B.C. Supreme Court rules Terrace can keep $6.18M deposit from industrial park developer

The City of Terrace has won a major legal victory in its years-long dispute with a developer over the stalled Skeena Industrial Development Park, a joint venture with the Kitselas First Nation that has struggled to move forward since its launch in 2014.

In a written decision, B.C. Supreme Court Justice Mark Underhill dismissed a lawsuit filed by Taisheng International Investment Services Inc., which had sued the city for the return of a $6.18-million deposit paid toward the construction of a groundwater system for the project.

Underhill ruled that the city is entitled to keep the deposit, writing that to decide otherwise “would result in Taisheng receiving a $6.18 million windfall.”

Project delays and unfulfilled promises

Under a 2014 agreement, Taisheng purchased land in the industrial park south of the Northwest Terrace Regional Airport and agreed to build a groundwater system to serve the site. The contract stipulated that Terrace would reimburse Taisheng for the deposit if the work was completed — but if deadlines were missed, the city could repurchase the land.

By 2019, Taisheng told the city it could not find a suitable groundwater source on the site and proposed using wells on nearby provincial land instead. However, according to the court, the company completed little work beyond a technical report by Allnorth Engineering, which estimated the system’s total cost at over $14 million — far more than the original deposit would cover.

With minimal progress and no construction underway, the city exercised its right to buy back the land in October 2021. Taisheng refused to transfer ownership, prompting arbitration, which the city won. The land was formally returned to Terrace in October 2023 for just over $3.09 million.

City to use funds for new developer

In court, Taisheng argued that it was still entitled to the $6.18-million deposit, but Underhill rejected that claim, finding the city acted properly and in good faith.

“At the time that Terrace exercised the option to purchase, it was left with a development that is now years behind schedule, all of the costs associated with that delay, and the burden of an additional $8 million of construction costs to complete the groundwater system,” Underhill wrote.

Terrace officials said the city plans to use the deposit funds to move ahead with the groundwater infrastructure and attract new partners to the long-planned industrial hub.

Next steps

The city acknowledged that Taisheng has 30 days to appeal the ruling.

Taisheng, which was until 2023 a subsidiary of a Chinese state-owned asset management company, has not commented publicly on the decision. CBC News reached out to the company’s lawyers but did not receive a response.

The court’s ruling clears the way for Terrace to relaunch the industrial park project, now a decade in the making — but without the developer that once promised to build it.