs were ordered, as the petitioner's application for an order absolute was adjourned for three months without a final determination on the merits.