Dispute arises after construction fails to complete by outside completion date
The British Columbia Court of Appeal allowed an appeal and dismissed the underlying civil action upon determining that a strata developer did not breach the contract and could terminate it when construction could not complete by the outside completion date.
In Anderson Square Holdings Ltd. v. Zhang, 2025 BCCA 288, the appellant was the developer of a strata development in Richmond, BC, while the respondents were presale purchasers. The development could not attain completion by the contract’s outside completion date of Sept. 30, 2019.
The developer tried to terminate certain presale contracts by relying on two contractual clauses, which provided that the inability to comply with the outside completion date would trigger the termination provisions.
Under clause 2, the agreement would terminate if the completion date did not occur by the outside completion date unless all parties agreed in writing to an extension. In the proviso, the outside completion date would extend for a period equivalent to the delay period if circumstances beyond the developer’s reasonable control delayed it from completing construction.
Under clause 21, if a major outside event made it impossible or unreasonably feasible or economical for the developer to perform its contractual obligations, it could terminate the agreement through written notice to the purchasers. In that case, the developer would give the purchasers the deposit and interest earned.
The purchasers filed a civil claim against the developer. The trial revolved around the issue of whether failing to meet the outside completion date without an extension agreement would automatically terminate the presale contracts upon giving notice or would automatically extend the outside completion date, with the contract staying in effect.
The judge determined that the contract did not automatically terminate on notice but remained in force. He held that the developer committed contractual breach and acted dishonestly when it invoked contractual clauses to give a termination notice and anticipatorily repudiated the presale contracts.
The judge said the presale contracts remained in force until the purchasers accepted the repudiation in August 2021, at which point they had a duty to mitigate. He assessed damages at $13,093,900, representing the difference between the agreed purchase price in the respondents’ individual presale contracts and the stated values of the relevant units in August 2021.
The developer alleged that the judge wrongly interpreted the termination provisions by finding that the relevant clauses would automatically extend the outside completion date without the parties’ written agreement in case of delay beyond the developer’s reasonable control.
The developer asserted that, with the appropriate interpretation, the presale contracts terminated automatically after giving notice when the outside completion date was unattainable.
Interpretative error
The Court of Appeal for British Columbia ruled that the judge erroneously interpreted clause 2’s termination provision, given the plain meaning of the words used in their context and the interplay between clauses 2 and 21.
First, the appeal court saw nothing in clause 2, which defined both the completion date and the outside completion date, that would contractually obligate the developer to complete construction before Sept. 30, 2019.
The appeal court held that clause 2’s termination provision set a “drop-dead date” or an outer time limit on the contractual relationship between the parties and prevented the contractual obligations from binding them past the outside completion date, unless they agreed in writing to an extension in case of the development’s non-completion.
The appeal court explained that the proviso pertained to situations where the developer’s fault did not lead to delay beyond the outside completion date and stated that any agreed extension of the agreement would last for a period at least equal to the delay.
Next, the appeal court said the judge misinterpreted clause 21, given that the developer had no contractual obligation to complete construction before the outside completion date.
The appeal court added that the judge interpreted clause 21 in a way that rendered a portion of clause 2 redundant. As the appellant argued, clause 21 addressed circumstances different from what clause 2 contemplated.
