Canadian developer loses appeal in tussle with S'pore tycoon

VANCOUVER • A Canadian appeals court has ruled against Concord Pacific Group, one of the country's biggest property developers, in its long-running dispute with Singapore tycoon Oei Hong Leong over a failed US$1.1 billion (S$1.49 billion) waterfront deal in Vancouver.

Concord Pacific is seeking to appeal to Canada's top court, prolonging the tussle, while the ruling may create uncertainty for large, complex projects in the region.

A majority decision by British Columbia's Court of Appeal on Tuesday rejected the attempt to overturn a 2019 ruling that had dismissed its claim against Mr Oei and his associated firm.

Concord claimed they breached an agreement to build out the lucrative site. Two judges backed the lower court's earlier decision, which concluded that their pact was not legally binding.

But the third, Justice Sunni Stromberg-Stein, issued a strongly worded dissenting opinion.

She said the court's findings could leave initial commercial agreements in complex, multi-year, multibillion-dollar projects meaningless or uncertain.

Mr Oei said in a statement he was glad the legal process was coming to an end.

It may not yet: Concord Pacific said it intends to seek permission to appeal to Canada's Supreme Court. The dispute stretches back to 2015, when Mr Oei and Concord Pacific chief executive Terry Hui signed an initial agreement that envisioned jointly developing the site.

The partnership had plans for a C$1.4 billion (S$1.5 billion), two million sq ft condo development, but the deal quickly soured and triggered lawsuits within months.

Few sites match the potential of the nearly empty 5.3ha waterfront tract.

Few, too, are as storied. Known as the Plaza of Nations, the site was centre stage for a World Expo in 1986 that helped put the coastal Canadian city on the radar of Hong Kong billionaire Li Ka Shing, who snapped up the fairgrounds for C$320 million and set up Concord Pacific to redevelop the sprawling lands.

Investors and immigrants from Asia followed his lead, setting off a three-decade property boom that profoundly reshaped Vancouver physically, demographically and economically. Among those was Mr Oei, who bought the Plaza of Nations site from Mr Li for C$40 million in 1989.

Mr Oei told the court he bought the plot as a long-term investment he could live off to allow him "to retire and live in Vancouver".

It would turn out to be a remarkable bet. As Concord Pacific developed the surrounding swathe of lands into a thicket of gleaming luxury condos, Mr Oei bided his time.

In the spring of 2015, he began to look for a local partner to build out the site. He sounded out Vancouver's most prominent developers, including Concord Pacific, which Mr Li had exited by that point and was headed by Mr Hui.

By May of that year, Mr Oei and Mr Hui had struck what the former called a "happy price", valuing his land at C$500 million. They signed an initial agreement that would see Concord Pacific take a 50 per cent stake in an Oei-controlled company owning the tract.

The partnership quickly soured.

The two sides wrangled over the capital gains tax liabilities of a site that had appreciated C$460 million in two decades.

They could not agree on how to share the costs of hefty concessions to be made to the City of Vancouver in return for favourable zoning rules to maximise the project's profitability.

By late 2015, Mr Oei had brought two lawsuits in Singapore against Concord Pacific, alleging the developer had failed to make payments in breach of their agreement.

Concord Pacific, in turn, filed a suit in October 2015 in Canada, accusing Mr Oei and his company of violating the pact. The two-page pact signed by Mr Oei and Mr Hui had read: "This agreement is binding."

Nevertheless, in July 2019, Supreme Court of British Columbia Justice Peter Voith sided with Mr Oei, concluding that the agreement was not binding because the document lacked terms essential to a properly formed contract.

He also scathingly described a Concord vice-president and Mr Hui's key negotiator as "dishonest" in his trial testimony. However, the nearly 50-day trial and thousands of pages of witness testimony and evidence - including from a Deutsche Bank executive - showed Mr Oei was not always forthright.

The 2019 ruling acknowledged that when Mr Oei tried to obtain financing for the partnership with Deutsche Bank, he asked the lender to conceal details of the loan's structure from Mr Hui.

Concord argued that Mr Oei did so in an effort to set up a structure that would give Mr Oei ultimate control and hold Mr Hui personally liable at any time if things went awry.

Deutsche Bank refused to go along, saying it could not agree to withholding such disclosures, Mr Hui baulked at placing personal guarantees, and the partnership failed.

Deutsche Bank spokesmen did not immediately respond to a request seeking comment.

It also emerged that Mr Oei, after signing the agreement with Mr Hui, had proceeded to negotiate a deal with the Aquilini family valuing the Plaza of Nations land at C$450 million.

Mr Oei contended that was not in breach and that he was upfront about simultaneously exploring a back-up partner.

Meanwhile, a shuttered casino, concrete lot and 57 lonely flagpoles occupy the Plaza of Nations site.

BLOOMBERG