Company must refund $1-million deposit after failing to complete West Vancouver home on time, court rules

West Vancouver is seen from Vancouver in this file photo. (Shutterstock.com)

A West Vancouver company has been ordered to repay a homebuyer's $1-million deposit after it failed to complete construction on the property in time.

According to a B.C. Supreme Court decision issued last week and published online Monday, Zihao Yan – also known as Tony Yan – entered a contract with Benbow Residences Inc. in 2018 to purchase a home on Benbow Road in the district's Westmount neighbourhood for $5.38 million. 

Under the agreement, the court decision indicates, Yan would take possession of the property on Nov. 15, 2018, and the closing date for the transaction would be Oct. 30, 2019.

Before the closing date, Benbow Residences was required to complete construction on the home – including addressing 43 "deficiencies" identified after an inspection – and to provide an occupancy permit.

Yan took possession as planned in November 2018, with construction ongoing, according to the decision. He spent December 2018 and January 2019 in China, expecting that he would return to find the deficiencies addressed and construction completed.

"When Mr. Yan returned from China, not only were many of the deficiencies not fixed, but the property was in a state of upheaval," reads B.C. Supreme Court Justice Sandra M. Sukstorf's decision.

"For example, the driveway was dug up and was unusable, there was no working boiler to heat the pool and hot tub, the smart controls in the home did not work, the security system did not work, and the patio doors did not close."

"A similar state of affairs continued until late October 2019," the decision notes.

Nonetheless, Yan continued to prepare to complete the purchase, according to Sukstorf's decision.

He secured a $2.7-million mortgage and liquidated investments worth another $1.86 million to combine with his $1 million deposit and account for the purchase price.

Yan also obtained property insurance and instructed his lawyers to "take the necessary steps to complete the transaction," according to the decision.

While Yan was prepared to complete his purchase, the decision indicates, Benbow Residences was not.

"The defendant’s conveyancing lawyer initially forwarded (Yan’s lawyer's) office an occupancy permit for an entirely different property," the decision reads.

"When this was brought to their attention, the defendant’s conveyancing lawyer then suggested that the correct occupancy permit must have already been provided. The evidence confirmed that the defendant had not obtained an occupancy permit on the date of closing and would not obtain one until Sept. 17, 2020, some 10 months after the completion date."

Defendant stopped responding

When the transaction was not completed as planned, Yan's lawyer sent a letter to Benbow Residences informing the company that it had breached a fundamental term of the contract, and requested the return of Yan's deposit, according to the court decision.

Benbow Residences did not return the deposit, so Yan filed his lawsuit.

Phil Garrow, the company's president and director, filed a response to the lawsuit and a counterclaim alleging that it was Yan, not Benbow Residences, that had repudiated the contract.

The decision indicates Garrow initially corresponded with Yan's lawyers and participated in the court process, but later stopped communicating and did not participate in the trial.

Sukstorf determined that the trial should continue in the defendant's absence, noting that Garrow and his company were aware of the trial date and their obligations, and had demonstrated through earlier non-compliance a failure to "engage meaningfully in the litigation."

"If the defendant later seeks to set aside the judgment, he will need to provide a compelling explanation for his absence and demonstrate that his previous conduct was not indicative of an intention to abandon his defence," the decision reads.

Sukstorf had no trouble concluding that Yan was "ready, willing and able" to complete his purchase, and that Garrow and Benbow Residences had "repudiated" the contract.

Given this, Yan was within his rights to accept the company's repudiation of the contract and demand repayment of his $1-million deposit. The judge awarded him that amount.

She also awarded Yan special costs, citing Garrow and Benbow Properties' repeated failure to comply with "court orders and procedural obligations."

Sukstorf listed five document disclosure requests that the defendant "ignored," along with two orders issued by other judges with which the company "did not comply."

"In my view, the defendant’s repeated failure to comply with court orders, despite receiving clear instructions and multiple opportunities to do so, demonstrates a consistent disregard for the court’s authority that is deserving of rebuke," Sukstorf's decision reads.

"This behavior not only prejudiced Mr. Yan but also burdened the court system by necessitating repeated judicial intervention to enforce basic procedural requirements."

The amount Yan will be entitled to recover as special costs remains to be determined, according to the decision.

Notably, it appears that the company may have been dissolved. A company called Benbow Residences Inc. is among a list of hundreds of companies that were dissolved on July 3, 2023, according to a document published by B.C.'s Ministry of Citizens' Services. 

"In the event of difficulty in recovering the $1 million, Mr. Yan may apply for such further relief as is necessary on notice to the defendant," Sukstorf's decision concludes.