Lawsuit over SmartCentre land transaction

The site of the planned SmartCentres shopping centre is the subject of legal wranglings in BC Supreme Court.

The site of the planned SmartCentres shopping centre is the subject of legal wranglings in BC Supreme Court centring on purchase of the land five years ago.

At the heart of the dispute is the length of time the rezoning approval took, the type of rezoning that was approved, as well as the amount of land that was eventually protected from development because of its proximity to the Salmon River.

In April 2010, a civil lawsuit was launched by a B.C. numbered company, 0759594, that lists Mike Fowler with a Richmond mailing address as president. It names three defendants – another numbered company, 568295, with president Joseph Amato of Vaughan, Ont.; Salmon Arm Shopping Centres Ltd.; and Calloway REIT (Salmon Arm) Inc. The three defendants are affiliated with SmartCentres.

The Statement of Claim notes the ‘568’ numbered company agreed to purchase the seven parcels involved for $16.7 million. Two million dollars of that payment was deferred, pending rezoning and subdivision approval. If the purchaser couldn’t get the city approvals before November 2009, the purchaser would pay the seller the remaining $2 million by Nov. 15 of that year. The seller had reserved the right to buy back a portion of the lands for residential development.

The document states that because no rezoning and subdivision of the lands occurred by Oct. 15, 2009 and the purchasers did not pay the $2 million by the Nov. 15, 2009 deadline, the plaintiff/seller is suing for the two million, plus interest and costs.

On June 4, 2010, a statement of defence and counterclaim was registered by the defendants, followed by a notice of application from the defendants on March 2 of this year. The March 2 document seeks three orders. One, that the plaintiff’s/seller’s claim be dismissed. Two, that the court award a judgment against the plaintiff of $3.3 million and, three, costs be awarded to the defendants.

The defendants/purchasers argue that they didn’t get all pertinent information when they bought the land.

They state that a representative of the seller sent an email on Aug. 14, 2006 saying that “the Phase II Environmental confirmed that there are no environmental areas of concern on the lands and the geotechnical report confirmed that we will not require pre-loading on the commercial lands, both of which are of course great news for us.”

The defendants also state that an information document about the lands says: “The City of Salmon Arm was instrumental in having the lands excluded from the ALR and in preliminary meetings with the Salmon Arm Planning Department, Can-Corp has received full support and approval in principle with having the lands rezoned for commercial/residential use…”

The defendants/purchasers also refer to the purchase agreement, which states: “the vendor has disclosed to the purchaser all material information pertaining to the purchased lands, whether solicited by the purchaser or not…”

The court document goes on to say that “during the process of seeking rezoning of the purchased lands in late 2007 and 2008, the defendant/purchaser learned of facts that were inconsistent with representations made in the purchase agreement.”

In particular, it refers to four points: 1) the elevation of the land, which required setbacks under the Riparian Areas Regulation, means a large portion of the land is unsuitable for development; 2) rezoning of the full 60 acres would be difficult and/or unlikely; 3) residents of the city “were very well-organized, influential with the council of the city and intent on opposing any rezoning or permitting applications that would permit the entire 60 acres to be used…”; and 4) staff of the city’s planning department “were also not offering full support of permitting the purchased lands to be rezoned for both a large-scale commercial development and a residential development that would permit utilization of the entire 60 acres.”

It goes on to say that only 33 per cent of the property can now be used for development purposes and only for commercial development, not residential.

The application to have the plaintiff’s claim dismissed is scheduled to be heard in BC Supreme Court in Vancouver on April 16.

Salmon Arm Observer