The hotel company that opened a 71-room boutique hotel in the City of North Vancouver’s Shipyards project is now suing the Shipyards, alleging construction delays have cost them millions of dollars.
Executive North Van Hotel Ltd. has filed a civil claim in B.C. Supreme Court against The Shipyards Development Ltd.
Legally, City of North Vancouver leases the lands to The Shipyards Development Ltd., which signed a sublease agreement with Executive in May 2018. Under the lease terms, the Shipyards Development Ltd. was to construct the main building including walls, elevators, HVAC, roughed-in plumbing, electrical and doors; Executive was to do additional works to construct and operate the hotel for a 20-year term.
The parties agreed the hotel would take possession on Oct. 1, 2018.
“However, in breach of the sublease, the master tenant failed to complete the building and master tenant’s work in order to render the premises suitable for possession by Oct. 1, 2018 and to allow the commencement of the subtenant’s work,” their claim states.
The hotelier took possession on Nov. 27; however, it found “various deficiencies” in the base building work, the claim continues.
In its court filing, Executive estimates it had to take on another $1.9 million in costs to finish the work left undone by the Shipyards, more than $110,000 in delay costs and $313,000 for “other” costs including revisions to exterior signage.
Executive is asking the court to award it general and special damages for breach of the sublease, restitution for the Shipyards’ unjust enrichment, plus interests and court costs.
In a response filed in B.C. Supreme Court last week, the Shipyards denies Executive’s claims. Instead, it argues, the two sides agreed Executive would take on some of the work originally slated to be done by the Shipyards.
“The parties negotiated a change directive to reflect this agreed change in the scope.
No agreement with respect to the cost associated with this revised scope of work was reached,” the response to the civil claim stated. “A pre-possession walk-through identifying existing alleged base building deficiencies was completed by the subtenant on Nov. 26, 2018. The minor deficiencies identified during that walk-through were completed by the [Shipyards].”
The language of the sublease also specified that if any delays on the Shipyards’ part delayed completion of Executive’s work, the applicable remedy would be to extend the 210-day “fixturing period” in which Executive was not required to pay rent.
The fixturing period ended on June 25, 2019 and the Seaside Hotel opened for business on Oct. 1.
The Shipyards has also filed a counterclaim, asking the courts to force Executive to pay for additional works the master tenant took on at Executive’s request.
