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The building site at 7000 Lougheed Highway in Burnaby, B.C., is central to a legal dispute between Telus and Polygon Homes.

Darryl Greer/Darryl Greer/The Globe and Mail

In September, 2017, Vancouver-based developer Polygon Homes Ltd. inked a $175.5-million deal for a 14-acre property in Burnaby with Telus Communications Inc., the site marketed as transit-oriented in a “booming” area nestled between two town centre malls along a coveted commuter-friendly SkyTrain route.

The land at 7000 Lougheed Highway, owned through an entity on behalf of the Telus pension plan, once housed a company operations building that has since been demolished. The plot is now sitting empty, with browning overgrowth snaking up through the cracked, worn concrete under the shadow of the Millennium Line SkyTrain tracks. The neighbouring property is the site of a Saputo Dairy facility still bustling with trucks, though it is now a temporary renter on the land after selling for $209-million to a developer last year.

With development plans in the works, Polygon still had to wait on Telus and the City of Burnaby for a “detailed site investigation” of both on-site and off-site contamination, and subsequent remediation requirements. As a condition of their agreement, Telus needed a “remediation closure plan.” Polygon had to extend the deadline to deliver the plan several times.

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In May, 2019, the City of Burnaby – amid an atmosphere of housing unaffordability, real estate speculation and a wave of so-called “demovictions,” imposed a development condition that 20 per cent of the proposed Polygon project be rental.

With the imposition of this new requirement and the absence of an agreed plan to clean up the site, Polygon decided to pull out of its deal with Telus. It now wants Telus to return its $5-million deposit.

In legal filings, Telus now claims Polygon pulled out when the market softened, with an “ulterior motive” of trying to pay a lower price for the property years after the ink was dry on the purchase and sale agreement.

The companies' contrasting versions of events are contained in two lawsuits filed moments apart in B.C. Supreme Court in late October.

“Since the [Purchase and Sale Agreement] was executed, the real estate market in the Lower Mainland declined and the purchaser and Polygon Homes formed the view that the property was now worth much less than the purchase price and, as a result, their planned development would no longer be profitable [or would be less profitable],” Telus’ lawsuit states. “For that reason, as well as others that are unknown to the vendor and Telus at this time, the purchaser and Polygon Homes resolved to find a way out of the PSA or to force the vendor to lower the purchase price and make other concessions to the contractual terms.”

In May, 2019, the City of Burnaby imposed a development condition that 20 per cent of the proposed Polygon project be rental.

Darryl Greer/Darryl Greer/The Globe and Mail

But Polygon's lawsuit says the company was uncomfortable moving forward with the deal when the City of Burnaby was unable to provide "requisite feedback" about an amendment to the city's Official Community Plan needed for the site's rezoning and subdivision.

“Polygon Pacific conducted its due diligence and planning process for the lands,” its claim states. “Polygon Pacific attended numerous meetings with the environmental group and other planning representatives of the City, had regular communications with Telus, employed internal staff resources and engaged qualified third-party consultants including architects, engineers, environmental engineers and legal counsel to carry out the development program.”

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In addition, the rental component requirement, Polygon claims, would've necessitated major and costly changes to the plan, while "the economic return to Polygon based on the purchase price stipulated in the Purchase and Sale Agreement would be substantially reduced."

Polygon claims it made "reasonable efforts in good faith" to change the deal given the city's feedback, "but no agreement was reached."

Polygon president Neil Chrystal declined to comment on the lawsuit when reached by the Globe.

"I don't think there's anything I can really tell you," he said. "I'm really sorry."

The company's lawyer, Rose-Mary Basham with Owen Bird Law Corp. in Vancouver, told the Globe that Polygon had every right under the contract to withdraw.

“There was an agreement that was entered into that had certain conditions that had to be met. Polygon gave them 10 extensions. They didn’t get met. Polygon terminated the agreement. The other side has taken the position that Polygon wrongly terminated the agreement and they are trying to sue for damages,” she told the Globe in a phone interview. “That’s their position, but we’re saying that’s hogwash. It’s not correct.”

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Ms. Basham said she couldn’t comment on the particulars of the site’s contamination, but asserted that the lack of a completed remediation plan and the city’s rental requirement made the deal “unacceptable” to Polygon.

Telus' lawyer, Hein Poulus with Harris & Co., did not return the Globe's request for comment, nor did company representatives. Calls to the City of Burnaby for comment were not returned.

In its legal filing, the telecom firm claims it was “ready, willing and able to complete the sale of the property,” adding that the City of Burnaby was “supportive” of Polygon’s proposed development plans.

Ms. Basham said the lawsuits “were literally filed contemporaneously within a couple seconds of each other,” and would likely be consolidated into one matter.

“Right now it’s before the courts, but there’s nothing to say that it would not be settled somewhere down the road,” she said. “There’s always room for both parties to come to terms, but we’re not at that stage right now.”

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