Beedie Development Group has won a long, drawn out court case, avoiding a multi-million-dollar rent increase on Vancouver’s Kingsgate Mall.

The Burnaby-based company leases the mall from the Vancouver School Board. The school board lost an appeal that sought to overturn a lower-court ruling allowing Beedie to pay significantly lower rent for the land beneath the enclosed mall at Kingsway and Broadway.

The British Columbia Court of Appeal upheld the lower-court decision setting annual rent for the property at $1.65 million rather than the $9.6 million determined by a 2022 arbitration panel.

In the majority decision, Justice Janet Winteringham wrote: “VSB has not established that the [B.C. Supreme Court] judge erred in her exercise of discretion to reach this disposition.”

The earlier ruling by Anita Chan of the Supreme Court of British Columbia found that the arbitration panel had misinterpreted a previous 1999 decision about how to determine the site’s value. Chan reverted to the earlier interpretation based on the land’s immediate redevelopment value tied to its existing retail use, setting the property’s value at $20 million and annual rent at $1.65 million.

The arbitration panel had instead assessed the land based on its potential redevelopment value with available upzoning, estimating the property at $116.5 million and setting rent at $9.6 million per year.

In a statement posted on LinkedIn, Beedie President and CEO Ryan Beedie said the judgment confirmed that the majority of the 2022 arbitration panel erred in its interpretation of the company’s lease.

“It was unfortunate that it took ‘years of costly litigation’ to reach the outcome in the case,” he said, noting that the ruling marked the fourth-consecutive court decision in the developer’s favour. “In our view, the decision to prolong this dispute reflects a troubling mismanagement of a significant public real estate asset and an unnecessary expenditure of public funds.”

He criticized the school board for opting for costly litigation after ignoring the company’s many offers to resolve the dispute through mediation. The court ordered the school board to cover Beedie’s legal costs.

A spokesperson for the Vancouver School Board told CBC that the board is reviewing the ruling with legal counsel.

“While the court did not rule in the [board’s] favour, pursuing legal clarity on the interpretation of a long-term ground lease was a governance decision made by the [board] in the public interest,” the spokesperson wrote, adding that the move was driven by a “fiduciary obligation to steward VSB assets responsibly.”

In response to Ryan Beedie’s LinkedIn post, independent commercial real estate analyst Wendy Watters said the school board lost out on approximately $100 million that it could have earned by redeveloping its surplus land as mulit-residential in a tight housing market.

“Instead they spent two decades and millions on lawyers fighting Beedie’s land lease payment, which was set by the courts/legal process,” said Watters.

The school board has leased out the mall since 1972 under a 99-year agreement with renewal periods every 10 years after an initial 25-year term. Beedie acquired the lease in 2005 from original tenant Royal Oak, whose earlier dispute over a rent increase led to the 1999 arbitration-panel ruling.

Herbert Silber, an attornery with law firm Kornfield in Vancouver, said in response to Ryan Beedie’s LinkedIn post that the Court of Appeal affirmed the original lease protocol. Silber represented Royal Oak in the original 1999 arbitration case and said he was glad that the appeal worked out for Beedie.

The company must decide by Nov. 19 whether to renew the current 10-year lease term for the property.