The B.C. Court of Appeal has ruled in favour of a high-profile developer embroiled in a protracted legal fight with the Vancouver School Board over a multimillion-dollar lease agreement related to the Kingsgate Mall property.
The ruling now means Beedie Development LP, which operates Kingsgate Property Ltd., can continue its fight in the courts to determine how much rent the company should be paying to lease the school board land at East Broadway and Kingsway.
“We're very pleased with the decision,” said Ryan Beedie, president of Beedie Development LP, in an interview Wednesday.
“It's consistent with what the lower court ruled. All we've asked for is to have our day in court because it's a very significant issue for us. And the courts have agreed that we will indeed have our day in court.”
The ruling, which was released Tuesday, is a response to the school board appealing a B.C. Supreme Court decision centred around two arbitration hearings related to the original lease agreement, renewal terms and market value of the mall property.
The court’s three judges unanimously upheld the Supreme Court ruling and agreed that a hearing held in 1999 to set the market value of the property for the purpose of calculating rent for the renewal term was not properly considered in the 2022 hearing.
“The 2022 tribunal arguably erred in determining that issue estoppel did not apply to the interpretation of the 1999 arbitration award,” the court ruled. “The substantial merits of the alleged errors will be determined in the appeal of the award itself.”
The Merriam-Webster dictionary defines “estoppel” as a legal bar to alleging or denying a fact because of one's own previous actions or words to the contrary — a term Beedie said was the “main legal issue” and key to understanding the ruling.
“The zoning [of the Kingsgate property] hasn't changed, the outright use, the immediate use of the property — nothing's changed [since the 1999 arbitration hearing],” he said. “So how does one make a decision that varies from the arbitration before it?”
Arbitration hearing
Glacier Media contacted the school board Tuesday for a response to the court ruling but had not heard back before this story was posted. In a previous statement, the board said it wouldn’t comment on the case because it is still before the courts.
Beedie’s subsidiary company, Kingsgate Property Ltd., has leased the school board land since 2005. The board had originally leased the property to Royal Oak Holdings Ltd. in 1972 before Beedie took it over in 2005.
In 2017, Beedie wanted to renew its lease for 10 years but was unable to reach an agreement with the school board over “basic rent.” An arbitration hearing before a three-member tribunal was held in 2021.
The tribunal concluded in a January 2022 decision that the market value for the purposes of calculating the basic rent for renewal was $116,500,000, as of May 20, 2017. The lone dissenting member of the tribunal argued the market value was $20,000,000.
$49 million in rent
Details of the legal history between Beedie and the school board were set out in a civil claim the board filed Jan. 12. The board alleged it is owed more than $49 million in rent and says “basic rent” from 2017 to 2027 should be $9,611,250 and payable in monthly instalments of $800,937.50.
In addition, Kingsgate is obliged to pay the board “both the deficiency in basic rent for the period during which the parties had submitted their dispute to arbitration and interest on that amount, as well as ongoing basic rent in accordance with ‘market value.’”
The “deficiency,” in this case, is in excess of $50,000,000, the claim said.
“Kingsgate has failed or refused to pay either the deficiency or rent in accordance with the tribunal’s determination of market value,” the claim said. “Instead, Kingsgate has paid $3,750,000 toward the deficiency and ongoing monthly rental payments of $137,500 based on an annual rent of $1,650,000.”
Beedie said his company will not file a statement of defence regarding the civil claim.
“This is a move for the school board to protect their interests — we have no reason to respond,” he said. “The courts will determine the interpretation of the lease and what the rent should be, and that will be the deciding factor.”
Added Beedie: “And either we're going to owe this money, or we're not. It's up to the courts. And everything else to me is just kind of legal noise, for lack of a better term.”
Beedie expects to get a court date sometime in the spring or summer.
