A $61-million strata wind-up and sale in Burnaby has landed in B.C. Supreme Court, with both sides accusing the other of breaking the deal.
Owners at Cameray Gardens (3925 Kingsway and 5715 Jersey Ave.) directly north of Central Park passed a resolution in February 2022 to wind up the strata, built back in 1974.
A liquidator engaged by the strata then struck a $61-million deal in December 2022 with a numbered company (1038573 B.C. Ltd.) that agreed to buy the 1.9-acre property with the strata’s 101 units.
But the deal stalled a year later.
"The agreed sale has gone sideways," B.C. Supreme Court Justice David Crerar said in a recent ruling in the case.
The first shot in the dispute was fired in December when the numbered company (whose president and sole director is Kush Kumar Bhatia, according to a corporate search) filed a notice of civil claim, alleging the strata had reneged on the deal by failing to deliver "clear title" to the property by the Dec. 15, 2023 closing date.
The strata, through its liquidator, Crowe MacKay & Company Ltd., denied the claim.
It said the liquidator had been "ready, willing and able" to complete the sale on Dec. 15 according to the contract, and it was the numbered company that had broken the deal by not providing the required documents or the $61-million purchase price.
Development property with a view
What's at stake is a property of "particular value," in the words of Justice Crerar.
In its notice of civil claim, the numbered company said the property is "unique and has special characteristics."
First off, its zoning allows for "considerable future development," according to the claim.
The property falls within Central Park North in Burnaby's Metrotown Downtown Plan, allowing for future commercial podiums and highrise residential
building forms on the property.
And whatever is built on the Cameray Gardens land will look out across 86-acre Central Park right across the street to the south.
The claim also highlights the size, nature and age of the property, including the strata buildings, and its proximity to Vancouver and transit, including the nearby Patterson SkyTrain station.
In short, the numbered company said there are few market opportunities like it in the area.
The company applied to the court for an order compelling the strata to go through with the deal according to the contract and another order compelling it to "take and do all steps necessary to complete the sale."
Lawsuit, tax arrears, undisclosed rental agreements
The numbered company pointed to a list of issues it said the strata needs to resolve.
First, the strata is in the middle of a $224,000 lawsuit with Community Fire Prevention Ltd. related to the alleged installation of fire prevention equipment at the strata.
There are city taxes owing on 13 of the strata lots "such that those units were subject to be sold by the City of Burnaby," according to the numbered company.
And, before signing the deal in December 2022 to buy the strata property, the numbered company said it had been told there were 29 units with residential tenancies.
But as of October 2023, the company said there were nine further written leases and an unknown number of verbal rental agreements.
"Details with respect to such leases have not been forthcoming," the company wrote.
Finally, the company said it has also learned some of the lots have been sold by individual owners as late as January.
The company said all those factors amount to encumbrances on the property not permitted under the sales agreement.
The numbered company also noted the strata appears to be "effectively controlled" by two people – Kulwant Chauhan and David Grewal – whose holding companies own almost half the units in the property.
"The extent to which these individuals and their holdings companies have purchased or leased additional units after the execution date – in breach of the (purchase and sales agreement) – is an issue that merits further exploration," stated the numbered company.
'Meritless claim'
But the strata accused the numbered company of filing a "meritless claim" to buy more time to secure financing.
"The purchaser's claim is a transparent attempt to obtain an extension the parties had not agreed to," stated one of the strata's court filings. "This is obvious from the purchaser's election not to simply close on the completion date and sue for the damages in relation to its complaints."
The strata said the Community Fire Prevention lawsuit and extra residential tenancies are "immaterial" to the agreed-upon sale.
It pointed out the Community Fire Prevention lawsuit represents less than 0.4 per cent of the purchase price, and the numbered company would have to deal with existing residential tenancies at the strata in any case after the sale.
"A few more such tenancies will not change that process in any material respect," the strata said.
The strata has filed a counterclaim asking the court to declare that the numbered company repudiated the agreement and the deal is dead.
It has also applied for a court order compelling the company to pay the liquidator a $3-million deposit agreed to in the contract.
A certificate of pending litigation has been registered against all 101 units at the strata, restricting further dealings until the matter is resolved.
The case has been adjourned without another date currently set.
None of the allegations have been proven in court.
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