The last-minute cancellation of a 15-storey mixed-use residential tower in Richmond that has spurred outrage from pre-sale buyers stemmed from a costly dispute between the project’s developer and former primary contractor, legal documents show.
In a letter it sent to buyers notifying them of their sales contracts’ cancellations, Anderson Square Holdings Ltd. - which identifies former Richmond city council candidate Sunny Ho as its director - said the Alfa project cannot be completed at the announced date of Sept. 30, and therefore the developer is terminating the pre-sale contracts.
The letter, signed by Ho, said Anderson Square is “facing serious and significant circumstances beyond our reasonable control,” naming one such circumstance as a civil claim notice by Scott Construction Ltd. against the developer on Dec. 11, 2018, to the effect of $4.66 million plus costs - which may increase as the construction is delayed.
Ho’s letter also identified that Anderson Square and Alfa “cannot be granted a satisfactory financing commitment in this uncertain business environment” in the developer’s quest to secure construction financing. The letter added that each buyer is eligible to receive back their deposits on their Alfa unit.(Ho did not return calls for comment.)
The case cited by Anderson Square, a civil claim filed by Scott Construction in B.C. Supreme Court, showed that Scott was the general contractor at Alfa and was set to begin building the project in 2017 for a cost of $36.1 million plus taxes - subject to “adjustments for among other things, delays cause by [Anderson Squre].”
In court documents, Scott said Anderson Square failed to secure to building permit until February 2018 - in addition to not applying for the adequate dewatering permit needed for the project. Scott says that the delay resulted in financial losses, adding that Anderson Square did not agree to Scott’s request of an increase to both the base contract’s duration and price to offset the delay.
“At all material times, Scott Construction has complied with its obligations under the contract,” the documents said. “… The defendant has failed to honour its obligations under the contract and has breached the contract.
“The defendant has breached the contract by failing to provide the necessary permits, as required for the timely and orderly prosecution of the work and by impeding the progress of Scott Construction’s work. In these circumstances, Scott Construction is entitled to an extension to the contract time and an increase in the base contract price, plus damages.”
Anderson Square, however, has issued a counterclaim against Scott, saying the delay in permitting resulted from the contractor’s insistence on using aluminum windows by Winspia Canada Inc., a South-Korean made product that “has not yet developed a reputation in British Columbia as a reliable window supplier,” instead of an established alternative like products from Toro Glasswall Inc.
“Anderson did not agree to the substitution from Toro to Winspia,” the counterclaim said. “Anderson was required to obtain home warranty insurance for the project. Without home warranty insurance in place, the City of Richmond would not grant a building permit for the project.
“Anderson… expressed concerns to Scott Construction that Winspia did not have a proven track record in British Columbia and, as a result, home warranty providers may refuse to provide the required home warranty insurance. Scott Construction was insistent about using Winspia as the window supplier.”
The counterclaim said two separate home warranty insurance companies declined Anderson Square’s application for Alfa, forcing Scott to consider an alternative. Scott switched to Starline Windows Ltd. in January 2018, but the delay for the building permit was already set in motion, the developer said.
Alfa, which at one time had more than 100 pre-sale buyers but now has about 40 potential owners left in limbo just months short of delivery, was slated to add 12,000 square-feet in retail space in addition to the 111 condo units.