101090442 Saskatchewan Ltd. v. Harle, 2014 SKCA 6

• Judge: Lane, Jackson and Klebuc, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: February 20, 2013
• Jurisdiction: Saskatchewan
• Citations: 2014 SKCA 6;(2014), 433 Sask.R. 62 (CA)

101090442 Sask. v. Harle (2014), 433 Sask.R. 62 (CA);

    602 W.A.C. 62

MLB headnote and full text

Temp. Cite: [2014] Sask.R. TBEd. JA.026

Douglas John Harle and Colleen Karen Harle (defendants/appellants) v. 101090442 Saskatchewan Ltd. (respondent)

(CACV2258; 2014 SKCA 6)

Indexed As: 101090442 Saskatchewan Ltd. v. Harle

Saskatchewan Court of Appeal

Lane, Jackson and Klebuc, JJ.A.

January 23, 2014.

Summary:

The plaintiff purchaser sued the defendant vendors for specific performance of a purchase and sale agreement respecting the vendors' farm.

The Saskatchewan Court of Queen's Bench, in a decision reported 392 Sask.R. 178, allowed the action. The vendors appealed.

The Saskatchewan Court of Appeal held that the trial judge did not err in finding that there was an enforceable agreement and that the vendors breached that agreement; however, the trial judge erred in granting specific performance. The court remitted the matter to the trial judge to assess damages. Klebuc, J.A., dissenting in part, disagreed with the majority's ruling on specific performance.

Contracts - Topic 2252

Terms - Conditions and warranties - What constitutes a condition - The vendors agreed to sell their farm and execute a leaseback agreement prior to the closing date - After the closing date, the vendors refused to transfer title, alleging that the agreement lacked certainty and the lease had to have been executed before the closing date - The purchaser successfully sued for specific performance - The vendors appealed - The Saskatchewan Court of Appeal held that the agreement did not fail for uncertainty of terms - Further, the requirement that a lease be in place prior to closing was not a condition that had to be fulfilled in order for the contract to be enforceable - However, specific performance should not have been granted in this case and the court referred the matter for assessment of damages - See paragraphs 41 to 79.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - The vendors agreed to sell their farm and execute a leaseback agreement prior to the closing date - After the closing date, the vendors refused to transfer title - The purchaser successfully sued for specific performance - The vendors appealed - The Saskatchewan Court of Appeal allowed the appeal on the specific performance issue - The trial judge misapprehended the extent to which Semelhago (SCC 1996) changed the law of specific performance - He did not give sufficient weight to the nature of this property, and he started with the wrong question, i.e., whether the property was unique, rather than whether damages were an adequate remedy - He also did not appreciate that the purchaser led no evidence demonstrating that the damages were speculative or too uncertain and, indeed would not be able to lead such evidence, given its lack of a business plan - Indeed, the purchaser was prepared to quantify and fix damages based on the increase in the value of the land as of a date selected by the trial judge - See paragraphs 80 to 102.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - A trial judge granted specific performance of an agreement of purchase and sale of farmland - The vendors appealed - The Saskatchewan Court of Appeal held that the trial judge erred in granting specific performance - One of the difficulties with the trial judge's reasons was that he viewed "uniqueness" and the "adequacy of damages" as distinct questions, each to be answered independently of the other - The appeal court pointed out that he considered whether the property was unique before considering whether damages would be an adequate remedy - As such, he failed to give effect to the change of law brought about by Semelhago v. Paramadevan (SCC 1996) - See paragraph 81.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - The Saskatchewan Court of Appeal held that a trial judge erred in granting specific performance of a purchase and sale agreement - The appeal court stated that "... the trial judge cites Sharpe, Injunctions and Specific Performance, saying this Court in Raymond v. Raymond Estate ... cited para. 7.220 of that text with approval. This is not quite accurate. The Court in Raymond Estate quotes para. 7.220 to explain the approach of the courts with respect to specific performance before Semelhago [SCC 1996]. Indeed in the footnote to para. 7.210 of Robert J. Sharpe, Injunctions and Specific Performance, looseleaf (Toronto: Canada Law Book, 2013), which introduces the role of 'uniqueness' as a factor weighed to assess the suitability of specific performance, the learned author of the text directs the reader to paras. 8.10 to 8.220, where 'the automatic remedy of specific performance is criticized'. In Raymond Estate, ... the Court made plain the proposition that the modern approach of courts faced with a breach of contract claim is 'to assess the adequacy of damages before resorting to the remedy of specific performance, but then only if compensatory damages prove inadequate' ..." - The court thereafter referred to the summary of the present state of the law set out in the Raymond Estate case - See paragraphs 82 to 84.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - A trial judge granted specific performance of an agreement of purchase and sale of farmland - The vendors appealed - The Saskatchewan Court of Appeal held that the trial judge erred in granting specific performance - The court noted that the trial judge gave no effect to the nature of the transaction, the uncertainty of the purchaser's plans for the land and its decision not to adduce any evidence as to how damages should be assessed other than on the basis of comparable sales and market activity - The court stated that the assessment of those matters was a particularly critical exercise when land was purchased for investment purposes - Here, the purchaser conceded that if this was a damages case, damages could be calculated based on the value of the land - Such an admission or concession was clearly relevant to the adequacy of damages - Damages could not be inadequate when the purchaser removed from the table the consideration of methods of calculating damages other than the increase in value of land - See paragraphs 84 and 85.

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - The Saskatchewan Court of Appeal stated that "... The doctrine of uncertainty of contract may be considered according to these categories: (i) incompleteness-in the sense of an agreement that lacks an essential term; (ii) agreements to agree-in the sense that the parties have stipulated in an agreement that they intend to reach an agreement in the future; and (iii) vagueness associated with an important term-in the sense of incurable uncertainty" - See paragraph 41.

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - [See Contracts - Topic 2252 ].

Interest - Topic 2144

Agreement to pay interest - Bars to recovery - Wilful default - Vendors agreed to sell their farm, but subsequently refused to transfer title - Interest was to be paid at the rate of 6% per annum on any portion of the purchase price not received by the vendors by the possession date - The purchaser successfully sued for specific performance - The trial judge held that no interest was payable to the vendors because they failed to perform their obligations under the contract and wrongfully withheld transfer of title - The vendors appealed, arguing, inter alia, that the trial judge erred in refusing to award interest on the unpaid purchase price - The Saskatchewan Court of Appeal held that since the trial judge did not err in finding that the vendors had breached their contract, they should not be granted any interest on the purchase price - See paragraphs 103 to 108.

Specific Performance - Topic 506

When available - General principles - Contractual obligations - [See first Contracts - Topic 4110 ].

Sale of Land - Topic 805

The contract - General - Agreement for sale - What constitutes - [See Contracts - Topic 2252 ].

Sale of Land - Topic 871

The contract - Uncertainty - General - [See Contracts - Topic 2252 ].

Sale of Land - Topic 952

The contract - Conditions and warranties - What constitutes a condition - [See Contracts - Topic 2252 ].

Sale of Land - Topic 2010

The contract - Validity of the contract - Consensus - Uncertainty - General - [See Contracts - Topic 2252 ].

Sale of Land - Topic 6041.2

Completion - Conditions precedent and subsequent - Condition respecting leases - [See Contracts - Topic 2252 ].

Sale of Land - Topic 7408

Remedies - General - Specific performance - When available - [See all Contracts - Topic 4110 ].

Sale of Land - Topic 8551

Remedies of purchaser - Specific performance - When available - [See all Contracts - Topic 4110 ].

Sale of Land - Topic 8755

Remedies of purchaser - Damages - In lieu of specific performance - [See first Contracts - Topic 4110 ].

Cases Noticed:

Saskatoon Business College Ltd. v. 607113 Alberta Ltd., [1995] 7 W.W.R. 244; 132 Sask.R. 248 (Q.B.), refd to. [para. 29].

Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 53 O.A.C. 314; 79 D.L.R.(4th) 97 (C.A.), refd to. [para. 35].

Turney v. Zhilka, [1959] S.C.R. 578; 18 D.L.R.(2d) 447, refd to. [para. 37].

Canadian Pacific Railway Co. and Toronto (City), Re (1903), 5 O.L.R. 717 (C.A.), refd to. [para. 43].

Domtar Inc. v. ABB Inc. et al., [2007] 3 S.C.R. 461; 369 N.R. 152; 2007 SCC 50, refd to. [para. 44].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488; 112 D.L.R.(3d) 49, refd to. [para. 48].

Calvan Consolidated Oil & Gas Co. v. Manning, [1959] S.C.R. 253, 17 D.L.R.(2d) 1, refd to. [para. 58].

Von Hatzfeldt-Wildenburg v. Alexander, [1912] 1 Ch. 284, refd to. [para. 60].

Semelhago v. Paramadevan, [1996] 2 S.C.R. 415; 197 N.R. 379; 91 O.A.C. 379; 136 D.L.R.(4th) 1, refd to. [paras. 81, 112].

Raymond v. Raymond Estate (2011), 371 Sask.R. 260; 518 W.A.C. 260; 2011 SKCA 58, refd to. [paras. 82, 112].

1244034 Alberta Ltd. v. Walton International Group Inc. et al. (2007), 422 A.R. 189; 415 W.A.C. 189; 2007 CarswellAlta 1562; 288 D.L.R.(4th) 360; 2007 ABCA 372, refd to. [paras. 84, 128].

365733 Alberta Ltd. et al. v. Tiberio et al. (2008), 440 A.R. 177; 438 W.A.C. 177; 2008 ABCA 341, refd to. [paras. 84, 128].

1110049 Ontario Ltd. v. Exclusive Diamonds Inc. et al. (1995), 83 O.A.C. 391; 25 O.R.(3d) 417 (C.A.), refd to. [para. 91].

Chan v. Chadha Construction & Investments Ltd. et al. (2000), 138 B.C.A.C. 175; 226 W.A.C. 175; 2000 BCCA 198, refd to. [para. 91].

Chaulk v. Fairview Construction Ltd. (1977), 14 Nfld. & P.E.I.R. 13; 33 A.P.R. 13 (Nfld. C.A.), refd to. [para. 91].

Covlin v. Minhas et al. (2009), 469 A.R. 250; 470 W.A.C. 250; 2009 ABCA 404, refd to. [para. 93].

Cantini Developments Ltd. v. Hi-Rise Group (Toronto) Inc., [2013] O.T.C. Uned. 186; 28 R.P.R.(5th) 279; 2013 ONSC 186, refd to. [para. 93].

Southcott Estates Inc. v. Toronto Catholic District School Board, [2012] 2 S.C.R. 675; 435 N.R. 41; 2012 SCC 51, refd to. [paras. 95, 126].

Hayes v. Elmxley (1893), 23 S.C.R. 623, refd to. [para. 106].

306793 Ontario Ltd. in Trust v. Rimes (1979), 100 D.L.R.(3d) 350 (Ont. C.A.), refd to. [para. 107].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 120].

Authors and Works Noticed:

Anger and Honsberger, The Law of Real Property (3rd Ed. 2006) (2007 Looseleaf), p. 23-22 [para. 94].

Di Castri, Victor, The Law of Vendor and Purchaser (Looseleaf) (3rd Ed. 2008), vol. 2, para. 476 [para. 105].

McCamus, John D., The Law of Contracts (2nd Ed. 2012), pp. 92 [para. 41]; 93, 94 [para. 51].

Sharpe, Robert J., Injunctions and Specific Performance (2nd Ed. 2010), para. 7.210 [para. 127]; para. 7.220 [paras. 82, 117, 127].

Sharpe, Robert J., Injunctions and Specific Performance (Looseleaf) (2013), paras. 8.10 to 8.220 [para. 82].

Counsel:

Jeffrey Grubb, Q.C., and Graham Purse, for the appellants;

Deron Kuski and Joshua Morrison, for the respondent.

This appeal was heard on February 20, 2013, before Lane, Jackson and Klebuc, JJ.A., of the Saskatchewan Court of Appeal. The decision of the court was delivered on January 23, 2014, including the following opinions:

Jackson, J.A. (Lane, J.A., concurring) - see paragraphs 1 to 110;

Klebuc, J.A., dissenting in part - see paragraphs 111 to 133.