Developer of cancelled Cambie condo could face legal backlash, says lawyer

A cancelled development along the Cambie Street corridor could set the stage for a costly legal challenge, a lawyer says.

Vivagrand Developments, the group behind the proposed Langara West — a condo development at Cambie Street and West 59th Avenue — has cancelled the 72-luxury unit project citing significant permit delays from the City of Vancouver, which led to a loss of financing.

The group says it now plans to sell the property instead.

Several lawyers contacted by CBC News confirmed a group of Langara West pre-sale buyers are currently exploring their legal options.

Calls for pre-sales were made after the land was acquired. According to the developer, 68 people bought into pre-sale contracts. Units were advertised online for an average of $850 per square foot. The developer says it is in the process of refunding all the deposits, and will provide an additional 50 percent of the paid deposit as further compensation to each buyer.

However, as prices for condos continue to soar in Vancouver, some lawyers suggest the developer could be on the hook for a lot more.

Good faith

Since the development was initially advertised and pre-sales were bought up in 2014, the market price for condos in the neighbourhood has gone up significantly. Some realtors put the average price per square foot for new developments along the Cambie Street corridor between $1,000 and $1,200.

As a result, many of the the initial buyers may have been pushed back into a Vancouver condo market where prices are now far higher.

According to real estate lawyer Andrew Morrison, those Langara West pre-sale buyers could have a legal case against Vivagrand Developments for damages — especially if they find themselves now priced out of the market.

"The purchasers might be able to claim that the developer is not performing the contract in a way that's fair to them, or in good faith, and that has caused them to lose the opportunity to buy into the market," Morrison told CBC News.

The CBC could not reach any of the pre-sale buyers.

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Under the 'good faith' principle in law, parties involved in a contract are under a duty to honestly and reasonably uphold their end of the bargain.

Morrison said the developer could be liable for damages — that is, the difference between the asking price of the units they bought into, and the current market price for comparable units. If they bought into a two-bedroom unit priced at $750,000, for example, and comparable units are now priced at $950,000, the developer could be found to owe the buyer $200,000, he said.

"I think the purchasers have a reasonable prospect of winning a claim against the developer if they can establish that the developer could have made this project work, but chose not to because the developer had a better economic choice available to it. The court may well side with the purchasers than the developer."

The question then remains, could Vivagrand Developments have made Langara West work?

Permit problems

An official statement from the developer cites an unsuccessful two-year long effort to get the building approved by the City and sharply rising construction costs as reasons for cancelling the project and opting to sell the land.

"We worked with the City for over a year to address these conditions, providing all requested information and documentation in a timely manner," the statement reads.

But according to the City, the developer repeatedly submitted designs that contravened city bylaws, and at one point, Vivagrand failed to submit a redesign for over one year.

"The City provided feedback on the developer's submission in March 2016 but did not receive the developer's redesign responding to that feedback until April 2017 (a period of 13 months)," says the city's statement.

According to Tsur Somerville, associate professor at the University of British Columbia's Centre for Urban Economics and Real Estate, lengthy permit approval processes are hardly an excuse to cancel a major development.

"This is all on the developer, because a whole lot of other people have managed to get developments through [along the Cambie Corridor]," Somerville said.