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Sausage maker’s dispute to grind out in court

The property where the International Sausage House deli is located is coveted by a developer for a new condo project, but a dispute between the property
The property where the International Sausage House deli is located is coveted by a developer for a new condo project, but a dispute between the property's owners, the developers and the operator of the deli is going to court.
— image credit: MARIO BARTEL/NEWSLEADER

A sausage maker is the missing link in a big developer’s plans to build a new condo project in Burnaby’s Brentwood area.

And it’s going to take a trial in B.C. Supreme Court to determine if the sausage maker will be chopped out of the picture.

On July 29, B.C. Supreme Court Justice Stephen Kelleher refused an application by the owner of International Sausage House Ltd., Piotr Karwowski, for a summary trial to quickly settle a dispute between himself and the two other owners of the property where his sausage factory and deli reside, as well as developers Millennium Group Properties.

Kelleher said in his decision there were too many disputed facts and issues to make a decision before a full trial, which is scheduled to begin Jan. 26, 2015.

The International Sausage House Co. Ltd. has operated at 1846 Gilmore Ave. since 1967. It was owned a third each by Henry Eustergerling, Leon Hammer and Rudolph Gutfreund, who also owned the property. In 1997 Eustergerling, Leon Hammer’s widow Lola, and Gutfreund decided to lease the property back to the sausage business they also controlled.

In August 1998, the sausage business was sold to Karwowski and the lease assigned to his company, which was renamed International Sausage House Ltd. The lease gave the tenant a right to renew the lease for one additional term of five years, which he did in 2001, as well as the right of first refusal within 21 days of any agreement to sell the property, noted Kelleher in his judgement.

In January 2006, Eustergerling sold his portion of the property to Karwowski’s parents, Janusz and Kazimiera. A few months later Piotr signed another five-year renewal of his lease effective July 1, 2007.

Four years later, Millennnium bought two properties adjacent to the International Sausage House and entered into discussions with planning staff at the City of Burnaby. The area is designated as high-density, multi-family residential use in the city’s Brentwood Town Centre Community Plan.

In September 2011, a real estate broker commissioned by Millennium approached the owners of the sausage house property about selling their lot.

Karwowski, representing himself as the tenant and his parents as one-third owners, said he indicated at a meeting with the broker his intention to continue operating his sausage plant at the site for another five-and-a-half years. And if he had to leave early, he wanted a substantial moving allowance, including money for new equipment and a new deli store.

Negotiations continued, and on Nov. 16, 2011, an offer was made that seemed to satisfy everyone involved, said Kelleher. Karwowski would be allowed to continue to operate his sausage business and deli on the site until Feb. 28, 2014.

But at some point between the agreement and the closing date in July 2012, a dispute arose about the terms of Karwowski’s existing lease.

While that was being hammered out, Millennium cooled on the deal. The condo market was sagging and the developer felt the project was no longer financially feasible. According to testimony presented to Kelleher, it wanted to lower the sale price for the sausage plant’s property.

More negotiations followed, during which, Karwowski asserted, his lease had been renewed until June 2017. Millennium said it wanted proof. None was provided, noted Kelleher, and Karwowski said he told Millennium’s agent there was nothing in writing.

In October 2012, one of the property owners testified, Karwowski was advised that he hadn’t renewed his lease and was now a month-to-month tenant.

Karwowski said he sought confirmation, through his lawyer, of the deadline for his right of first refusal, but the other owners said that right was only in effect if their tenant was under a lease.

In November 2012 Karwowski filed a caveat against the property that asserted his right of first refusal and the sale to Millennium fell apart.

In December 2013, the sale of the adjacent properties closed. But without the lot occupied by International Sausage House, a new development can’t proceed.

Justice Kelleher said with so many facts in dispute by so many parties, the only way to sort the case out is through a full trial.

“The recollections and accounts of some parties about significant events are markedly different or absent from those of others,” said Kelleher in his decision. “Even if I could rule on the merits of this specific application, that would not obviate the necessity of a trial.”

 

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