B.C. family must pay $1.4 million to contractor who built their mansion, judge rules

The luxury home in Richmond that was the subject of this court case is seen in a photo from a real estate listing. (Dracco Pacific Realty)

A Richmond couple and their daughter must pay a contractor a combined total of nearly $1.4 million after a B.C. Supreme Court judge ruled against them in a dispute over construction of two Metro Vancouver homes.

Yu Na Song and Bo Wei hired Yongfeng Enterprises Ltd. to build them a house on No. 2 Road in Richmond in 2015, according to a ruling issued this week by Justice Simon R. Coval.

Around the same time, Michelle Wei – the couple's daughter – signed a contract to purchase a vacant lot in West Vancouver, and hired Yongfeng to construct a home on it, according to the decision.

According to BC Assessment, the Richmond home boasts seven bedrooms and 11 bathrooms across more than 15,000 square feet of living space and more than an acre of land. The assessed value as of July 1, 2022, was $6,044,000.

The West Vancouver house is more modest, with only 3,500 square feet of living space, though BC Assessment still lists the property as having seven bedrooms and nine bathrooms. The assessed value as of July 1, 2022, was $2,956,000.

While Yongfeng substantially constructed both homes, Coval's decision indicates that Song and Bo Wei ordered the company to cease work on the Richmond property in July 2017.

Yongfeng – and its owners Feifei Ren and Shao Ming Wang – sued the Wei family, alleging $1.5 million in unpaid work and lost profits on the Richmond home.

They also alleged another roughly $273,000 in unpaid work on the West Vancouver home, which was completed in June 2016, but did not receive an occupancy permit until November of that year as the parties dealt with requirements from the district.

The Wei family counterclaimed $207,000 for alleged overpayments and deficiencies in the work on the Richmond property. They also alleged deficiencies at the West Vancouver property, and claimed damages due to the delay in receiving the occupancy permit.

JUDGE RULES UNSIGNED CONTRACT WAS VALID

In support of its claim, Yongfeng's owners provided the court with a copy of an unsigned building contract that they said the parties had agreed to, despite the lack of signature.

The contract included a budget and construction schedule, the court decision notes, with payments totalling just under $4.5 million, plus GST, to be made in installments as the work reached certain milestones.

"Mr. Wang testified that, in December 2015, when the building permit for the Richmond house was obtained, Mr. Wei was in China," Coval's decision reads.

"Mr. Wang contacted Ms. Song and told her Yongfeng was ready to start construction, and she told him to proceed. He told her that he could not start such a large project without the Richmond Contract being signed. She told him to contact Mr. Wei in China about that."

Wang told the court he did just that. Wei told him the contract had been approved and agreed upon and that work should proceed, according to the decision.

The Weis paid a deposit and Yongfeng started work on the house on Dec. 15, 2015.

In court, Wei denied ever seeing the contract, and Song said she was given a copy, but never looked at it, according to Coval's decision.

The couple claimed that they didn't want to sign a contract with Yongfeng until the company had completed the West Vancouver home, so that they could assess its performance.

"They testified that their verbal agreement with Mr. Wang for the Richmond house was that Yongfeng could begin the initial phases of construction, such as excavation, foundations and framing," Coval summarizes in his decision.

"Mr. Wei said he saw this as letting Yongfeng 'temporarily do the job.'"

The judge assessed these two opposing narratives about the contract and found that the Wei family's lacked credibility.

Though the contract was never signed, Coval concluded it was clear that both parties nevertheless verbally agreed to be bound by it, citing letters from the Wei family to Yongfeng that referenced the parties "enter(ing) an agreement" to construct a home on the property for $4.5 million.

Likewise, their pleadings in the case referenced "entering a contract" for the construction of a home and described a milestone-based payment schedule for the $4.5 million total price, the judge wrote.

"I find Mr. Wei and Ms. Song knowingly testified to a false version of events designed to avoid the legal effects of the contract they agreed to," Coval's decision reads.

NO DEFICIENCIES AT WEST VAN HOME

Yongfeng's claim regarding the West Vancouver home included the final payment installment of $153,308 for the project, plus a claim of $119,480 for unpaid "extras" that came up during construction.

While Michelle Wei acknowledged the $153,308 she owed under her contract with the company, she told the court it should be offset because of the delay in receiving the occupancy permit and deficiencies in the work Yongfeng did.

Coval was unconvinced that there were deficiencies in Yongfeng's work, finding that the Wei family had not provided objective evidence that would overcome his reservations about their credibility.

Likewise, he concluded that the delays on that project were not caused by Yongfeng, and should not offset the amount the Wei family owed the company.

The judge didn't accept every claim made by Yongfeng, however.

Coval awarded the company less than it sought for the "extras" it completed on the West Vancouver project, finding that $86,526 was an appropriate amount.

In all, the judge ordered Michelle Wei to pay $239,834 to Yongfeng for the unpaid work and extras at the West Vancouver home.

ABUSE OF PROCESS AND FOREIGN EXCHANGE COSTS

For the Richmond home, Coval ordered the Wei family to pay a total of $1,154,150, again stopping short of awarding Yongfeng all of the compensation it sought.

The vast majority of that total is the $1.07 million that the Weis owed to Yongfeng for construction milestones the company reached.

Having found that the contract was valid, Coval determined that the company was entitled to 66 per cent of the total cost of the project based on the milestones it completed, or roughly $2.97 million.

After paying regularly early on in the construction, the Wei family began withholding payment from Yongfeng in the summer of 2016, according to the decision.

They paid an initial $300,000 in December 2015, then approximately $200,000 per month from January to August 2016, and only $200,000 more between September 2016 and July 2017, when they ordered Yongfeng to stop working on the property.

In all, Coval found, the Weis had paid $1.9 million, meaning $1.07 million remained outstanding.

Yongfeng also sought $232,284 for profits it claimed it would have made if the Weis had allowed it to finish the project.

The judge found that the company's assumed 15-per-cent profit margin "may have been only aspirational."

He awarded the company $84,150, representing a 5.5-per-cent margin on the remaining $1.53 million worth of work it was not allowed to complete.

Similarly, Coval declined to award Yongfeng additional compensation it sought for foreign currency conversion costs.

The Weis made most of their payments in Chinese yuan, transferring the funds from accounts they held in China to accounts Yongfeng held in that country.

The company claimed that this approach to payment left it exposed to fluctuations in the value of the currency, as well as conversion costs associated with bringing the funds into Canada, but Coval was unmoved.

"Each time the Weis made their yuan payments, Mr. Wang provided them signed receipts from Yongfeng, stating that they were accepted as payment in full for the $200,000 and $300,000 instalments," the judge's decision reads.

"In my view, having accepted these payments at the time as payment in full of the Canadian amounts, Yongfeng cannot now take the position that they were not."

Finally, Coval ordered the Weis to pay Ren $2,500 for abuse of process, because they filed unjustified certificates of pending litigation against two properties the Yongfeng co-owner owned in Richmond.

The CPLs were voluntarily removed in January 2019, but the judge found they were still "illegitimately obtained and used for an improper purpose," and therefore worthy of condemnation and deterrence.

The Wei family's counterclaims were all dismissed, leaving them on the hook for a total of $1,396,484.