Bought for $690K in 1996, a Surrey property is now worth $25 million and at the centre of a court case

The 4.3-acre parcel at 6728 152 St. in Surrey has exploded in value since it was purchased for $690,000 in 1996. (BC Assessment)

In 1996, Harjinder Cheema purchased a 4.3-acre property on 152 Street in Surrey, B.C. He paid $690,000 for the site, which included a modest, one-storey home with a finished basement, and was zoned for agricultural use.

His Realtors for the purchase were his friends Gurdarshan Mand and Kuldip Gill, who each agreed to provide 10 per cent of the purchase price and cover 10 per cent of the expenses of maintaining the property in exchange for a 10 per cent ownership stake, which Cheema would hold in trust for them.

Today, the property is worth more than $25 million, and the friends have fallen out over their respective interpretations of the oral trust agreement and later attempts to codify it in writing.

The question of who owns how much of the property ended up before the B.C. Supreme Court, where Justice Lauren Blake issued a sprawling, 128-page ruling on the matter this week.

Ultimately, despite finding all three men had serious credibility issues, the judge found Mand and Gill retained ownership interests in the property and made a variety of orders aimed at ensuring they and Cheema would be fairly compensated from its court-ordered sale.

‘Highest and best use’

The increase in the property’s value from the $690,000 Cheema paid for it in 1996 to the $25,555,900 BC Assessment values it at for 2025 is extraordinary, even in the context of Metro Vancouver’s decades-long real estate boom.

The current assessed value is more than 37 times the 1996 purchase price, an astronomical increase of 3,703 per cent. Put another way, the property has accrued an average of more than $880,000 in value – 127 per cent of the original investment – every year since 1996.

While Blake’s decision does not concern itself with explaining why the property value has skyrocketed, it contains some insights from an appraiser’s report submitted by Mand and Gill, the plaintiffs in the case.

The house on the property was built in 1969, and BC Assessment lists it as having six bedrooms and three bathrooms across 2,092 square feet of living space. The home accounts for just $32,900 of the property’s assessed value, with the rest allocated to the land.

While the property’s current zoning is A-1, a “general agriculture zone,” it has not been used as farmland since Cheema acquired it, according to the court decision. Working farms are typically assessed at a much lower rate in B.C. than residential or other commercial land.

Despite its current zoning, the site is located in an area designated for “mixed employment” in Surrey’s Official Community Plan and as a “business park” in the city’s East Newton Business Park Neighbourhood Concept Plan. Thus, the property’s “probable highest and best use,” according to the assessor, is redevelopment as a business park.

108-day trial

Blake’s decision in the case comes after a trial that was initially scheduled for 25 days, but ended up stretching for 108 days over 19 months.

At multiple points in the decision, the judge laments the volume of evidence submitted in the case and the length of time spent arguing issues that ultimately proved irrelevant to her analysis of the case.

At its most basic, the dispute centred on the plaintiffs’ assertion that Cheema continues to hold 20 per cent of the property in trust for them. Cheema denied this, arguing that the trust agreement had been voided, either because of a subsequent agreement between the parties or because the plaintiffs had failed to keep up with their responsibility to pay 20 per cent of the property maintenance expenses.

Neither of these arguments satisfied Blake, who declared that Cheema holds 20 per cent of the property in trust for Mand, Gill and their wives, with the remaining 80 per cent held in trust for himself.

As a remedy, the judge determined it was necessary to order the sale of the property, something the plaintiffs sought and the defendants opposed.

“To continue to tie the parties together as co-owners of the property by way of partition would just generate further conflict and inevitable legal proceedings,” Blake’s decision reads.

“The most efficient manner in which to address the high level of conflict and animosity between the parties is to order the sale of the property.”

The judge ordered that the property be listed for sale within 60 days of her decision, and set out the terms for how the sale should be conducted.

Once the property is sold, the plaintiffs will be entitled to receive 20 per cent of the proceeds of the sale, minus the same percentage of Realtor commissions, necessary closing costs, and applicable taxes.

The plaintiffs will also have to deduct from their portion of the proceeds 20 per cent of the value of a mortgage and line of credit and 20 per cent of Cheema’s “reasonably incurred expenses” as determined by the court registrar, as well as 20 per cent of the tax consequences arising from the sale.

Their portion of the sale proceeds will be increased by 20 per cent of the $42,000 in rental income Cheema received from the home on the property and did not share with them, as well as 20 per cent of the payments Cheema Bros. Transport Ltd. “should have paid” to Cheema under the terms of a lease of the property.

The exact value of many of these considerations remains to be determined. An additional hearing will be held to determine how court costs should be assessed, according to Blake’s decision.