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In the Courts: $1.5M demand for B.C. gas station delivers $1K blow to Alta. company

Centex Petroleum found to have repudiated contract with gas station’s former owner
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The B.C. Supreme Court in Vancouver

An Alberta gas station chain was ordered to pay $1,000 to a B.C. holding company for repudiating a repurchase agreement for a West Kootenay gas station.

Imraj Holding Ltd. and defendant Centex Petroleum, officially incorporated as 650273 Alberta Ltd., had partnered on a Salmo, B.C., gas station when Imraj came to own the property in early 2012.

The defendant helped Imraj with financing of $485,996 to install fuel station equipment and loaned a further $190,000 for operations, of which Imraj repaid $100,000 by December 2012, according to a B.C. Supreme Court decision penned by Justice Julianne Lamb.

Centex entered into an agreement with the plaintiff in January 2013 to be the sole fuel provider, and the two loans would be repaid at a rate of at least one cent per litre bought.

Imraj began falling behind on payments by December 2013 and was $225,000 in arrears by June 2016. 

By that time, Imraj was also under threat of foreclosure on its mortgage on the property from the Kootenay Savings Credit Union.

Imraj Holding Ltd. opted to sell the gas station to Centex in June 2016 for $739,545, the sum of the $411,647 mortgage on the property, a $102,898 line of credit from the KSCU and the $225,000 in unpaid fuel.

However, that sale agreement included a clause allowing Imraj to repurchase the gas station within three years for $739,545.

Imraj told Centex in April 2019 it was interested in repurchasing the property. But Centex said it must pay $1.46 million, something Lamb found to be inconsistent with the repurchase agreement.

That $1.46 million figure included $461,930 for equipment financing; $97,500 for the balance remaining on the operating loan; $780,002 for the total purchase price, including taxes; and $120,673 for the unpaid fuel balance.

Imraj alleged in its civil claim that Centex breached its contract and sought specific performance – that is, an order for Centex to sell the gas station for $739,545 – or damages in lieu.

Centex filed a countersuit claiming Imraj owed Centex for the remaining financing on the property, a claim that Centex conceded “falls away if Imraj fails on its claim for specific performance.”

Lamb deemed the $1.46-million demand to be a repudiation of the repurchase agreement, noting that the price was a “key term” of the agreement.

“In particular, the repurchase agreement did not require Imraj to pay out the balance of the equipment financing,” Lamb wrote. “Centex unilaterally sought to insert this condition.”

In fact, the repurchase agreement laid out that the equipment financing agreement would come back into effect upon repurchase of the gas station.

Lamb found Imraj failed to prove it was ready to pay the $739,545 for the property by June 21, 2019, and it further failed to prove that the property is unique.

“Although I accept that the property was a well-known truck stop, it was a commercial investment and not objectively unique. Imraj would be able to run a gas station on another property, and in fact did have another gas station business in another municipality,” Lamb wrote.

With that in mind, Lamb found Imraj hadn’t proven that it couldn’t mitigate the issue by purchasing another property to operate a gas station, and therefore it was not entitled to an order for the purchase to go through.

Imraj further failed to prove losses from the breach, and it was therefore only entitled to nominal damages of $1,000, Lamb found.