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ALBERTA SECURITIES COMMISSION

DECISION

Citation: Westside Land Corporation, Re, 2012 ABASC 486 Date: 20121120

Westside Land Corporation, West Pointe Park Ltd., Avion Park Ltd.,

Eastridge Park Ltd., Eastridge Park II Ltd., Tovero Ridge Park Ltd.,

Foxcreek Park Ltd. and David Brezsnyak

Panel: Glenda A. Campbell, QC

Maureen McCaw

Fred R.N. Snell, FCA

Appearing: Robert Stack

for Commission Staff

Steven Leitl and Marlene Stewart

for the Respondents

Dates of Submissions: 3, 19, 26 and 31 October 2012

Date of Decision: 20 November 2012

#4366673 v1

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I. INTRODUCTION

[1] In a 4 April 2012 notice of hearing (the "Notice of Hearing"), Staff ("Staff") of the

Alberta Securities Commission (the "Commission") made allegations against Westside Land

Corporation ("Westside"), West Pointe Park Ltd., Avion Park Ltd., Eastridge Park Ltd.,

Eastridge Park II Ltd., Tovero Ridge Park Ltd., Foxcreek Park Ltd. and David Brezsnyak

("Brezsnyak") (collectively, the "Respondents"). The allegations related to the Respondents'

sales of securities to finance the purchase of real estate in southern Alberta and develop those

lands for subsequent resale.

[2] Attached to the Notice of Hearing was a statement of agreed facts (the "Agreed Facts")

signed on 30 March 2012 and 2 April 2012 by the Respondents and Staff, respectively. (The

Agreed Facts are attached as Appendix A to this decision.) The Respondents admitted that they

sold securities without registration or a prospectus and without taking steps to determine if the

purchasers met the criteria for relevant exemptions. The Respondents also admitted that in so

acting they violated sections 75 and 110 of the Securities Act, R.S.A. 2000, c. S-4 (the "Act").

There was no allegation or admission that the Respondents engaged in conduct contrary to the

public interest.

[3] In addition to the Agreed Facts, we received other documentary evidence, heard the

testimony of an investor and of Brezsnyak, and received written submissions from counsel for

Staff and for Brezsnyak and Westside.

II. BACKGROUND

A. The Respondents

[4] Westside is an Alberta corporation formed on 25 October 2000 and has never been a

reporting issuer in Alberta. Its business is "real estate acquisition, management, development

and sales". Its sole shareholder is currently a numbered Alberta company wholly controlled by

Brezsnyak.

[5] Brezsnyak, a high-school graduate with some post-high-school business administration

courses, has no securities-related training or experience. He has been a shareholder, director and

officer of Westside since incorporation. At all relevant times, Brezsnyak was a guiding or

directing mind of Westside.

[6] West Pointe Park Ltd., Avion Park Ltd., Eastridge Park Ltd., Eastridge Park II Ltd.,

Tovero Ridge Park Ltd. and Foxcreek Park Ltd. (the "Project Companies") were incorporated by

Westside "to facilitate certain kinds of real estate transactions and projects". Staff did not seek

any sanctions against the Project Companies.

[7] None of Westside or the Project Companies has ever filed a prospectus with the

Commission. None of Westside, the Project Companies or Brezsnyak was ever registered with

the Commission to trade in securities (neither was another individual formerly involved).

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B. Westside Projects

[8] Westside projects involved Westside purchasing farmland near Calgary, and then taking

"steps to bring the land closer to urban residential, country residential or commercial use". The

land could then be sold to a developer or other purchaser, with surplus money paid to the

investors (the "Westside Investors") as a dividend. Westside would sell undivided interests in

land ("Westside UDIs") directly or use a special purpose company (a "Park Company") in which

investors would purchase shares funded through registered tax-sheltered plans. The Project

Companies acted as the Park Companies for the Westside Projects, thus the shares were "Project

Company Shares".

[9] Approximately 1500 Westside Investors purchased Westside UDIs or Project Company

Shares. Westside Investors received title to the lands as tenants in common. Westside UDI-

holders with at least a 60% interest in a particular project could terminate Westside as operator of

that project (the evidence indicated that Westside Investors have never taken this step); 60% was

also the percentage required to approve a development plan or sales proposal.

[10] Westside was compensated in three ways, including becoming a Westside UDI-holder

itself by retaining a 10% interest in lands sold to investors. Brezsnyak personally sold Westside

UDIs, as did "finders" who were paid a fee. Brezsnyak earned approximately $3.5 million in

wages and dividends between 2002 and 2011; $2.4 million of that between 2007 and 2011.

[11] Westside did not advertise but used personal contacts to promote its projects. Westside

brochures given to prospective investors frequently mentioned an estimated three-to-five-year

development period.

[12] Westside has been involved in 11 land projects, with the first purchased in February

2002. The first three resulted in invested funds totalling $10 492 924, with lands sold in April,

July and August 2006, respectively, for an average annual return to the participating Westside

Investors of 24.5%, 43.5% and 58.2%, respectively.

[13] Westside has seven outstanding projects, with land purchase dates ranging from March

2006 through December 2008, and with money received from Westside Investors totalling

$66 499 374. The first six of these projects have not been completed within the three-to-five

year project period mentioned in Westside's literature to potential investors; the last of the seven

is still within that period.

[14] Westside UDI sales for a late 2010 project were not successful. Westside returned to

those Westside Investors their money; almost $230 000 had been raised.

[15] Westside Investor PD testified that he invested approximately $500 000 in various

Westside projects, some of which are still outstanding. He has no concerns with the

development of the projects, never understood there to be any promised or guaranteed returns,

and believes that Brezsnyak's continued involvement is "critical" for investors. PD fears that

"any disruption" in Brezsnyak's involvement "would adversely affect . . . the well-being of our

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investments". PD also noted that Brezsnyak circulates regular publications updating Westside

Investors and is always easy to contact.

[16] We did not hear evidence that any Westside Investors were concerned with the

information they were given when investing in Westside UDIs or Project Company Shares, or

were concerned with the way Westside and Brezsnyak were operating the business.

C. Cooperation and Compliance Efforts

[17] Brezsnyak received, as director of Westside, a 25 October 2010 letter from a Staff

investigative counsel requesting information about Westside's fund-raising, projects and

operations. Brezsnyak testified that he immediately contacted legal counsel and worked

diligently to gather all requested information, which was provided in a letter to the Commission

dated 8 November 2010. The parties eventually prepared and agreed to provide a hearing panel

with the Agreed Facts, leaving the panel to determine a limitation issue and what, if any,

sanction orders are appropriate to make in the public interest against the Respondents.

[18] The evidence is clear that the Respondents were extremely cooperative with the

Commission throughout the investigation and enforcement hearing process. It is also clear that

once the Respondents were alerted to the Commission's concerns and realized they were engaged

in illegal activities, they took immediate steps to comply with Alberta securities laws, including

retention of legal counsel with securities law experience and filing required documentation with

the Commission.

III. ANALYSIS

A. Alberta Securities Laws Contravened

1. Illegal Trades and Distributions

[19] To find a contravention of section 75 of the Act, there must be a finding that a "security"

and "trade" were involved, with section 110 having the additional prerequisite of finding a

"distribution" within the meaning of the Act. The Respondents admitted to engaging in illegal

trades and distributions respecting the Westside UDIs and Project Company Shares, subject to

limitation period arguments they might raise (invoking section 201).

[20] It is clear that the Westside UDIs and Project Company Shares sold to Westside Investors

were "securities" within the meaning of sections 1(ggg) (v) and (xiv) of the Act, respectively, as

admitted by the Respondents. We so find. We also find that the sales of Westside UDIs and

Project Company Shares were "trades" and "distributions" within the meaning of sections 1(jjj)

and 1(p), respectively. The Respondents acknowledged that they were not "registered to trade in

securities" during the relevant times, there was no filed or receipted prospectus for Westside or

any of the Project Companies, and they had not taken steps to determine if any of the exemptions

from the prospectus and registration requirements of the Act were available. We so find.

[21] Based on those admissions and our conclusions, we find that the Respondents

contravened sections 75 and 110 of the Act.

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2. Limitation Period

[22] Section 201 of the Act provides:

No proceedings under this Part shall be commenced in a court or before the Commission more

than 6 years from the day of the occurrence of the event that gave rise to the proceedings.

[23] Westside and Brezsnyak contended that Westside projects purchased before 4 April 2006

should not be considered for sanction purposes, as that was six years before the 4 April 2012

Notice of Hearing commenced these proceedings. Further, they submitted that even if Westside

projects invested in before that date could properly be considered, three of those four projects are

completed and thus no longer exist.

[24] Staff submitted that any activity before 4 April 2006 was captured by the Notice of

Hearing as part of a "continuing course of conduct" or, alternatively, could be considered in the

sense of past conduct indicating that additional specific or general deterrence may be required.

[25] This situation is unusual because the Notice of Hearing was issued with admissions

attached and sought a determination on sanction only, not on the merits of allegations. There

may have been some trades and distributions of securities by the Respondents that occurred

outside of the six-year limitation period, but no evidence of the specifics of any such trades or

distributions was provided. For example, we do not know how many investors purchased

Westside UDIs or Project Company Shares before 4 April 2006 or the amount of money they

invested. In any event, in light of the sanctioning principles and factors discussed below and

given the extent of the admitted illegal activity occurring after 4 April 2006 – the number of

investors and money raised – the Respondents' activities before 4 April 2006 would have little or

no effect on the magnitude or type of the sanctioning orders we would make.

B. Sanction

[26] We next consider whether it is in the public interest to make an order with respect to

sanction against the Respondents under sections 198 and 199 of the Act.

1. Parties' Positions

(a) Staff

[27] Staff submitted that the circumstances in this case require orders that will serve as a

strong general deterrent with some measure of specific deterrence. In this regard, Staff

contended that a very substantial amount of money – over $66 million relating to the seven

outstanding projects – was raised from Westside Investors with no adherence to Alberta

securities laws, although Staff acknowledged measures taken by the Respondents to comply with

Alberta securities laws once alerted of their non-compliant activities by Staff. While Staff

conceded that there appeared to be a low risk of future "wholesale non-compliance with Alberta

securities laws" by Brezsnyak, they were concerned that his inexperience with securities

regulatory requirements might give rise to a risk of some future non-compliance. Staff also

noted that Brezsnyak made a large amount of money from his illegal activity. Staff submitted

that although some Westside Investors had received return of their investment with a profit, other

Westside Investors' invested money remains at risk of not being returned and some Westside

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Investors may not have invested had they been given full disclosure of the risks involved,

including the risks inherent in real estate development.

[28] For those reasons, Staff submitted that the following sanctions would provide appropriate

specific and general deterrence:

an administrative penalty "in the range of $300,000", payable jointly and

severally by Westside and Brezsnyak;

a two-year trading ban on Westside and Brezsnyak to prevent them from raising

money in the exempt market, with a carve-out for Brezsnyak's personal trading in

his own account; and

a ban on Brezsnyak acting as a director for an unspecified time, with Brezsnyak

continuing "in an officer-like role" for "technical and business matters relating to

land development".

[29] Staff did not seek sanctions against any of the Project Companies.

(b) Westside and Brezsnyak

[30] Westside and Brezsnyak submitted that there is no need for specific deterrence in these

circumstances. They contended that there is no risk that they will in future contravene Alberta

securities laws, meaning there are no accompanying risks to investors or the Alberta capital

market. In support of their contention, they pointed to the remedial steps taken to date and their

commitment to use experienced legal counsel to guide them in all future business endeavours.

Westside and Brezsnyak emphasized that the Respondents acted in good faith, operated an

"honest, rational, open and successful" business, did not cause financial harm or any real risk of

such harm, present no risk of future harm, fully cooperated with Staff, and "admitted their

violation and have taken all reasonable steps to ensure compliance going forward". They also

noted the critical role played by Brezsnyak in completing the Westside projects, and that the

Westside Investors believe the continued engagement of Brezsnyak in his role as a director and

officer of the Project Companies is critical to the success of their real estate development

projects. Accordingly, Westside and Brezsnyak submitted that the appropriate sanction would be

a "modest" administrative penalty with no public interest need for a trading ban on Westside and

Brezsnyak or a director ban on Brezsnyak.

2. The Law

(a) Principles and Factors

[31] The parties agreed on the applicable sanctioning factors. This Commission set out those

factors in Re Lamoureux, [2002] A.S.C.D. No. 125 at para. 11, as restated in Re Workum and

Hennig, 2008 ABASC 719 (affirmed 2010 ABCA 405) at para. 43:

the seriousness of the findings against the respondent and the respondent's recognition of

that seriousness;

characteristics of the respondent, including capital market experience and activity and

any prior sanctions;

any benefits received by the respondent and any harm to which investors or the capital

market generally were exposed by the misconduct found;

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the risk to investors and the capital market if the respondent were to continue to operate

unimpeded in the capital market or if others were to emulate the respondent's conduct;

decisions or outcomes in other matters; and

any mitigating considerations.

[32] In applying these factors we look to the underlying legal principles, as defined by our

public interest mandate: sanctions are to be protective and preventative, not punitive or

remedial. In protecting the public interest, we determine the appropriate levels of specific

deterrence (preventing future harm caused by a particular respondent) and general deterrence

(preventing future harm caused by others who may be tempted to engage in similar behaviour).

These principles have been confirmed as appropriate by the Supreme Court of Canada:

Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities

Commission), 2001 SCC 37 at paras. 39-45; and Re Cartaway Resources Corp., 2004 SCC 26 at

paras. 52-62. These sanctioning factors and principles have been applied in many decisions of

this Commission, including Workum and Re Arbour Energy Inc., 2012 ABASC 416.

(b) Principles and Factors Applied

[33] In determining appropriate sanction in particular circumstances, we examine the

misconduct as a whole, the need (and relative need) for specific and general deterrence, and the

combined effect of different sanction orders.

(i) Relevant Factors

[34] Based on their admissions and the evidence before us, Westside and Brezsnyak engaged

in serious capital-market misconduct. Illegal trades and distributions of securities are of great

concern because they deprive investors of the protections provided by Alberta securities laws

and thereby impair investor confidence in the fairness and efficiency of our capital market. The

Respondents, under the stewardship of Westside and Brezsnyak, raised approximately

$77 million (over 80% of that connected to projects purchased after April 2006) through their

illegal trades and distributions of Westside UDIs and Project Company Shares. However, the

evidence was that Westside's business and that of the Project Companies is legitimate and the

money raised from Westside Investors has been used as intended. There was no evidence of

undue pressure, misrepresentations or other such dishonest and reprehensible conduct.

Moreover, Westside and Brezsnyak clearly recognize the seriousness of their contraventions, as

shown by their cooperation from the outset, their admissions, Brezsnyak's testimony, and the

Respondents' continuing work with legal counsel to ensure compliance since becoming aware of

their obligations under Alberta securities laws.

[35] Westside and Brezsnyak have not previously been sanctioned by the Commission. They

did not have any prior securities knowledge or experience. We accept their contentions that

Westside and Brezsnyak were unaware Alberta securities laws applied to their fund-raising

activities and that they did not intend to breach securities laws. We do note, however, that there

has been a general awareness in Alberta that certain investments in real estate may be subject to

securities laws since this Commission's decision in Re Land Development Co., [2002] A.S.C.D.

No. 468. We also emphasize, as discussed below, that ignorance of the law – including Alberta

securities laws – will not excuse unlawful conduct.

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[36] As noted, Westside and Brezsnyak received significant financial remuneration in

connection with their illegal trades and distributions of securities, and stand to receive further

remuneration if the outstanding projects are completed as planned. However, we find no actual

financial harm to any specific investors; the evidence indicates that Westside Investors were not

misled in any way and they appear to have received what they intended to buy – raw land

purchased with hopes of eventual development and resale. We also noted that Westside Investor

PD expressed no dissatisfaction with the Respondents, but remained supportive of them and of

their land development projects.

[37] However, despite the specifics of this case, we do find that the Respondents' activities

caused overriding reputational harm to the Alberta capital market. Illegal trades and

distributions, being by their nature illegal activities, jeopardize investor confidence in the

fairness and efficiency of the Alberta capital market and may well threaten the future ability of

law-abiding market participants to successfully raise money in the exempt capital market.

[38] We agree with Staff that there are no helpful previous decisions. We did not find useful

the cases referred to by Westside and Brezsnyak.

[39] The preceding analysis addressees the mitigating factors relevant in these circumstances.

(ii) Specific and General Deterrence

[40] All of the Respondents admitted to contravening sections 75 and 110 of the Act. We

accept that those contraventions were unintentional and not dishonest. We were impressed with

the efforts the Respondents made to address Staff's concerns as soon as those concerns were

raised with them. We also find significant the Respondents' ongoing commitment to ensure

compliance with Alberta securities laws in the future, including their efforts in working with

counsel to address compliance concerns raised by Staff. We are of the view that it is in the

public interest to encourage those who inadvertently breach securities laws to take responsibility

for their misconduct, remedy wrongdoings, cooperate with Staff, and self-impose measures to

prevent any future contraventions. We conclude, in these circumstances, that Westside and

Brezsnyak pose little risk to investors and the Alberta capital market in the future. Accordingly,

we find little need here for specific deterrence.

[41] That said, ignorance of the law is no excuse. Operating in the Alberta business climate

for many years, raising money from others, Westside and Brezsnyak should at some point have

become aware that securities laws may be applicable to their activities or, at the least, become

aware of the need to explore whether any such legal requirements may apply. Such lack of

attention to legal requirements is concerning. As mentioned, we have no doubt that the

Respondents are now well aware of their legal obligations in this regard. We must, however,

ensure that others operating businesses in Alberta and who seek to raise money from Alberta

investors be made aware that they are expected to learn of, and comply with, all legal

requirements, including Alberta securities laws. We also need to demonstrate that the

Commission treats illegal trades and distributions of securities as serious misconduct that will be

dealt with firmly.

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(iii) Conclusion on Sanction

[42] We conclude that the public interest favours sanctioning Westside and Brezsnyak in these

circumstances. They – and others – must be reminded that certain activities are subject to

Alberta securities laws and to the Commission's oversight, and that the Commission's mandate is

to protect investors and promote the efficiency of our capital market.

[43] In our view, it is in the public interest to order an administrative penalty of $100 000

against Westside and Brezsnyak, payable jointly and severally. Such an administrative penalty

will communicate to other market participants that failure to register and use a prospectus, or to

use exemptions, when selling securities to the public – however inadvertent or unintentional – is

a serious matter.

[44] It is also in the public interest to deny Westside and Brezsnyak the use of all of the

exemptions under Alberta securities laws for a period of one year. This will further the goals of

both specific and general deterrence by denying them the privilege of raising further money

through the exempt market for that period, while allowing them time to ensure compliance with

all securities regulatory requirements.

[45] We do not consider it necessary to prevent Brezsnyak from acting as a director of any

issuer. We are satisfied that Brezsnyak's misconduct did not involve an abuse of his position as a

director of an issuer. We do not believe that permitting him to continue as a director of issuers

would present a threat to investors or the Alberta capital market. Further, and most compelling,

the evidence convinces us that the Westside Investors would benefit from Brezsnyak continuing

on in his position as a director of Westside and as its guiding and directing mind.

C. Deemed Distribution

[46] Staff submitted that there is a chance of possible future sales of these securities by

Westside Investors to others, which "would effectively perpetuate the harm of the original illegal

distribution", unless appropriate measures are imposed to prevent subsequent resales. Therefore,

Staff contended that it would be appropriate in the circumstances for the Commission to deem to

be a distribution, under section 144(2) of the Act, any trade or intended trade in the Westside

UDIs or Project Company Shares outstanding. This would oblige the seller "to comply with the

ordinary requirements regarding disclosure or to limit its trades to cases where an exemption is

available".

[47] The Respondents agreed with Staff's suggestion that an order under section 144(2) of the

Act would be appropriate to restrict resales by Westside Investors.

[48] In these circumstances, Westside UDIs or Project Company Shares were issued without a

prospectus or an exemption, with the result that the market does not have the disclosure and

protections mandated under Alberta securities laws. With a view to protecting potential other

investors, we think it appropriate that no further resales of these securities occur until such time

as a prospectus is filed in respect of the relevant securities or the resale is effected in compliance

with an exemption provided for under Alberta securities laws.

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[49] We therefore conclude that it would be appropriate and not prejudicial to the public

interest to order under section 144(2) of the Act that any trade of an already-issued Westside

UDI or Project Company Share be deemed to be a distribution under the Act.

D. Costs

[50] Although Staff pointed to investigation and hearing costs of approximately $12 000, they

submitted that this is an appropriate case for no costs award or a low costs award. Westside and

Brezsnyak likewise contended that only a modest, if any, costs award would be appropriate in

the circumstances here.

[51] After considering the parties' positions on costs, we conclude that this is an appropriate

case in which to order modest costs of $6000 against the Respondents jointly and severally.

IV. CONCLUSION AND ORDERS

[52] For the reasons expressed above, we find it in the public interest to make the following

sanction orders:

Westside

under section 198(1)(c) of the Act, all of the exemptions contained in Alberta

securities laws do not apply to Westside, until (and including) 20 November

2013; and

under section 199, Westside pay, jointly and severally with Brezsnyak, an

administrative penalty of $100 000; and

Brezsnyak

under section 198(1)(c), all of the exemptions contained in Alberta securities laws

do not apply to Brezsnyak, until (and including) 20 November 2013, except that

this order does not preclude Brezsnyak from trading in or purchasing securities

through a registrant (who has first been given a copy of this decision) in:

trading accounts for Brezsnyak's benefit;

registered retirement savings plans, registered retirement income funds,

registered education savings plans or tax-free savings accounts (each as

defined in the Income Tax Act (Canada)) or locked-in retirement accounts

for the benefit of one or more of Brezsnyak, his spouse and his dependent

children, if any; or

both; and

under section 199, Brezsnyak pay, jointly and severally with Westside, an

administrative penalty of $100 000.

[53] In addition, we find it appropriate to order under section 202 of the Act that Westside and

Brezsnyak pay, jointly and severally, $6000 of the costs of the investigation and hearing.

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[54] For the reasons expressed above, and considering that it would not be prejudicial to the

public interest to do so, we order, under section 144(2) of the Act, that any trade of an already-

issued Westside UDI or Project Company Share be deemed to be a distribution.

[55] This proceeding is now concluded.

20 November 2012

For the Commission:

"original signed by"

Glenda A. Campbell, QC

"original signed by"

Maureen McCaw

"original signed by"

Fred R. N. Snell, FCA

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APPENDIX “A”

ALBERTA SECURITIES COMMISSION

AGREED STATEMENT OF FACT

Date: 20120402

Docket: ENF-007477

Securities Act, R.S.A. 2000, c. S-4 (Act)

Westside Land Corporation, West Pointe Park Ltd., Avion Park Ltd., Eastridge Park Ltd.,

Eastridge Park II Ltd., Tovero Ridge Park Ltd., Foxcreek Park Ltd., and David Brezsnyak

Introduction

1 Staff of the Alberta Securities Commission (Staff and Commission, respectively)

conducted an investigation into the affairs of Westside Land Corporation (Westside),

West Pointe Park Ltd., Avion Park Ltd., Eastridge Park Ltd., Eastridge Park II Ltd.,

Tovero Ridge Park Ltd., Foxcreek Park Ltd., and David Brezsnyak (Brezsnyak)

(collectively the Respondents). The investigation indicated to Staff that the Respondents

had violated certain Alberta securities laws through their participation in an illegal

distribution of securities.

2 Solely for the purpose of regulating securities in Alberta, Canada, and elsewhere, and as

the basis for a hearing by the Commission regarding what sanctions, if any, the

Respondents should receive under Sections 198 and 199 of the Act, the Respondents

make the admissions set out below.

Parties

3 At all material times, Westside was a corporation formed pursuant to the laws of Alberta.

It was incorporated on October 25, 2000. Since incorporation, Westside has been

involved in the business of real estate acquisition, management, development and sales.

Westside has never been a reporting issuer in Alberta.

4 West Pointe Park Ltd., Avion Park Ltd., Eastridge Park Ltd., Eastridge Park II Ltd.,

Tovero Ridge Park Ltd., Foxcreek Park Ltd. (Project Companies) were all entities that

Westside incorporated to facilitate certain kinds of real estate transactions and projects.

5 Brezsnyak has been a shareholder, director and officer of Westside since the

incorporation. Presently, a corporation that Brezsnyak wholly controls, 1153647 Alberta

Ltd., is the sole shareholder of Westside. At all times Brezsnyak was a directing or

guiding mind of Westside.

6 Brezsnyak originally shared the ownership, direction and daily control and operation of

Westside with another individual, Mariano Serpico (Serpico). Serpico was a director of

Westside and owned 50% of Westside shares (either directly or through a company he

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controlled). Serpico ceased to be a director of Westside in December 2009 and his equity

interest terminated at the same time.

7 Brezsnyak is a high school graduate. He studied business administration for under one

year each at SAIT Polytechnic and Mount Royal College. He has never taken any

securities-related training.

The Business of Westside

8 Westside is involved in the real estate business. It purchases lands that it later seeks to

sell at a profit. In particular, Westside targets for purchase farm land in rural

municipalities near Calgary, Alberta, or near the urban communities that surround

Calgary, such as Airdrie, Springbank and Okotoks. Once Westside has purchased

undeveloped land, it takes steps to bring the land closer to urban residential, country

residential or commercial use. The land may then may be sold to a developer or other

purchaser.

9 In order to purchase these lands, Westside has raised money from investors. It has done

so by selling undivided interests (UDI(s)) in the lands. Westside’s land acquisitions have

typically involved the following steps:

9.1 Westside would identify farm land that it determined to have potential for

development and resale;

9.2 Westside, either directly or through a company incorporated for the purpose,

would enter into an agreement to acquire the property; Westside would pay any

deposit with its own funds;

9.3 Westside would then sell UDIs in the land to investors, who would sign Sale and

Purchase and Joint Venture Agreements and advance funds to Westside; [Tabs A

and B]

9.4 Westside would hold investor funds in a separate account; once it had sold

sufficient UDIs to close the land purchase, it would release funds to the

landowner and title would transfer to Westside; Westside would then transfer title

to the UDI-holders, who then received land titles certificates reflecting their

interest in the land.

10 Westside also offered a system for buying UDIs with funds held in registered, tax-

sheltered accounts or plans. The following additional steps were necessary in those cases:

10.1 Westside would incorporate a special purpose company for the project (a Park

Company);

10.2 the investors would pay a nominal amount to acquire 100 shares of the Park

Company for each UDI financed by the registered plan;

10.3 the investor’s registered plan would loan the Park Company the price Westside set

for the UDI; the loaned funds were held in trust by legal counsel pending transfer

of title to the Park Company;

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10.4 on the closing of the land purchase agreement, Westside would obtain title and

then have the UDIs registered in the name of the Park Company;

10.5 a mortgage in the name of the registered plan would be registered against title;

10.6 the Park Company would annually repay the registered plan a nominal amount of

the mortgage sum;

10.7 upon sale of the project, the Park Company would first pay off the mortgages

owed to the registered plans and then pay any surplus to the investors as a

dividend.

11 The Project Companies acted as the Park Company for particular projects. Each of the

Project Companies issued shares and holds investor UDIs.

12 Westside UDI-holders were tenants in common. According to Alberta land law, each

investor owned an interest in the entire property, but none had rights of exclusive

possession or enjoyment to any part of the property and most decisions about the land

had to be made collectively. The Purchase and Sale and JVC agreements detailed how

such decisions would be made in the case of the Westside lands.

13 The Purchase and Sale Agreement and Joint Venture Agreement contained the following

terms:

13.1 the purchaser desired to acquire a UDI in the real property for the purpose of

deriving revenue by way of sale, lease or similar arrangement;

13.2 the purchaser acknowledged that the unit for sale constituted an undivided interest

in property held in common with all other owners of the property;

13.3 the UDI-holder indicated a wish to contribute their undivided interests to a joint

venture, which would “operate and manage” the lands, develop the lands “by way

of subdivision” and arrange the sale of the joint venture lands;

13.4 Westside would be the operator of the UDI and joint venture;

13.5 UDI owners holding, in aggregate, at least 60% interest in the real property had

the right to terminate Westside’s status as operator at any time and for any reason;

13.6 a development plan or proposal to sell the property would require at least 60%

approval of the UDI owners;

13.7 in addition to the purchase price, the purchaser would contribute between $500

and $1,500 (depending on the project) for each UDI to a development fund held

in a separate bank account established for each project;

13.8 Westside would apply the development funds to: the costs incurred for planning,

engineering and development; the costs of subdivision and services; and

Westside's management of the project (capped at 15% of the money spent from

the fund). [Tabs A and B]

4

14 Westside created value in its projects first by identifying undeveloped property and

arranging for its purchase. After acquisition, it added value to the joint ventures by taking

steps to encourage annexation, subdivision, development and sale of the lands.

15 Westside was compensated for these contributions in three ways: first, the price of its

UDIs included a mark up above the amount Westside agreed to pay for the property;

second, Westside could receive up to 15% of project development funds as an operator

management fee; third, Westside retained a 10% interest in the lands it otherwise sold to

investors. Westside was therefore a UDI-holder like all other owners in the joint ventures.

16 Brezsnyak was personally involved in selling UDIs to investors. Westside also used

“consultants” and a referral network to market its UDI product, paying a fee to “finders”.

It did not advertise in any public media, but used personal contacts to promote its

projects.

17 Prospective investors would receive a Westside brochure describing the investment

opportunity. Brochures would usually state in general terms steps Westside would take

to add value to the land. Westside marketing material frequently mentioned an estimated

3-5 year timeline for development.

18 Westside marketed each of the lands as a specific project. Westside has been involved in

the following projects:1

Name Location Purchase

Date

Aggregate

Funds

Received

Status

Montebello Spring Bank

area

February 2002 $4,217,505 Land sold April

2006 and

investors paid

out (24.5%

average annual

return)

West Pointe I Airdrie Area May 2004 $2,064,735 Land sold July

2006 and

investors paid

out (43.5%

average annual

return)

West Pointe II Airdrie Area February 2005 $4,210,684 Land sold

August 2006

and investors

paid out (58.2%

average annual

return)

1 Westside and Brezsnyak reserve the right to assert that any activity before 2006 was subject to the

limitation set out in Section 201 of the Act.

5

Avion Spring Bank

Area

March 2006 $4,225,380 Still holding

land

Eastridge I Airdrie Area July 2006 $10,125,410 Still holding

land

Eastridge II Airdrie Area July 2007 $11,017,000 Still holding

land

West Pointe III Airdrie Area July 2007 $9,105,450 Still holding

land

West Pointe IV Airdrie Area July 2007 $13,300,684 Still holding

land

Tovero Ridge Okotoks Area July 2007 $8,393,500 Still holding

land

Foxcreek Spring Bank

Area

December

2008

$10,331,950 Still holding

land

West Pointe V Airdrie Area $229,348 The land

purchase did

not close and

all investors

received a

refund

19 Westside’s last proposed project was West Pointe V. Sales to investors occurred in

September and October 2010. However, UDI sales did not meet expectations and

Westside was not able to negotiate an extension to the purchase agreement for the land.

Westside returned all funds to those who did invest.

20 Approximately 1,500 investors have purchased Westside UDI’s or Westside Park

Company shares.

6

21 Brezsnyak’s personal earnings from the Westside business are as follows:2

Wages Dividends

2002 147,500.00

2003 61,249.98

2004 108,435.69 92,000.00

2005 135,133.32 100,000.00

2006 415,000.00 90,000.00

2007 - 400,000.00

2008 1,940,000.00 -

2009 - -

2010 - -

2011 60,000.00

Total 2,867,318.99 682,000.00 3,549,318.99

Non-Compliance with Alberta Securities Laws

22 The Respondents admit that the Project Company or Park Company shares were

“securities” under Section 1(ggg)(v) Act.

23 The Respondents further admit that Westside’s sale of UDIs involved the following

elements:

23.1 an investment of money by individuals or entities seeking a profit;

23.2 the investment was in a common enterprise of many investors; and

23.3 the profitability of the enterprise was in a significant way reliant on the efforts of

Westside and Brezsnyak and not the investors.

24 The Respondents admit that Westside’s UDIs therefore fall within the definition of an

“investment contract” and were thus a “security” under Section 1(ggg)(xiv) of the Act.

25 Neither Westside nor the Project Companies ever filed a draft prospectus or prospectus

with the Commission and neither received a receipt for a prospectus. Nor did Brezsnyak,

Serpico or anyone else file a prospectus on behalf of either Westside or any of the Project

Companies. None of Westside, the Project Companies and Brezsnyak or Serpico were

ever registered to trade in securities.

26 None of Westside, the Project Companies or Brezsnyak took steps to determine whether

any of the purchasers of Westside UDIs or Westside Project Company shares met the

criteria for exemptions to registration and prospectus requirements. Some investors might

2 Westside and Brezsnyak reserve the right to assert that any activity before 2006 was subject to the

limitation set out in Section 201 of the Act.

7

have met the requirements for exemptions under National Instrument 45-106 had the

Respondents taken steps to qualify them.

27 Subject to arguments they may raise in relation to s. 201 of the Act, the Respondents

admit that they have violated Section 75 of the Act by unregistered trading in securities

and that they violated Section 110 of the Act through the distribution of securities that

had not yet been issued and in relation to which no prospectus had been filed with the

Commission.

Timing of Certain Events

28 On October 25th

, 2010, a member of the Case Assessment Department of the Commission

wrote to Westside to ask, among other things, that Westside provide details of all

investment funds received by Westside or its related entities since January 1, 2008.

Westside responded promptly through counsel to this request for information.

29 On January 4th

, 2011, the Director, Enforcement, of the Commission signed an order

under Section 41(1) of the Act appointing certain individuals to investigate into any and

all matters relating to Brezsnyak, Westside and other related entities and individuals

subsequent to January 1, 2006 (the “Order”). Under this Order, ASC Investigation Staff

gathered further information regarding Westside, the Project Companies and Brezsnyak.

Other Matters

30 The Respondents state that they were neither aware of nor intended to breach the above-

noted Alberta securities laws.

31 The Respondents have cooperated with the ASC investigation and prosecution and were

forthcoming with information.

32 The Respondents have not been sanctioned by the Commission before.

33 This Agreement has saved the Commission the time and expense associated with а

contested hearing regarding whether there had been violations of Sections 75 and 110 of

the Act.

8

34 Westside undertakes to have legal counsel review all future trades and market materials

to ensure compliance with Alberta securities laws.

Signed by the duly authorized signatory

of WESTSIDE LAND CORPORATION

at Calgary, Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”__________

SIGNATURE

)

)

)

)

)

)

)

)

WESTSIDE LAND CORPORATION

PER: “Original Signed By”

DAVID BREZSNYAK

Signed by the duly authorized signatory

of WEST POINTE PARK LTD. at

Calgary, Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

WEST POINTE PARK LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

Signed by the duly authorized signatory

of AVION PARK LTD. at Calgary,

Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

AVION PARK LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

9

Signed by the duly authorized signatory

of EASTRIDGE PARK LTD. at Calgary,

Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

EASTRIDGE PARK LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

Signed by the duly authorized signatory

of EASTRIDGE PARK II LTD. at

Calgary, Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

EASTRIDGE PARK II LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

Signed by the duly authorized signatory

of TOVERO RIDGE PARK LTD. at

Calgary, Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

TOVERO RIDGE PARK LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

Signed by the duly authorized signatory

of FOXCREEK PARK LTD. at Calgary,

Alberta this

30 day of March 2012, in the

presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

FOXCREEK PARK LTD.

PER: “Original Signed By”

DAVID BREZSNYAK

10

Signed by DAVID BREZSNYAK at

Calgary, Alberta this 30 day of

March, 2012 in the presence of:

Marlene G. Stewart

WITNESS NAME

“Original Signed By”

SIGNATURE

)

)

)

)

)

)

)

)

)

“Original Signed By”

DAVID BREZSNYAK

Calgary, Alberta, this 2nd

day of

April 2012.

)

)

)

)

)

)

)

)

ALBERTA SECURITIES COMMISSION

PER: “Original Signed By”

ROBERT STACK

#4131690v2