Potential partner sues Vancouver’s Nexii alleging breach of contract

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Vancouver-based construction materials firm Nexii Building Systems boasts of expansion plans that include licensed manufacturers for its futuristic eco-friendly building components system in Pittsburgh, Dallas and southern Vancouver Island.

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An attempt to crack the Ontario market, however, has ended with a purported partner, a subsidiary of Burnaby headquartered Symphony Group, suing Nexii in B.C. Supreme Court over an alleged breach of contract over negotiations Symphony thought would wind up in agreement to license production in Ontario.

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Subsidiary firm Symphony Advanced Building Technologies (SABT) incorporated in Ontario and in spring 2019 started talks with Nexii aimed at reaching a licensing deal, one of two ways Nexii talked about wanting to expand beyond its Vancouver roots, according to the document.

Nexii, a startup that has become a darling of the green building sector valued at over $1 billion, attracted Symphony’s principal Gurdeep Kainth, who was an early investor for its patented system for high-tech building designs that use wall, floor and roof panels that are manufactured at central plants and assembled on construction sites.

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“Ontario is one of the largest construction markets in all of North America, so it was very important for us to secure those rights in this incredibly growing market,” said Max Krangle, vice-president of corporate development for SABT.

The claim alleges that the Symphony subsidiary reached a “non-binding term sheet” with Nexii by the end of 2019 that set out basic terms for Symphony to license Nexii’s intellectual property and establish a manufacturing plant, with subsequent steps including payment of a $250,000 non-refundable reservation fee in January 2020.

Those steps, however, did not result in Nexii delivering a final licensing agreement over the following months, as SABT expected. Instead, Nexii returned to SABT by June 2020 with an offer for SABT to become a “certified manufacturer” of its products.

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According to SABT’s claim, Nexii drafted the certified-manufacturer concept with a U.S. manufacturer in mind and a Canadian deal would be similar, but “substantially different from the licensing model described in the SABT/Nexii agreement.”

Subsequent communication between the firms failed to come up with a resolution suitable to SABT by the end of June 2022, at which point the company decided to sue for breach of contract — failing to live up to the terms SABT argues were laid out subsequent to the initial term sheet that it considers binding.

The claims have not been proven in court and, in its response, Nexii contends “there were no enforceable agreements, nor any agreements reached,” so the company has “not breached any contractual or other obligations.”

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Nexii vice-president Gregor Robertson, Vancouver’s former mayor who signed on with Nexii at the start of 2020, was not available for comment Tuesday. However, in a statement, the company said “it is unfortunate that SABT pursued litigation. Nexii believes the claim has no merit and is confident in a just resolution.”

“Nexii emphatically denies the allegations and will vigorously defend its case.”

In the meantime, Nexii is making progress in delivering building projects using its “whole building solution” of precision-manufactured components that are assembled on-site to save on both time and construction waste. Last week, Nexii boasted completion of 10 6,400 to 14,800 square foot buildings at rest stops on the New York State Thruway, which used components produced at its certified manufacturing facility in Hazelton, Penn.

And, on its website, Nexii says it has other certified-manufacturer deals in the works in Pittsburgh, where star actor Michael Keaton is listed as an investor, in Dallas and on southern Vancouver Island.

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