Three companies affiliated with Smartcentres have been awarded more than $8 million based on paying too much for the Salmon Arm land where the shopping centre sits.
The controversial shopping centre has been open for four years, but the legal battles surrounding its development have continued.
Last month the Supreme Court of British Columbia ruled that three companies affiliated with Smartcentres – Salmon Arm Shopping Centres Limited, Calloway Reit (Salmon Arm) Inc. and a B.C. numbered company – are owed damages of $8,020,000 by the B.C. numbered company which sold the property to them. Mike Fowler of Richmond is named in court documents as principal of that company.
Justice Andrew Mayer ruled the amount was appropriate as it was what the purchasers (the Smartcentres affiliates) overpaid for the property as a result of the seller’s breach of the warranty.
Referring to a second lawsuit, the judge said the $8 million figure could change depending on the amount of a settlement between the property purchasers and EBA Engineering, which prepared a Riparian Areas Regulation (RAR) report for them.
The dispute in both lawsuits centred around the size of the property the developers had hoped to develop and the actual size that was allowed once the environmental requirement was accurately determined.
RAR governs setbacks to fish-bearing waters, meaning developments must be set back a stipulated distance from the high-water mark – in this case, the Salmon River.
The purchasers claimed that RAR reports provided by the engineering company in 2007 were wrong.
“The two reports provided by EBA suggested that substantial portions of the properties could be used for development based on the anticipated RAR (riparian areas regulation) setbacks contemplated in the reports. However, that information proved to be inaccurate,” stated a court document outlining Smartcentres’ position.
The area that the purchasers were permitted to develop under the regulation was just 33 per cent of the 51 acres they had hoped to develop.
Court documents explain that the main parcels comprising the property’s 61 acres had been removed from the Agricultural Land Reserve in July of 2005 on application by the City of Salmon Arm to allow for commercial development.
When the $14.7 million purchase agreement between the Smartcentres affiliates and the seller was completed in 2007, the purchasers expected to develop 51 of the 61 acres. About 17 acres were to be for high-density residential development and the rest, about 34 acres, for commercial.
In May 2010, B.C.’s environment ministry completed its assessment, which restricted total development to about 33 per cent of the developer’s plan, or 16.7 acres.
A Salmon Arm citizens group was instrumental in bringing attention to the accurate high-water mark.
The seller’s warranty that the BC Court of Appeal decided had been breached referred to statements from the seller that, in preliminary meetings with the city’s planning department, the department had given full support and approval-in-principle to a rezoning; and that there were no areas of environmental concern related to the lands.
The documents also refer to the unexpected strong opposition to the development by citizens.
Justice Mayer said if the Smartcentres affiliates have received a financial settlement from EBA Engineering for damages from the same circumstances it would “amount to double recovery” and he might then alter his decision regarding the $8 million.