$13M decision in B.C. pre-sale condo case overturned on appeal
A decision ordering a developer to pay pre-sale condo buyers more than $13 million in damages for breach of contract has been overturned on appeal, with the high court dismissing the case entirely.
More than 30 people who made deposits on condos at what was then called the ALFA development in 2015 and 2016 sued Anderson Square Holdings Ltd., alleging breach of contract.
The pre-sale purchasers had their contracts terminated by the developer in July of 2019, with the developer citing a legal dispute with contractors and an inability to secure financing. But the units would ultimately be sold – at higher prices – roughly two years later, albeit under the name 'PRIMA,' according to a B.C. Supreme Court decision handed down last year.
The buyers' claim was, essentially, that the developer had no right to terminate the contract when it did. The $13,093,900 in damages awarded represented the difference between what the pre-sale buyers paid for their units and what the condos were valued at when the buyers 'repudiated' their contracts by accepting the return of their deposits in August of 2021, according to the 2024 decision.
Anderson Square Holdings Ltd. appealed the decision, claiming the lower court judge 'erred' in interpreting crucial clauses in the contract. The developer argued it was 'entitled to terminate the contract' when it became clear construction would not be completed by Sept. 30, 2019, and the three-judge appeal court panel unanimously agreed.
Although the appeal court found the clause in question was 'inherently unclear and ambiguous' and 'poorly worded,' the judges determined it gave the developers the right to terminate the agreement without the written consent of the pre-sale buyers in the event the project could not be completed by the specified date, if the circumstances were beyond its 'reasonable control.'
The court rejected the pre-sale buyers' argument that the contract remained in effect even without their written consent, saying the result of that interpretation would have 'commercially absurd' results.
'That interpretation would mean that if there were blameless delay, the contract would remain on foot for the duration of the delay, unless the parties agreed otherwise,' the decision said.
'The parties would be automatically locked in for the full extent of the period of blameless delay in construction. Such delay could be indefinite, leaving the purchasers' investments trapped in the project as the vendor works to complete construction.'
Finding the lower court judge erred in interpreting the contract, the appeal was allowed and the case dismissed.
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