Judge dismisses developer’s $20-M lawsuit against city

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This article was published 23/10/2023 (724 days ago), so information in it may no longer be current.

A judge has dismissed a local developer’s $20-million lawsuit against the City of Winnipeg, which alleged it had unfairly backed out of a deal to develop industrial land in St. Boniface.

Terracon Development Ltd. filed the lawsuit in 2016, alleging it entered into a joint venture agreement to develop 237 acres of vacant industrial land but the city breached the contract and committed misconduct in the process.

In the lawsuit, the company alleged the city made “untrue and/or misleading” statements that indicated the partnership would go ahead and the developer paid about $1.6 million to extend Mazenod Road to support it, plus $1 million in “soft costs.”

In a written decision released Friday, Manitoba Court of King’s Bench Justice Theodor Bock dismisses that claim and states the punitive damages sought would have amounted to “a historically large award.”

“I find the parties never concluded a legally binding agreement. As for Terracon’s claim for punitive damages, there is no evidence to support the conclusion that the conduct of the city in its dealings with Terracon was in any way untoward,” writes Bock.

The judgment notes city council approved a plan to pursue a joint venture to develop the land in 2013, which was conditional upon a final agreement being reached with civic officials. It finds council rescinded that decision in 2015, after a final agreement couldn’t be reached.

“It is clear to me that from one year to the next, the parties’ basic position never changed: no agreement was reached because there were always essential terms that had… not been settled. There is ample support for this conclusion having regard to the evidence as a whole,” Bock writes.

The judgement states discussions on a potential joint venture started in 2008, and continued until 2015, but the two sides couldn’t settle key sticking points to complete a deal to develop the land.

A key element of the dispute was Terracon’s call for the city to continue to own the land, so that it would be exempt from property taxes, according to the judgment. However, city legal officials said that plan wasn’t feasible because the company would be an “occupier” of the land, so it would be liable for property taxes, the court document states.

It also notes Terracon felt both parties agreed the company would not be liable for any property tax from the outset of the talks.

“Terracon characterizes the city’s refusal to take whatever steps were necessary to fulfill its obligation as outrageous, given the time, effort and resources which it had expended since 2008 to advance the… project,” the judgment notes.

Bock writes the impasse led to a phone call in 2015, in which a Terracon official told the city the company “would no longer be pursuing a joint venture agreement,” shortly before council rescinded its decision to seek one.

Winnipeg’s chief administrative officer welcomed the judge’s decision.

“It’s consistent with what we argued all along and we’re very pleased with the result,” Michael Jack said Monday.

The judge’s decision also orders Terracon, one of the city’s largest land developers, to pay the city’s legal fees in the case.

The company could not immediately be reached for comment. Robert Tapper, Terracon’s lawyer, declined comment Monday.

In 2015, city council approved a deal to sell part of the land to Parmalat Canada, with Parmalat, the city and the province contributing to the cost to service it.

As of February, the lands were almost fully serviced and 95 acres had been sold, the judgment notes.

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