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$8.6M lawsuit against stalled Richmond Atmosphere project dismissed in court

Directors, shareholders and investors applied to dismiss a contractor's lawsuit against them for unpaid work.
The developer of the long-stagnant Atmosphere project in Richmond is in the process of applying for a building permit.

A contractor's lawsuit to seek repayment from directors, shareholders and investors of a stalled Richmond city centre development project was struck in B.C. Supreme Court due to its weak claims.

Metro-Can Construction (AT) Ltd. took the developer and related parties for the Atmosphere project on No. 3 Road and Alderbridge Way to court in 2021, seeking $8.6 million in damages for unpaid work, negligent misrepresentation and breach of trust.

Metro-Can was hired by Alderbridge Way Limited Partnership, through its general partner Alderbridge Way GP Ltd., to perform excavation and related work.

The project stalled in March 2020 when the developer experienced financial difficulties. The developer ultimately obtained creditor protection in 2022, which resulted in a stay of proceedings order for all legal proceedings against the developer.

As a result of the developer's insolvency, it was unable to pay Metro-Can's invoices for $6.6 million from 2020.

The development plan for the Atmosphere project includes an office tower and six residential towers with 824 units of housing.

The Richmond News reported last fall that Alderbridge Way Limited Partnership was expected to submit a building permit application and have it in place by March 2024.

In response to a request for update from the News, City of Richmond spokesperson Clay Adams confirmed on Tuesday that the application process is "still underway" and the city anticipates completion "soon."

The site on No. 3 Road and Alderbridge Way has been excavated and is currently surrounded by wooden fencing.

Metro-Can's lawsuit listed Alderbridge Way Limited Partnership, Alderbridge Way GP Ltd. and the developer's wholly-owned subsidiary and registered owner of the land, 0989705 B.C. Ltd., as some of the defendants.

It also sought the same amount of damages against directors, shareholders and investors, who applied to have Metro-Can's claims against them dismissed based on Metro-Can's failure to support its claims with facts.

Contractor's claims were bound to fail, says B.C. Supreme Court justice

In a judgment issued on March 1, B.C. Supreme Court Justice Andrew Majawa sided with the applicants.

"It appears that in trying to access individuals and entities that may have resources and are not subject to the (creditor protection), the plaintiff has cast its net too wide," wrote Majawa.

"In doing so, it has brought claims against the applicants which have no reasonable prospect of success."

In Metro-Can's amended claim filed in October 2023, it alleged the directors, investors and shareholders negligently misrepresented to Metro-Can that it would be paid as long as it kept working on Atmosphere. Metro-Can also sought damages against them for breach of trust and a declaration that they were unjustly enriched with $8.6 million.

Majawa found Metro-Can did not offer evidence to support its claims or to respond to the defendants' evidence.

"The evidence it submits consists of suspicions and conjecture," wrote Majawa.

He disagreed with Metro-Can's argument that it was premature to decide on the matter based on the evidence before the court.

Although Metro-Can argued it couldn't be expected to have more evidence when the information was under the defendants' control, Majawa said Metro-Can was in a position to provide evidence in support of its claims but failed to do so.

Majawa also decided Metro-Can's claims for misrepresentation should be dismissed for failure to disclose a reasonable claim and denied it a second chance to amend its pleadings.

He found the claim was deficient because it was vague and failed to include particulars such as how and when the representations were made, and "made no attempt to identify" what each applicant said or did. Metro-Can also failed to show why the applicants would be liable in a personal capacity.

Furthermore, Majawa dismissed Metro-Can's claims against the applicants for breach of trust and unjust enrichment for disclosing no reasonable cause of action and found they disclosed no genuine issue for trial.

"This is a case where a contractor has unfortunately not been paid for all of the work it completed and it is attempting to shift liability from the party it contracted with to that party’s directors and shareholders," said Majawa.

However, he added, there was no basis in law or in the evidence before him that he could hold the applicants liable for the developer's alleged wrongdoing.

He also awarded special costs to the applicants given his concern with Metro-Can's decision to amend its pleadings to "affirm and repeat" serious allegations that applicants misappropriated trust funds and made fraudulent representations "without any evidence to support such claims."

"Such pleadings are scandalous and, in my view, this is an appropriate case to make an award of special costs in favour of the applicants," he wrote.

With files from Maria Rantanen

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