Who owns the club properties?

Below is a list of questions on the issue of property ownership, which were recently submitted to the trustee, the board and DRI, by a group of members.

The Ownership Questions – LETTER EXTRACT

… We are writing to you as concerned members of Embarc Members Association (formerly known as Club Intrawest, referred to herein The Club), a non-stock, non-profit Delaware corporation.

We wish to inquire on the status of real property contained within the Trust Agreement dated as of the 20th day of January, 1994, (Original Trust Agreement; attached) and which has since undergone fifty-six amendments, such that the most current representation of the trusts is the Eighth Restated Trust Indenture and the Fifth-Sixth Trust Agreement Amendment that exists between the following entities (both attached):

  1. COMPUTERSHARE TRUST COMPANY OF CANADA, Federal Trust Company having an office at 510 Burrard Street, Vancouver, British Columbia.
  2. EMBARC MEMBERS ASSOCIATION, a non-stock, non-profit Company duly organized and existing under the laws of the State of Delaware, United States of America and having its records office at 375 Water, Suite 326, Vancouver, British Columbia, Canada.
  3. DIAMOND RESORTS CANADA. LTD., a British Columbia corporation having an office at 10600 West Charleston Boulevard, Las Vegas, Nevada, United States 89135.

Our inquiries are as follows:

  1. According to the Tax Court of Canada case, Club Intrawest versus Her Majesty the Queen (Docket 2012-3401(GST)G; judgement attached), and the subsequent Federal Court of Appeal case (Docket A-249-16; judgement attached), based on the evidence provided by Club Intrawest, to include the Original Trust Agreement, no principal-agency relationship exists between the Club and its members. Additionally, both the Tax Court and Federal Court of Appeal found no evidence that members possess beneficial ownership of the real property (e.g. land and title) identified in the trusts. Our questions as it relates to ownership are as follows:
    1. Do individual members of The Club (not The Club itself as a separate legal entity) possess beneficial ownership of the real property identified in the trusts?
    2. If the members possess beneficial ownership of real property, do the members own the real property outright? If so, what specific assets (legal title) do they own and where is this documented?
    3. If members do not have beneficial ownership of the real property:
      1. What do members own, if anything at all?
      2. Who has beneficial ownership of the real property?
      3. Who owns the real property itself?
    4. As it relates to documentation, please provide the following:
      1. The documents indicating that the developer transferred ownership of the initial resort accommodation directly to the club itself (e.g. the transfer agreement between Intrawest and The Club)
      2. The documents indicating that The Club transferred ownership of the initial resort accommodation to the trustee (e.g. the transfer agreement between The Club and the trustees).
      3. The documents indicating that The Club transferred ownership of the initial resort accommodation to the members (e.g. the trust agreement between The Club and its members).
      4. Note we are not referring here to The Club Instruments (i.e., the certificate of incorporation, the master declaration, the trust agreement; the bylaws and the guidelines), as none of these documents show evidence to the above transactions.
  1. In line with the above questioning, we have specific questions on the Initial Resort Accommodations (see Original Trust Agreement) that established The Club, that is: Whistler:
    1. Why does this asset (Whistler land) not appear on the club’s audited financial statements?
    2. Was the transaction as reported in the Original Trust ever completed?
    3. Who owns the Whistler land?
    4. Has the Whistler property been transferred to some other entity other than The Club? If yes:
      1. Why and who authorized the transfer?
      2. How and when was this disclosed to The Club membership?
  1. As reported in the 2003 Financials, a fire at Whistler resort caused damages of approximately $600,000, which was to be covered entirely by the Club’s insurance provider, except for a $5000 deductible.
    1. To whom did the insurance provider issue the cheque?
    2. Who is currently named as the beneficiary of any proceeds that may be paid out on any insurance claim?
  1. In the trust agreement, there is reference to the term Resort Accommodation.
    1. Does Resort Accommodation, as referred to in the trust, directly equate to real property and, if so, what are the specific components of the real property (including legal title)?
    2. If Resort Accommodation does not directly equate to real property, what does it represent specifically (beyond the definition provided, which defines Resort Accommodation in numerous ways).
  1. In 1996, eight (8) Resort Accommodations (RA) located in Kauai were transferred from the Developer to The Club. In June 2007 (as per the 2007 Financials; attached), ten (10) Kauai RAs were removed from The Club. We have the following questions on these transactions:
    1. Transfer
      1. When were the two additional Kauai RAs transferred from the Developer to The Club?
      2. How many points were issued by The Club to the Developer?
      3. What was the occupancy rate of the RAs?
      4. When were the Kauai RAs transferred from The Club to the Trustee?
    2. Value
      1. What was the property value of the Kauai RAs when they were transferred to The Club, and then when they were transferred to the Trustee?
      2. What was the value of the RAs for each year, while they remained in The Club?
    3. Ownership
      1. Who was the official owner of the Kauai RAs from 1996 to 2007?
      2. What was the name of the entity that took legal possession of the Kauai RAs throughout this period?
    4. Sale
      1. What was the property value of the Kauai RAs when they were sold?
      2. What legal entity reported the sale?
      3. What was the name of the entity that paid taxes on the capital gain incurred between 1996 and 2007 on the Kauai RAs?
    5. Replacement
      1. What RAs (described by location, units and occupancy rate) were added to the trust to replace the Kauai RAs?
      2. What was the number of resort points issued to the developer, if any, when the new RAs were transferred from the Developer to The Club?
    6. Benefit
      1. How did The Club benefit from the above transaction?
      2. Who else benefited from the transaction, and how?
  1. The Embarc Members Association bylaws state …”On a winding-up and dissolution of the Club, the Board of Directors or the Trustee shall liquidate all of the assets of the Club and convert them to cash and the balance, after making a provision for the payment of all debts, taxes (if any), and expenses associated with the winding-up and dissolution shall be distributed to the Members of the Club so that each Member receives a portion of the proceeds equal to a fraction composed of the total number of Resort Points owned by the Declarant, a Resort Points Member or allocated to a Advantage Member as the nominator and the total number of all Resort Points issued by the Club, to the Declarant, to Resort Points Members and allocated to Advantage Members.”
    1. In the event of wind-up, which assets of The Club are to be liquidated? Please specify the type of assets and identify them.
    2. If the only assets to be liquidated are those listed on The Club’s consolidated financials, please confirm that the assets do not, therefore, include the real property that forms the Resort Accommodations.
    3. Please identify who receives the real property, currently sitting in trust, upon wind-up of The Club.
  1. As you are aware, The Club has dispensed with the Annual General Meeting (AGM) since inception of The Club, contrary to the provisions of the law in Canada (NFP Act) and British Columbia (Societies Act), along with Delaware (Delaware Code, Title 8). Please explain why this AGM has been cancelled every year.

We request that, as it relates to this letter and all business arising, the Board of Directors and The Club’s legal secretary ensure that (1) this letter is officially tabled at the next Board of Directors meeting of The Club as new business; (2) the discussion of the letter occurs in the public portion of the Board meeting; (3) the associated discussion of the letter is documented in the meeting minutes; (4) the letter be attached to the meeting minutes; (5) the meeting minutes be distributed to all members; and (6), the answers to the questions be issued to all members.  We hereby give authorization to the Board to make this letter public to the entire membership, through the public Board meeting documents, as we have indicated above.