Royalty Heights in Charlottetown was supposed to set a new standard in the city’s residential realty market, with more than 500 new ‘quality controlled’ homes built at a total cost of $170 million. Instead, the project collapsed into bankruptcy, owing millions. What happened?

The statement of claim is in black and white, on paper tucked away in files at a Charlottetown courthouse. But the business deal it describes was not. That agreement was sealed only with words.

A Prince Edward Island company built two new show homes for the Royalty Heights subdivision in Charlottetown in late 2008 and early 2009, spending nearly $500,000 on construction costs.

There was nothing on paper formalizing the deal, the contractor, Blue Heron Enterprises Inc., acknowledged in court documents. But the company said it had a verbal agreement for payment when the homes were completed, or when they were sold. Alternatively, Blue Heron could simply pay fair market value for the land, and get the homes free and clear. But none of that happened, according to a lawsuit filed by Blue Heron in P.E.I. Supreme Court last September.

“Despite repeated requests for payment of the amounts (for the two homes), the defendants have failed to pay those amounts, or any portion thereof, to the plaintiff,” Blue Heron president Lise Buote noted in a sworn affidavit filed with the court.

The P.E.I. company further alleged that a British Columbia businessman named Steve Uppal “committed misrepresentations” that the lots were mortgage free. The company said it later found out that the Bank of Montreal had a mortgage on the lots before construction began — contrary, Buote claimed, to Uppal’s verbal assurances.

To make matters worse, a numbered company owned by Uppal transferred ownership of the two lots to another of his numbered companies without Blue Heron’s knowledge, according to the plaintiff’s court filings.

Blue Heron sued Uppal and those two numbered companies. No statement of defence was ever filed.

To further complicate the situation, Blue Heron isn’t the only company with an interest in those properties. The bank has a mortgage on the land. The company that built the roads and installed infrastructure at Royalty Heights has sued to have the transfer of those lots overturned, under P.E.I.’s Fraud on Creditors Act. And one of Uppal’s numbered companies — the driving force behind Royalty Heights — has been forced into bankruptcy.

The Blue Heron lawsuit is just one aspect of a story that is more tangly than last year’s Christmas lights. And it’s a story that is not likely to be neatly wrapped up with a bow like a present under the tree.

On a crisp late winter evening — spring near on the calendar page, but faraway in the heart — two solitary people are walking their dogs on a paved road. Breath plumes out in front of them. The streets are otherwise deserted. The snowplows have been through, and the pavement is bare. But there are no cars on most of the roads, and no houses — just small wooden posts jutting out of the white blanket of snow, markers for each empty lot. Ornate lampposts, most of them dark even after sunset, stand silent sentinel over the vast expanse of land.

This is the site of Royalty Heights. Just three short years ago, these empty streets were trumpeted as the first phase of a “quality controlled” subdivision project that would see the construction of 524 new homes over eight phases spanning seven years. Estimated overall cost: $170 million.

But Royalty Heights — or Windsor Park, as it was recently rechristened — is now snarled in bankruptcy proceedings. As of late last year, creditors were owed $3 million — an amount that does not include Blue Heron’s $500,000 claim. And a flurry of lawsuits related to the project has papered courts on the Island, and beyond.

At the centre of it all is Uppal, a British Columbia businessman whose first foray into Atlantic Canada also ended badly, many years ago.

A court-appointed receiver and bankruptcy trustee are now dealing with the mess, trying to sell dozens of lots and nearby undeveloped land in the hopes of providing at least some cash to those who are owed money.

But as of mid-April, it remained unclear how many of them would get anything.

It wasn’t supposed to turn out this way. In August 2008, a ground-breaking ceremony was held at the Royalty Heights site. The mayor was there. So were the three people involved with the development at the time — British Columbia businessmen Steve Uppal, Jas Boparai and Murray McCulloch. (Soon after, Uppal would become sole shareholder of the numbered company behind the development.) The local daily paper dispatched a reporter to chronicle the event.

“(Royalty Heights) sets a new standard for the city and something for future developers to follow,” Charlottetown Mayor Clifford Lee told The Guardian at the time. Lee noted that the project would provide a “tremendous tax benefit to the city of Charlottetown.”

The developers stressed that the “quality controlled” nature of the subdivision meant no semi-attached homes and no split entries. Any changes would have to go to them for approval, maintaining the integrity of the project and protecting resale value.

“We want people not to be afraid to build here,” Boparai told the newspaper. “We want people to know if they build they will be able to get their money back.”

But before long, those words would sound hollow to local companies who got involved with the fledgling project.

Curran & Briggs Limited, a Summerside- based firm, inked the contract to build roads, sewer and water systems and other infrastructure for Royalty Heights. Work continued through much of 2008.

But the first indications of a problem arose in the late summer of that year. According to documents filed by Curran & Briggs in P.E.I. Supreme Court, the numbered company behind Royalty Heights stopped making payments as required by the contract between the two parties.

According to documents filed in court, Curran & Briggs and the numbered company agreed on a revised date of substantial completion for the work — Oct. 20, 2008. Both sides signed a letter to that effect. That letter (dated Nov. 28, 2008) was sent out by the engineering firm for the project.

In the simplest terms, the date of substantial completion is a milestone marking when work at a site is certified to be finished to the level that it can be used for its intended purpose.

That date is important, because it sets the clock running on the time frame for a contractor to file a mechanic’s lien. Mechanic’s liens are a way for contractors to secure an interest in a property, in case of non-payment. In P.E.I., the deadline to register a mechanic’s lien is 60 days from the date of substantial completion.

According to court documents, Curran & Briggs was not paid, and registered a lien of $520,000 against the property the very last day of the 60-day window to do so — Dec. 19, 2008.

In court documents, Uppal acknowledged that the numbered company, 100875 P.E.I. Inc., had cash-flow problems as phase one of Royalty Heights was nearing completion.

Uppal initially stated in a sworn affidavit that Curran & Briggs did not finish working on site until Oct. 20. But he subsequently indicated to the court that was an error, and the work was actually completed earlier. Even though both sides had agreed on Oct. 20, Uppal insisted an earlier completion date rendered Curran & Briggs’ lien invalid. (The matter had still not been resolved by the courts when bankruptcy stayed all proceedings. 100875 P.E.I. had countersued Curran & Briggs, claiming delays cost the company hundreds of thousands in lost sales.)

Meanwhile, just days before that Dec. 19 lien deadline, 100875 P.E.I. transferred a number of the lots at Royalty Heights. Those transfers effectively removed the properties from any subsequent court actions against the numbered company.

On Dec. 16, 100875 P.E.I. transferred five lots to another company, 101231 P.E.I. Inc. No cash changed hands; just a promissory note for fair market value of the lands. At this point, Uppal was the sole shareholder of both those companies.

The same day, 100875 P.E.I. conveyed five other Royalty Heights lots to Uppal himself. Again, there was no cash payment, only a promissory note.

Uppal indicated in court documents that those transfers — to himself and his other numbered company — were made to help him get financing from the Bank of Montreal.

Curran & Briggs sued the two numbered companies and Uppal to void those 10 transfers, in accordance with the Fraud on Creditors Act. The P.E.I. firm also sued three other people who had business ties to Uppal, alleging similar fraudulent transfers of three other lots.

In May 2010, the Bank of Montreal — which was owed more than $1.5 million — petitioned 100875 P.E.I. into receivership. That effectively ground all legal proceedings against the company to a halt.

And there are a number of actions on file — some initiated before the bankruptcy order, others since.

They include three separate civil suits filed by Curran & Briggs — one to enforce its mechanic’s lien; another to void the alleged fraudulent conveyances; the third for special damages of $70,000 related to work over and above that covered by the lien.

In addition, MRSB Chartered Accountants and Management Consultants of Charlottetown sued Uppal and 100875 P.E.I. for non-payment of $24,000. And Blue Heron filed its civil suit related to the show homes.

But 100875 P.E.I. was not just defending itself in civil matters on the Island; it was also active as a plaintiff. In 2008, the numbered company sued Wayne and Lorna MacQuarrie, who owned land the company planned to acquire for later phases of Royalty Heights, for breach of contract. But the lawsuit was dismissed in early 2010, with Uppal’s company ordered to pay costs for the MacQuarries.

And, somewhat curiously, Uppal’s company even sued other companies in which he held ownership interests. In 2009, 100875 P.E.I. sued Cavendish House Inc. for more than $91,000, in relation to money advanced to buy a property, according to court documents. The same day, 100875 P.E.I. sued Rustico Developments for $456,000, also for cash advanced to buy land. Uppal is listed in P.E.I. corporate records as a shareholder in both of those companies being sued by his other firm.

And the legal maneuverings related to Royalty Heights did not end on the Island. A North York, Ont., businesswoman filed a lawsuit in British Columbia Supreme Court a year ago for more than $53,000. Lotus Zheng-Rong Qiu sued Uppal, 100875 P.E.I. and a B.C. company, ANJ Development Ltd., of which Uppal is listed as president. The lawsuit relates to a promissory note dating back to January 2009, although court filings do not explain why the note was issued.

Who is Steve Uppal? And how did he end up in Prince Edward Island, looking to make a go of it in the property development game?

Uppal (whose given first name is actually Amandeep, not Steve) did respond to an initial e-mail inquiry about the situation. “Please forward your questions pertaining to Royalty Heights via e-mail,” Uppal wrote. “I can review your questions then we can perhaps speak via telephone.”

That telephone conversation, however, never happened. And Uppal did not respond to follow-up messages seeking answers to a list of questions e-mailed to him three times.

Court files list Uppal’s address in B.C. as a home in Surrey, near Vancouver. The property is valued at $731,000, according to B.C. assessment records, and is listed in his wife’s name.

According to his new employer’s website, Uppal is now working as senior vice-president of corporate development for Slate Knowledge Solutions in British Columbia. His online bio notes that “Uppal previously development (sic) and managed the largest residential land project in the Eastern Canada (sic) and was on the board of directors for Royalty Heights Inc.”

The bio also notes his involvement with Pulse Enterprise Inc. prior to 2000, where it says he worked in strategic consulting “with a focus on helping clients develop and implement strategy realignments and organization and process improvements, as well as consulting with a focus on M&A advisory work.”

Mention Pulse to economic development agencies in Newfoundland, however, and that focus is perhaps not the first thing that comes to mind. Pulse Enterprises (1994) Inc. — a Newfoundland-incorporated offshoot of the B.C. operation — received government grants to set up a glove manufacturing facility in Argentia in the mid-1990s. Argentia, about a 90 minute drive from St. John’s, was the site of an American base that had just shuttered. Governments were working to diversify the local economy after the loss of the area’s biggest employer.

Enterprise Newfoundland and Labrador (ENL) provided $100,000 to Pulse. The federal Atlantic Canada Opportunities Agency (ACOA) disbursed $91,000 under its Fisheries Alternative Program. According to company financial records on file at Newfoundland Supreme Court, Pulse Enterprises (1994) Inc. also got $67,000 in money under the so-called TAGS program created to aid displaced fisheries workers. Another $40,000 came from the Argentia Management Authority, which was charged with diversifying the local economy.

Pulse Enterprises (1994) Inc. never produced anything at its planned glove factory in Argentia. The various government agencies lost their investments. ENL did not recover the $100,000 it gave to Pulse. ACOA tried to get back its $91,000, but finally gave up those efforts in 2002. The federal department in charge of TAGS can’t say today what happened to its cash contribution.

Uppal, who was president of Pulse’s Newfoundland incarnation, had a falling out with other shareholders in the company. Those shareholders (a father and son, Sohan and Harbinder Sangha, who were also from B.C.) filed suit in Newfoundland to have outside auditors appointed to look at the financial affairs of the company. They made a series of allegations about how the company was run, and even complained to police. (No charges were ever laid.) Around the same time, Uppal sued his business partners for defamation in British Columbia, although that suit appears to have gone nowhere. The court file ends after just one appearance, nine days after the launch of proceedings in late 1995.

However, Uppal found himself a defendant in a number of civil suits in British Columbia related to the various incarnations of Pulse. One suit was initiated in 1996 before being discontinued in 1997. Another case dragged into 1998. Yet another, into 1999.

That year, in 1999, Uppal filed for personal bankruptcy. He claimed assets of just $289 against liabilities of $793,174. Uppal received an absolute discharge in 2000, according to records on file with the Office of the Superintendent of Bankruptcy Canada. An absolute discharge releases a person from the obligation to repay the debts they had as of the date of their bankruptcy filing (except for certain things like alimony and student loans).

According to his current online bio, Uppal worked as a vice-president for a limousine service from 2000 to 2005, and previously as director of strategy and alliances with the main distributor for Tommy Hilfiger product lines in Panama.

In 2007, more than a decade after Uppal’s failed effort in Newfoundland, he again ventured east, arriving on Prince Edward Island. But what began with big talk, and big dreams, turned into a bigger nightmare for some Island businesses.

No one can, or will, say how and why Uppal ended up in real-estate development thousands of kilometres from home. Uppal himself did not answer that question, or any others posed to him.

It is also not clear exactly why the project fell apart. At the most simple level, the numbered company behind Royalty Heights stopped paying its bills. That set into motion a series of events that led to the filing of a mechanic’s lien and, ultimately, the bankruptcy.

And there are no answers to questions about why Blue Heron — which has been in business on P.E.I. for decades — footed the nearly $500,000 cost of building two homes at the site, based only on Uppal’s word. (Blue Heron, contacted through the company’s lawyer, did not respond to requests for comment.)

As of late 2010, there were only two secured creditors listed in the bankruptcy of 100875 P.E.I. The Bank of Montreal was owed $1.9 million, and Curran & Briggs was owed $600,000, according to the bankrupt company’s statement of affairs. Curran & Briggs, however, had filed more than $820,000 in claims as of December.

According to a list compiled in late 2010, unsecured creditors were owed $466,000. The list of creditors includes two local law firms, an accounting business, an engineering firm and a real-estate company. A large chunk of that amount — more than $200,000 — is for unpaid property tax. Under P.E.I. law, half of that debt is unsecured, while the other half ranks first in the priority list.

Royalty Heights was supposed to see construction of hundreds of high-quality homes. Instead, just four houses have been built there to date, and two of those are ensnarled in legal proceedings.

As of mid-April, 66 lots at the site were up for sale, listed with a local realtor at a significant discount from the pre-bankruptcy price.

At a meeting of creditors in December, the trustee noted he would be reviewing proof of all claims, including the validity of the Curran & Briggs mechanic’s lien, and the documentation of lot transfers “which may have been done for undervalue or might otherwise be reviewable.”

Curran & Briggs did not respond to e-mailed questions.

In May 2010, the then-president of Blue Heron, Wayne Buote, passed away suddenly. Steve Uppal posted a message on the online obituary: “My condolences to the Buote family and friends — a truly remarkable man.”

Four months later, the Buote family company sued Uppal. Lise Buote filed her sworn affidavit saying her late husband and Uppal had a verbal agreement covering the two homes built by Blue Heron — an agreement she said Uppal and his companies broke.

Finally, this March, Blue Heron followed up by suing the Bank of Montreal.

But lawyers for the bank, Blue Heron and Curran & Briggs then reached an agreement to allow the two homes to be sold to new buyers. The total sale price, according to documents filed at P.E.I. Supreme Court, came to $475,000. The $413,000 net proceeds of the sales, after expenses, were paid to the court. The cash will be held in trust, until it is finally determined who is entitled to what.

Like many things at Royalty Heights, it was not yet clear when that could happen.