After months of legal back-and-forth and council deliberations, town council has resolved to cover the cost of part of the legal fees associated with the sale of the former Kinsmen Centre building to local grocer Jim Hamilton.
The total bill from Jill Sheward, a partner with Brownlee LLP in Edmonton who was retained by the town, amounted to $6,000 for an estimated 13 hours of work.
To accommodate separating of the sale, so Hammy’s Spirits could own the building and Cash Foods would own the majority of the parking lot, there was a subdivision approval to separate the two parcels and the creation of two new sale agreements.
Creating the new agreements were accredited with three of the hours of legal time billed.
In keeping with the town’s Land Disposition Policy and the sale and construction agreement, which Hamilton signed, the purchaser, Hamilton, is responsible for paying all legal fees.
Hamilton wrote a letter to council in the spring, asking it to waive the legal fees of the transaction, as he felt the deal had become unnecessarily complicated.
After some debate during the June 24 meeting, council resolved to send the matter back to administration to come up with a solution that would be fair while being cognizant of the Land Disposition Policy.
In an in-camera session at their end of council’s regular meeting on Aug. 13, council approved a motion to cover $1,912.50 of the legal fees, representing the cost of preparing a unique sale agreement, and charging the rest of the amount ($4,087.50) to Hamilton.
The town has already paid for closing costs per its policy and the sale agreement.
An official statement from the town provided through communications manager Sandra Smith reads:
“The amount of $1912.50 represents the cost of the legal advice that was provided to the town and the cost of preparing two documents that accurately reflected what was required in this matter: a new sale and construction agreement and a new pre-closing construction licence which gave the buyer formal authorization to start reconstruction before the formal closing of the deal.
“The amount of $1912.50 represents 4.25 hours billed by the law firm at $450 per hour. As has been stated previously, this was not a simple real estate transaction, but rather a commercial transaction governed by a number of detailed policy requirements.
“As such, administration is confident the time spent and the cost incurred were reasonable for the creation of these new documents and for the quality commercial legal advice that was provided to the Town on this matter.”
It was necessary to create two agreements to comply with the town’s policy, and while these agreements were written to deal with this particular sale, the work that’s gone into preparing these agreements will result in a simpler, quicker process for future sales because these agreements can now be used as templates for future agreements, says Smith.
In an interview on Aug. 29, Hamilton stated that he had never been given an amount from the town’s lawyer as to what the bill would be and therefore asked for the fees to be waived.
He acknowledged he signed the agreement and was willing to pay the legal fees, but he had no way of knowing if the fees would be, “a normal amount or an outrageous amount.”
At least one town councillor was on Hamilton’s side, saying the fee was exorbitant for a real estate deal, even a complicated one.
“I’m sorry but the legal fees that are being charged by this law firm are extremely high,” said Coun. Teri Underhill at the June 24 meeting.
“I feel the legal fees are atrocious.”
Underhill stated this was her area of knowledge, having spent 15 years as a legal assistant specializing in commercial real estate deals.
“To me it’s just an unimaginable amount of money to spend on a real estate deal. This is not an $8 million deal.”
Coun. Sandra Lyons was not in favour of waiving the legal fees.
“My take on this, is the policy was written before the agreement was put together and on top of that, they accommodated pre-closing construction, there’s been a change of sale conditions and then there’s a savings of over $200,000, in my opinion, from the original purchase price, so I think the legals are a pretty small detail,” said Lyons.
About the $200,000 savings, Underhill said, “That was our fault. That has always been our fault.
“Our administration needs to make sure that we’re not spending an atrocious amount on legal fees on a transaction that I don’t understand how we got to $6,000 and I’ve done complicated real estate commercial transactions.”
“Was it a simple deal? No. Did they make it 100 times more difficult? Yes,” said Hamilton.
Hamilton stressed that his complaints were with administration, not town council members, who he says went out of their way to be helpful and consult with him.
“I find town council has been very good at getting the town to grow.”
Although the transformation of the building began months ago, and Hamilton hopes construction will be complete by the end of October to the middle of November, Hamilton says as of the end of August, he’s yet to receive a bill for the legal fees.
READ MORE: Work well underway transforming former Kinsmen Centre to new Hammy’s Spirits