A Saskatoon judge has concluded there is no legal basis to stop the city from demolishing a luxury home that had fallen into disrepair — unbeknownst to its owner in China — but says it is his "fervent hope" that the city will hold off from knocking it down.

In a written decision handed down late Friday, Court of Queen's Bench Justice Richard Elson dismissed the homeowner Liu Yu's application for an injunction to stop the city from demolishing his house.

He said there are no grounds to stop the city because it has not acted wrongfully.

"Despite the Court's decision, I must say that, irrespective of legal and equitable principles at play in this matter, it is my fervent hope that the city will hold off demolition until the applicant and [Bank of Nova Scotia] can determine in a meaningful way whether the residence is economically salvageable," wrote Elson.

The city said in written statement the decision does not necessarily mean the home will be demolished.

"Demolition will depend on whether a plan can be formulated with the city to determine if the property can be remediated safely, legally and quickly," said the statement.

"If the city will be proceeding to demolition, further notice will be provided to the surrounding residents before demolition commences."

Elke Churchman, who represented the home's owner, said the judge's order has been communicated to his client.

"Our client had expressed his intention to remedy the deficiencies multiple times after he became aware of the situation," Churchman said in a statement, and added legal proceedings have created a financial burden on his client.

"It would be a tragedy if he were to run out of financial resources before an agreement with the city and the bank can be reached."

Earlier in the day, Elson told a packed courtroom Friday that the case of a dilapidated Saskatoon luxury home that the city wanted to demolish — unbeknownst to its owner in China — has been "wacky since the moment it hit my desk."

The homeowner, Yu, is fighting the city's plan to knock down the house by asking for an injunction to stop the demolition. He says he was never told the house was falling into disrepair, and has taken immediate action to bring the house back up to code.

Friday's hearing at the Court of Queen's Bench was to determine whether the city should be allowed to knock down the house, which is listed by Land Titles as being valued at $710,000, and assessed by the city as being worth $650,000.

What basis in law do I have to enjoin the City of Saskatoon? - Court of Queen's Bench Judge Richard Elson

However, Yu's lawyers are technically not fighting the city in court — their lawsuit is against the Remax associate Sky Wu — who the homeowner says was authorized to manage the property and list it for sale.

The statement of claim alleges that the owner had not been told that, in 2016, the electrical meter was removed, the natural gas shut off and that the piping and plumbing had frozen and burst.

None of the allegations in the statement of claim have been tested in court.

Yu's laywer, Elke Churchman, argued at length with Elson on Friday that the court has the authority to order an injunction stopping the city from demolishing the house.

But Elson questioned the legal grounding for such an order, given that the lawsuit is not against the city, and noted differences between this case and the legal decision the defence cited as a precedent.

"What basis in law do I have to enjoin the City of Saskatoon?" Elson asked, describing the case as a "significant conundrum."

Churchman said the city had followed the "letter of the law," but could have done more to notify the house's owner in China.

She said the city would not negotiate, a claim the city's lawyer later denied, and that it had used a stop work order to prevent Yu from repairing the house.

Since the owner was given notice of the problem he has undertaken significant work to remedy the situation and has shown good faith in making those efforts in the face of a demolition order. - John Orr, engineer

"What is the imminent threat to the public, why not allow our people in to fix it?" she said. "Why this extreme haste to demolish this house?"

Churchman said the owner only received direct contact from the city on Sept. 30, the day before it planned to demolish the house, and that the owner had only heard about the planned demolition in the news around Sept. 28.

A backhoe and skid-steer loader sat parked on the front lawn of 166 Beechdale Crescent on Oct. 1. The big machines were scheduled to begin tearing down the half-million-dollar, two-storey house.

An engineer says the water and mould damage to the Briarwood house could be repaired for $20,000. (Saskatoon Fire Department)

On the same day, Elson granted a 10-day reprieve, allowing the lawyer for the home's owner to prepare a proper argument to save the property.

Lawyers for Yu and the city provided briefs, reports and affidavits to the court ahead of Friday's hearing.

Churchman said a seven-day national holiday in China had made it harder for the owner to gather evidence before the hearing.

The report did include a six-page report by John Orr, a veteran Saskatoon engineer, who said the house could be made habitable again for $20,000.

"Since the owner was given notice of the problem he has undertaken significant work to remedy the situation and has shown good faith in making those efforts in the face of a demolition order," Orr wrote.

"The amount of time and work remaining to make this house habitable again is not significant when compared to the final value and lifespan of the property."

Judge, city lawyer question $20K repair price tag

He said there was no evidence of structural damage and there should be no health concern in occupying the building once the remediation is complete, adding that it could be liveable again by Nov. 10.

However, Elson said he suspected it would cost more than that to return the house to its original form, a suspicion echoed by a lawyer for the bank that holds the mortgage.

David Gerecke appeared on behalf of Scotiabank, which proposed a plan to the city in negotiations on Thursday. He also questioned the $20,000 price tag to repair the house.

The bank wants to do its own structural and air quality inspections of the property. He said the reports could be provided back to the city within two weeks.

Inspections revealed the extent of the damage to the home. (Saskatoon Fire Department)

He said allowing the house to fall into disrepair could be considered a default on Yu's mortgage. The bank could force the demolition of the house if its own reports find it is not salvageable.

The city's lawyer, Alan Rankine, said the plan proposed by the bank — to investigate further through additional reports before deciding on subsequent steps — is the most "concrete" solution offered to date.

Rankine said the application for an injunction against the city should be dismissed because the city was not the defendant. Only the property manager is a party in the lawsuit.

He said the city would consider Gerecke's proposal but that the negotiations should not be done through the court.

Churchman said any decision from the judge should include provisions to allow immediate access to the house to address issues that could cause further damage during the winter months.

Wu 'never took one dime': Saskatoon Remax CEO

Liu Yu purchased the house through Sky Wu in 2012.

According to the statement of claim, one year later, Yu and his sister, Yuwei, signed a limited power of attorney authorizing Wu to manage the property and list it for sale.

"The plaintiff and Sky Wu had an oral agreement that Sky Wu would collect commission once the property was sold," the statement of claim said.

"The plaintiff also paid the mortgage, insurance, and property tax from the time he purchased the property until present."

Sky Wu declined interview requests from CBC. He referred questions to Larry G. Stewart, the chief executive officer for Remax in Saskatoon.

"He's never property managed anybody's stuff. He's not licensed to property manage," Stewart said.

"[Sky] says he never took one dime."

The house apparently sat vacant from about 2013 until 2016, when Yu indicated he wanted the house listed and sold.

It was listed in 2017 but by August 2018 the asking price had dropped to $570,000, the statement of claim said.