A Whitehorse contractor has been ordered to pay back almost $1 million to the owner of a condo project that it was hired to build.
The Yukon Court of Appeals found that builder, Wayne Cunningham of Kareway Homes Ltd., had over-charged the owner of the property, Alex Shaman, by $915,597.28.
The two men struck a verbal agreement back in 2006 to construct the two buildings that would become the Lansing Point condo complex.
That fall, while Shaman was out of town, Cunningham started on the concrete slabs that formed the foundations for the buildings, according to the findings from the first trial.
Shaman maintained that he never authorized that work to be done.
In his original decision, Yukon Supreme Court Justice Leigh Gower concluded that it was a simple miscommunication between the two men who were both “notoriously poor communicators.”
After he returned to town, Shaman told Cunningham that he didn’t want any more work done until there was a written agreement and a budget in place.
In early 2007, the two had hammered out a development agreement that split the profit on the project 50/50.
Construction didn’t start until April of that year.
But within a few months Shaman had started to worry about ballooning costs and construction delays.
The buildings were supposed to be done by December of that year, but it would end up taking two years for the project to be completed.
Things came to a head in the fall of 2009.
Cunningham accused Shaman of breaching the development agreement, stopped working on the project and filed suit that November.
At the trial, Cunningham claimed that the development agreement had been amended into a “cost plus” contract, and that Shaman had signed off on all the extras charged to the project.
Shaman countered that it was a “fixed price” contract and that Cunningham had blown through the budget that they had originally agreed upon.
In his judgment, Gower called into question Cunningham’s credibility and sided with Shaman, awarding him more than $500,000.
Cunningham appealed the decision but lost for a second time.
The Court of Appeal not only upheld the original ruling but found that Gower had underestimated the amount that should have been awarded to Shaman, and increased it by almost double.
Cunningham is now also on the hook for Shaman’s legal costs.
This isn’t the first time that Lansing Point has been involved in a legal dispute.
The condo corporation that manages the buildings launched a lawsuit last summer against Kareway Homes, the numbered company controlled by Shaman that owned the land, the City of Whitehorse, the two engineers that worked on the project and its insurance broker.
In its statement of claim, the condo board said that the foundations of both buildings were laid improperly and that frost heaves are now causing the buildings to shift.
In court filings, the city admitted that it didn’t inspect the foundation. Instead, it relied on reports signed by the professional engineers. That’s routinely done with large projects like Lansing Point, the city has said.
The condo board is asking for a little more than $300,000 so it can properly insulate and repair the foundations of the two buildings.
It has already spent $150,000 to repair the building with the most damage, said Geoff Wooding, the condo board president.
“We’ve fixed the fundamental problem with that building and we’re going to go ahead and remedy the second building if we can settle this lawsuit,” he said.
That case is still before the courts.
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