A Manitoba developer is suing the City of Brandon and a former city employee for more than $24 million over what he claims were actions of "bad faith" and defamation of character in connection to the Oakridge Estates development.
In a statement of claim made to Court of Queen’s Bench last November, Barry Andrews, president of Executive Homes 2000 Ltd., alleges that in April 2009, Brandon’s former construction and planning manager Gary Kaluzniak made "untrue" and "defamatory" statements regarding Andrews to an Alberta resident who had just been hired by Executive Homes as a building superintendent at the Oakridge Estates site.
He also alleges the city has refused to recognize the May, 2012 sale of the partially-completed development to Brandon-based Waverly Developments — which is also named as a defendant in the claim — and that the city demanded special requirements of the development that went against standard procedure.
Executive Homes received approval to develop Oakridge Estates, a 61-acre parcel of land off 18th Street North on Bell Avenue, from the city in 2009.
The $4-million development was to include a mix of starter and luxury homes, along with seniors’ housing and commercial business.
The development was approved on the condition the company sign an agreement requiring Executive to provide a two-year warranty for above ground and underground improvements. The company would be released from the warranty and other obligations upon a successful final inspection of the site, and the remediation of any defects or failures that were found.
Phase 1 of the project offered 69 residential lots for construction of higher-end homes and a 55-plus seniors housing complex, while the second phase would see the rest of the land available for starter homes and highway businesses.
Though Executive had completed "significant construction" of 34 residential lots under Phase 1, Andrews agreed to sell the development to Waverly Developments for $3.1 million on March 17, 2012, with a possession date of May 1, 2012.
But according to the development agreement, the city had to give consent to the sale of the development, which Andrews says has not been done. He said in an interview Tuesday this means Executive Homes is still responsible for at least two outstanding issues on the site that came out of the warranty period and the final inspection of the site that took place on Sept. 24, 2013.
However, the city has allowed Waverly to continue developing the property. The Sun reported earlier this month that city council approved a subdivision request for land at 1910 Bell Ave., subject to Waverly signing a development agreement, among other details.
Andrews told the Sun yesterday that the city is still holding the $200,000 Irrevocable Letter of Credit that Executive gave when site development began.
"They still hold my bond," Andrews said. "They have my $200,000 bond, Waverly is working under it. Waverly doesn’t have to put it up anymore, because they’re working under my bond of $200,000."
According to Andrews, the city also demanded that his company file separate zoning and subdivision applications. He contends synchronized zoning and subdivision applications are standard practice. He also alleges the city demanded a traffic study for the site, which he says is not standard practice.
The defamation allegation against the city stems from a conversation between Alberta resident Roy Begin, who was hired by Executive as site superintendent in April 2009, and Kaluzniak.
Andrews claims that while Begin was en route from Calgary to Winnipeg to begin his new job, he received a call from Kaluzniak, who said he "should be worried about getting paid."
As a result, Andrews says some of his company employees refused to work without advance payment, members of the local business community and suppliers refused to provide credit to Executive, and potential employees were scared off.
Andrews’ allegations have not been proven in court.
In its statement of defence, the city denies and claims "no knowledge" of Andrews’ accusations, and states that Andrews’ statement is "an abuse of process."
The city states that administration was not officially told of the sale of the development to Waverly, and only found out about the sale on March 27, 2012. In a May 2 advisement, the city said it was not prepared to approve the sale until it had time to consider the situation.
In September of that year, the city drafted an amendment to the development agreement that was supposed to end the impasse, but Andrews refused to sign.
While the city denies Kaluzniak made the alleged defamatory statement to Begin, it admits Brandon is "vicariously liable" for its employee’s actions within the scope of his employment. Kaluzniak retired from his position in 2010.
Brandon city manager Scott Hildebrand told the Sun he wasn’t in a position to comment on a case before the courts.
"We’ll do what we need to do from a legal standpoint," Hildebrand said yesterday. "We’ve communicated with our lawyer today. We have communicated to Mr. Andrews. And other than that I can’t really comment on the legal side of it."
In a separate statement of defence, Waverley Developments denied it is liable to reimburse Executive for any amount.
When reached Tuesday, Waverley owner John Burgess said that the issues that affect his company are "very minor."
"Obviously I can’t comment on the merits of the claim, but the dispute rests mainly with the city, and the City of Brandon’s former employee. We just kinda got caught up in it, with the handover.
"As far as I’m concerned nothing really material is in dispute between Waverly and Executive."
As of Tuesday, no court date had been set.