Williams Lake City Councillor Scott Nelson has filed documents with B.C. Supreme Court refuting allegations made in a lawsuit naming him and his wife, Twila Smigelsky, and companies they oversee.
The Aug. 28 response denies allegations made in the lawsuit filed against Nelson and his wife in June and instead indicates the respondents will be seeking special costs as a result of the claims brought forward, calling the allegations "salacious, unfounded and fundamentally incorrect."
Nelson, Smigelsky and businesses the couple owns or operates are listed as the respondents in court documents filed on June 25 on behalf of Dr. Mark Lambiotte Inc., Dr. J.D. Neufeld Inc., Marc Lambiotte, David Lambiotte and Lara Lambiotte (the petitioners or Lambiottes and Neufeld).
Along with Nelson and Smigelsky, the civil suit also names the following companies: Stratton Ventures Ltd. (Stratton), Lambiotte Ventures Ltd. (LVL), Scott and Twila Rentals Ltd., Best Buy Propane Ltd., and numbered companies registered as 1155033 B.C. Ltd. and 673284 BC Ltd (673).
"Mr. Nelson will be pursuing a claim in defamation outside the context of this litigation and will be seeking significant compensatory and punitive damages in the millions of dollars in an effort to repair his reputation," stated court documents filed on behalf of Nelson.
The petition documents filed in June put forward a number of allegations related to what the petitioners claim is the mismanagement of some of the companies, mainly Stratton by Nelson and Smigelsky. The allegations include the misappropriation of cash, failing to pay amounts due on mortgages and to the Canada Revenue Agency, entering fraudulent agreements and forging signatures, among other things.
According to the response from Nelson, the initial suit's allegations are based on "a limited review of one side of Stratton's books" and a "fundamental misunderstanding of the financial operations and status of Stratton."
The court documents state Nelson is in the process of reviewing bank statements from the 13 accounts held by Stratton and 673 in order to identify transactions on both sides of the ledger to more fairly represent the contributions made by him or the other companies, which the Lambiottes and Neufeld suggest funds were misdirected to.
It is alleged by the petitioners that Nelson and Smigelsky may have diverted funds from the corporations they were shareholders in, with the couple, to some of the couple's other companies or businesses, without permission.
However, Nelson's filing states that he advanced loans through his related companies to both Stratton and 673 on an as-needed basis and that the initial lawsuit seems not to have reviewed the transfers into Stratton from Nelson and his other companies, only the funds going out.
"The petitioners are aware that Stratton routinely engages in and relies on related party transactions as part of its normal functioning process," stated court documents.
In addition to refuting the allegations of misappropriation of funds to Nelson and Smigelsky's other companies, the response by Nelson questions the credibility of Nelson's former controller, whose work provided some of the basis of the initial lawsuit.
The initial lawsuit claims there was a failure to account for as much as $15 million in sales and refinancings of properties.
Nelson's response suggests the former controller made "significant errors" which were to Nelson's detriment, providing an example of an alleged incorrect entry from 2023, which it attributes to the controller.
Nelson's response also states Neufeld and Lambiotte received "massive benefits" from Stratton through the efforts of Nelson in managing the growth and success of the company. It says the Lambiottes and Neufeld received all-expenses paid family trips to Hawaii and New York, car payments, monthly payments and cash distributions in excess of $500,000 from Stratton.
The response states Neufeld and Lambiotte are "personally indebted" to Nelson after a recapitalization and restructuring of Stratton in 2018. In the process, the court documents filed by Nelson state he advanced Dr. Neufeld and Dr. Lambiotte $121,678.59 and $168,348.54, respectively, secured by promissory notes.
Stratton, the business which is the main focus of both the petitioner's documents and Nelson's response, is said to have been incorporated in 2014 for the purpose of investing in real estate in B.C. according the Nelson's filing. According to the response, Nelson, Smigelsky, Marc Lambiotte and Neufeld have been the sole directors of Stratton since 2018.
Stratton owns 100 per cent of the numbered company 673, which owns the Super 8 motel in Williams Lake.
Stratton, however, includes a number of other hospitality and apartment rental assets, including apartment buildings in Kitimat, B.C., Canoe Court in Prince George, and the Best Western motel in Penticton. The court documents states Stratton has grown to be worth over $48 million since its incorporation.
"Mr. Nelson has used his relationships and professional networks, along with his business and management prowess, to grow the value of Stratton's assets," it says, noting Nelson manages over two dozen companies, many of which own commercial and multi-family rental units.
The response goes into extensive details of the business arrangements between the parties involved and some of Stratton's investments, and credits Nelson, supported by Smigelsky, with the company's success.
It describes how this was achieved using a business model of purchasing properties at a low value and increasing their market value, then leveraging the increased value by selling the properties or refinancing them at the higher value.
The documents discuss property purchases by Stratton worth millions of dollars in Kitimat, Williams Lake, Prince George, and Penticton. Nelson's response claims that before 2018, he advanced the company over $1.5 million, and Stratton issued the first of a number of promissory notes to Nelson based on this advance.
Nelson states he always acted in the best interest of Stratton and 673 and did not advantage himself to the detriment of Stratton or the other shareholders and was not operating Stratton and 673 in a manner oppressive to or prejudicial to the petitioners, as they claimed in their suit.
While the initial petition to the court accuses Nelson and Smigelsky of "denying the petitioners adequate access to the books and records of the company," Nelson's response filing states instead that the petitioners, as fellow directors of Stratton, were able to be "as involved as they chose to be," and Nelson encouraged their involvement. Lambiotte and Neufeld were included in weekly director's meetings and rarely asked questions, according to the response.
"Dr. Neufeld and Dr. Lambiotte also had access to the books and records of Stratton upon request," states Nelson's response, as well as indicating Neufeld had online access to Stratton's banking records.
"Mr. Nelson is not aware of any instance where either Dr. Neufeld or Dr. Lambiotte requested access to Stratton's corporate or financial records and were denied that access."
This sits in stark contrast to the statement by the Lambiotte's and Neufeld's court documents alleging Nelson and Smigelsky concealed transactions from Stratton's shareholders and accountants.
In Nelson's documents it states that when both Lambiotte and Neufeld wanted to sell their shares of Stratton in 2025, Nelson offered to purchase their interests, but they were not satisfied with the offer and instead introduced the "spurious allegations."
While Nelson's response states he offered to provide "comprehensive documentation and records to clear up and clarify their misunderstanding," the petitioners chose to move ahead with legal action.
It also claims the petitioners are trying to monetize their limited investments in Stratton and, by requesting the dissolution of the company, are acting without regard for the potential impacts to the company.
While the Lambiottes and Neufeld were seeking a number of interventions by the courts, including the dissolution of Stratton and LVL, the respondents state in their filing that they consent to none of the orders set out in the petition.
An order of consent had been filed and signed by all parties, which prevents Nelson or Smigelsky from moving assets or funds out of Stratton and 673, but the response now states the respondents consent to none of the orders set out by part 1 of the petition.
The response indicates the relief sought by the petitioners will not further the interests of Stratton or 673 and instead will "cause further harm by delaying the ongoing sales and refinancing of certain of the properties."
In addition, the response indicates the respondents will be seeking special costs and that the petitioners' claims were made "without regard to the truth and without foundation," won't be supported by any admissible evidence, and questions the motive of the petitioners in bringing the claims forward.
