A man who backed out of a deal to buy a Saltspring Island property will have to pay $71,000, plus extra penalties for legal costs, following B.C. Supreme Court judgments.
Ganges Kangro Properties Ltd. sued Michael Philip Shepard, of Victoria, for damages for breach of contract after a residential property sale collapsed in August 2008.
Shepard had put down a $10,000 deposit but changed his mind about the site after hearing it had flooded earlier, court was told.
He refused to complete the purchase, worth a total of $411,000, on the closing date, even though subject-to conditions had been removed by then.
Ganges Kangro, a Saltspring development company, listed the property again. It sold nearly two years later for $360,000, which was $51,000 less than the agreement with Shepard.
A seven-day trial took place in December 2013 and in April of this year. Judge Gordon Weatherill decided in favour of Ganges Kangro in July and this week also released his rationale for imposing costs.
Ganges Kangro has been awarded damages totalling $71,179. This includes $48,578 for the difference in sale proceeds, $36,313 for interest paid on the property’s mortgage, property taxes, water fees and insurance premiums.
Shepard is also required to pay legal-related costs.
He had argued that a dam on a nearby property, owned by someone else, encroached onto the property he was interested in, causing flooding. This situation did not come to light when the site was inspected, court heard. Shepard said Ganges Kangro should have told him about this matter.
Weatherill decided that Ganges Kangro did not fail to disclose property defects. The dam built on the other site did not cause flooding on the Ganges Kangro land, the judge said. He blamed vandalism and poorly maintained highway ditches for one flooding incident.
A high-profile community debate developed on the Island about flooding in that area and about who was responsible. RCMP were called more than once and lawsuits were launched involving other parties.
The Ganges Kangro-Shepard matter went through a number of settlement offers and counter-offers. In December 2012, Ganges Kangro offered to settle in a plan that would see the company keep the $10,000 deposit from Shepard, court was told. This offer included legal-related costs.
Shepard rejected that offer, suggesting instead that his deposit be returned, with additional interest and costs paid as well. The seller turned that down.
Then in August 2013, Shepard proposed return of the $10,000 and dropped the request for costs.
Ganges Kangro refused that plan, countering with a plan for Shepard to pay $40,000, including costs.
Shepard’s final offer came in November of last year, asking for $9,000 of the deposit alone. That was rejected.
The initial offer from Ganges Kangro was an “extremely reasonable proposal,” Weatherill said, adding that Shepard should have accepted it.
Shepard entered a binding purchase agreement after a very cursory property inspection, the judge said. His decision to turn down the original proposal from the seller was unreasonable, the judge said.
