Judge says developer overpaid for Salmon Arm property by roughly $8M | iNFOnews | Thompson-Okanagan's News Source

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Judge says developer overpaid for Salmon Arm property by roughly $8M

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November 08, 2017 - 6:30 PM

SALMON ARM - A Supreme Court Judge has ruled in favour of a developer who paid millions of dollars for property in Salmon Arm that, while environmentally rich, wasn’t quite as profitable as it was led to believe.

In a judgement handed down last month in Vancouver, Supreme Court Justice Andrew Mayer found that the purchasers of a 61-acre parcel of land near Shuswap Lake in Salmon Arm suffered damages of just over $8-million related to the 2007 property sale.

The purchasers — owned by the big-box store developer SmartCentres — bought the land with visions of high density residential housing and commercial and retail spaces, but later found out only a small portion of the property (less than one third) could be developed due to riparian setback requirements.

The purchase agreement included a warranty from the vendor that all the information provided about the property was true. That information indicated there were no areas of environmental concern and additionally that the City of Salmon Arm appeared to show early support for the development.

“In the end only a small portion of the property could be developed as hoped as a result of the set-back requirements in the (Riparian Areas Regulation),” Mayer said in his decision. “In addition, significant local opposition to a big-box commercial project and a lack of support from the City of Salmon Arm for the high-density residential portion of the proposed project negatively impacted the approvals processes.”

Mayer said the case highlighted a "development project gone wrong" and provided a "cautionary tale" for overly broad vendor's warranties. 

The closing price on the sale in 2007 was roughly $14.7 million. Given that the property was only worth about $6.6 million, Mayer found the purchaser overpaid by about $8 million.

The seller’s claim for $2 million in damages related to money that was withheld by the purchaser was dismissed.

Mayer also acknowledged a settlement agreement between the purchasers and the engineering firm that studied the property's development potential, however the results of that settlement are not known.

To contact a reporter for this story, email Charlotte Helston or call 250-309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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News from © iNFOnews, 2017

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