567 Hornby, Le Soleil Hotel – Investors battle to regain control

Friday, August 19th, 2005

Ashley Ford

Jewel Nomani contends that he is acting to protect his investment. SAM LEUNG — THE PROVINCE

A long simmering, bitter civil war has broken into the open between investors at Le Soleil Hotel, one of downtown Vancouver‘s better known boutique hotels.

The battlefield, already littered with more lawsuits and counterclaims than a bad mosquito day in Winnipeg, now sees the hotel with two reception desks to welcome guests.

Vancouver hotel figure and businessman Zul Somani’s Sunbelt Hotel Management Services Ltd. and Executive Inc. runs hotel operations through an affiliate, Le Soleil Hospitality Inc.

But, on the second floor, 567 Hornby Apartments Ltd., led by investors Jewel Nomani and Vancouver medical practitioner Dr. Andrew Louie have opened their own reception desk.

This seemingly bizarre business arrangement is virtually unheard of and is merely the latest development in a complex drama that has dragged in investors from Singapore, Malaysia, Indonesia the U.S., Bahrain and Canada.

Trying to cut through the legal maze — at last count there were something like 14 active lawsuits pending — is a test in itself, but in essence, it boils down to a battle for control by investors over their investments.

Somani says there are close to 100 units in the hotel pool, while 567 claims control of 31 rooms, which they are attempting to rent out. 567 has changed all the locks on its doors, managed to put in its own telephone line, runs its own website and has a Vancouver City licence to operate as a hotel.

“We also have our own concierge, cleaners and laundry services,” says Nomani.

The pair say they have the potential over the next few months to bring 60-64 rooms under their control.

Nomani said Louie’s rooms had been empty for a year before the pair acted to protect their investments and “we are now getting revenue from our rooms.”

Nomani, a Vancouver businessman says that Somani has gained control of the strata council and he and Louie are merely moving to protect and enhance their investments and produce revenue.

The pair also believe Somani is attempting to buy up units from other investors on the cheap by offering under-market prices.

“His game plan is to try and get total control of a building that cost $34 million for around $16 million. He has a powerful legal team and they keep throwing out lawsuits hoping to exhaust the remaining investors into selling to him,” Nomani says.

However, Somani refuted that outright and says he only owns one unit in the building.

“I am not in the business of buying and selling suites but we have investors who want to,” he said in an interview yesterday.

He said he has never heard of two reception desks in a hotel in Vancouver and says he doesn’t believe it will work.

The soft-spoken Louie says it is a “filthy war and I got tired of being kicked around.”

Investors, mainly from Singapore, initially paid between $240,000 and $280,00 for their units. Recent room sales have been in the $160,000 to $170,000 range.

Le Soleil opened its doors for business in1999 with 128 units, 119 rooms, at a cost of approximately $35 million. It was developed by American Corporate Suites (Canada) Inc. led by then Vancouver businessman Barry Hong.

American went bankrupt and the receivers sold the hotel’s common property leases, including the car park and lobby areas to Sunbelt for $1.53 million, a sale approved in 2002 by receiver D. Manning and Associates of Vancouver.

One of many lawsuits claims Sunbelt‘s leases of the common property are not valid as they were sold without the owner’s permission.

The Singapore Straits Times quotes Singaporean management consultant K.W.Tan, a Le Soleil investor, saying Sunbelt is forcing the owners to sell their units at a loss by holding on to common areas essential to hotel operations.

Somani denied in an e-mail to the paper that Sunbelt is causing owners to sell their units at very low prices. “In the past, we’ve bought units offered for sale either in the open market or directly offered to us by individual owners,” Somani said in his e-mail..

Sharookh Daroowala, president of the LMS 3837 strata council of the hotel said in an interview yesterday that “the January 2005 elections to the strata council were fair and square and conducted and supervised by Crosbie Property Management Ltd. who oversees maintenance of the property.

“Mr. Nomani and his group unsuccessfully tried to control the strata council but lost by a wide majority,” he said.

“Le Soleil Hospitality Inc. has commenced legal proceedings against Mr. Nomani and Dr. Louie and others alleging breach of fiduciary duty, breach of confidence, conspiracy, wrongful interference with contractual relations, inducing breach of their contract and have applied for an injunction restraining Nomani and others from further participation.

“Originally the Somani group was at odds with approximately 90 owners, but most of them have since settled their differences and given the units to Le Soleil Hospitality Inc. to manage or have sold their units.”

Daroowala said the injunction application will be heard next month. Well over $2 million has been spent in legal fees in the last three years, he added.

An irony: Last year the hotel was named by influential Conde Nast Traveller magazine as one of “the world’s best places to stay.”


One Response to “567 Hornby, Le Soleil Hotel – Investors battle to regain control”

  1. Sharookh Daroowala says:

    Since you have been following this litigation on your web site I thought I would let you know that judgment has now been given in one of the major lawsuits in this matter and the Court’s findings are available at http://www.courts.gov.bc.ca/jdb-txt/SC/10/11/2010BCSC1183.htm

    The Court found that Dr. Andrew Louie and Jewel Nomani a.k.a. Syed Nomani have engaged in fraud, perjury, breach of Court Orders, civil conspiracy etc. and noted:

    [333] From the outset, Mr. Nomani did all that he could to enhance his own position in connection with Hotel matters. For example, in 2003 and 2004 he acted as a consultant to both Dr. Louie and Hospitality concurrently and told Mr. Daroowala “If I can’t make money from my friends, I have to make money from my friends’ enemies”. He also took sales commissions from LSOG owners, Mr. Franiek and Dr. Louie for agreements regarding LSOG units. I infer that this long-standing pattern of self-serving action was at the heart of his efforts to persuade Dr. Louie to disavow the LOI.

    [353] The unlawful means Dr. Louie and Mr. Nomani agreed upon and implemented in pursuit of their common objective included fraud, perjury and the breach of court orders. These acts predictably caused injury to Hospitality.

    [371] In this case, I find that Dr. Louie and Mr. Nomani behaved utterly outrageously. Their planned, deliberate, persistent fraud went far beyond the sort of “fast one” pulled in Performance Industries. Within hours of the LOI’s conclusion, they conspired to undermine it. After they were told it was valid and enforceable, they created, executed and relied upon the fraudulent Alleged June Agreements in a variety of litigation contexts for a period of over three years. In so doing, they repeatedly abused the court process and required Hospitality to prove its claim.

    [378] I conclude that this is one of the exceptionally rare commercial cases in which punitive damages are appropriate. Taking into account the case authorities and the need to exercise restraint, I award $100,000 in punitive damages against the Louie Group Defendants and $100,000 in punitive damages against 567 and Mr. Nomani. In making these awards, I exclude from my consideration their conduct in the litigation itself in order to avoid imposing a double penalty, given the special costs awarded below.[386] Dr. Louie and Mr. Nomani both committed fraud and perjury. Although Dr. Louie eventually recanted, he did so for self-serving reasons in an attempt at damage control. Their conduct in relying upon the fraudulent Alleged June Agreements for over three years and perjuring themselves was reprehensible. Standing alone, this conduct would justify awards for special costs. It does not, however, stand alone.

    [387] Dr. Louie and Mr. Nomani also failed repeatedly to produce relevant documents throughout the course of the litigation. They went on to swear false affidavits and breach court orders in this regard. Their purpose in so doing was to hide Dr. Louie’s massive funding of the Prohibited Actions and their fraudulent conduct with respect to the Alleged June Agreements. But for Hospitality’s extraordinary tenacity, they may have achieved at least a measure of success.