410675 Alberta Ltd. v. Trail South Developments Inc., (2011) 508 A.R. 208 (QB)

• Judge: Smith, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 21, 2011
• Citations: (2011), 508 A.R. 208 (QB);2011 ABQB 470

410675 Alta. Ltd. v. Trail South Dev. Inc. (2011), 508 A.R. 208 (QB)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. JL.155

B & R Development Corporation Ltd., operating under the trade name of Abbey Lane Homes (plaintiff) v. Trail South Developments Inc. (defendant)

410675 Alberta Ltd. (plaintiff) v. Trail South Development Inc. (defendant)

(0203 07239; 0003 10282; 2011 ABQB 470)

Indexed As: 410675 Alberta Ltd. v. Trail South Developments Inc.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Smith, J.

July 20, 2011.

Summary:

Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement.

The Alberta Court of Queen's Bench dismissed the actions.

Contracts - Topic 1505

Formation of contracts - Consensus or agreement - Essential terms - What constitutes - Two plaintiffs brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The defendant argued that there was no agreement on price and land - The Alberta Court of Queen's Bench rejected the argument - The evidence proved that the parties knew the land with which they were dealing - Both the land and price issues arose during the planning process in relation to the question of who would own the land relevant to the easement - Deadlines aside, the agreement could have been concluded as originally written with the price being adjusted under the price adjustment clause, or not, depending on which party took the easement land - The consideration changed as the contract advanced, however, those changes were known and clear to all involved - The agreement, therefore, could not be said to be void for uncertainty - See paragraphs 182 to 184.

Contracts - Topic 3852

Performance or breach - Time for performance - Time of the essence - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The plaintiffs sought a ruling that the defendant, by its objectively viewed representations and conduct beginning with October 27 and 29 letters, waived the time of the essence provision in the agreement (paragraph 10(g)) and ought to be estopped from now relying upon that clause to have the agreement declared null and void - The Alberta Court of Queen's Bench rejected the assertion - A "time is of the essence" clause such as that found in paragraph 10(g) indicated that any failure to meet a deadline provided a basis to terminate a contract - Here, there were in fact two "layers" of "time is of the essence" provisions in the agreement - First, there was the paragraph 10(g) "blanket" clause that presumably applied to the entire agreement - However, paragraphs 4(f) and 4(i) were themselves "time is of the essence" clauses by the manner in which they operated; if certain deadlines were not met the agreement was "null and void" - The critical deadline was the February 13, 2000 end of the paragraph 4(f) re-zoning and subdivision period - It was clear on the evidence that deadline was never adjusted in a clear and express manner - The paragraph 4(f) February 13 deadline was indirectly a product of the October 29 amendment to the paragraph 4(c) feasibility period deadline - Arguably that could negate the "time is of the essence" character of paragraph 4(f) deadline - That approach, however, failed to take into account the character of the paragraph 4(f) deadline - If the deadline was not met the agreement was automatically null and void - It did not provide a party the option to terminate but rather summarily ended and negated the contract - Paragraph 4(f) had to, by necessity, have an associated and definite date, otherwise it lost all meaning - To remove the intrinsic "time is of the essence" character of that provision left the agreement in a state of limbo - Contract law was based on certainty of parties and obligations - The result of any attempt to interpret or apply paragraph 4(f) other than as a functionally "time is of the essence" clause was contrary to the fundamental basis of contract law - See paragraphs 213 to 233.

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - [See Contracts - Topic 1505 ].

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - 410675 entered into an agreement with the defendant to purchase the property - 410675 was a shell corporation used by Mastroprimiano for the purpose of acquiring property for his other corporation B & R - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The defendant argued that the use of the words "or nominee" as purchaser with 410675 rendered the parties uncertain and that, as a consequence, the entire contract was a nullity - The Alberta Court of Queen's Bench rejected the argument - A contract which defined a party as "(identified party) or nominee" was not necessarily void for uncertainty where the contract and/or other evidence provided a basis for a court to interpret the "or nominee" to indicate a right to substitute one party for another - In the present case, that was obviously what the parties intended and understood "410675 or nominee" meant - Further, the controlling minds of the plaintiffs and the defendant knew that 410675 was a shell corporation and fully expected a transfer of the land, if the agreement was fulfilled, to a separate and different development company - Here, the other potentially involved party (the "or nominee") was clear; it would be another company, either B & R or a related company, owned and controlled by Mastroprimiano - That was understood by all parties - See paragraphs 169 to 181.

Contracts - Topic 7952

Statute of Frauds - General - When applicable - [See third Contracts - Topic 9000 ].

Contracts - Topic 8008

Statute of Frauds - Part performance - When available - [See third Contracts - Topic 9000 ].

Contracts - Topic 8405

Collateral agreements - General - When valid - [See second and third Contracts - Topic 9000 ].

Contracts - Topic 9000

Rights and liabilities of strangers to contract - General - Privity of contract - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - 410675 entered into an agreement with the defendant to purchase the property - 410675 was a shell corporation used by Mastroprimiano for the purpose of acquiring property for his other corporation B & R - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - While B & R was not a party to the agreement, B & R's claim was based on the allegation that, inter alia, 410675 acted as a trustee for B & R - The Alberta Court of Queen's Bench noted B & R was not nominated under the terms of the agreement - No nominee was named - The deal unraveled before that could happen - There was no express trust agreement - No disclosure of the alleged trust relationship was made to the defendant beyond the small print on the checks sent to pay the deposits - The court rejected the alleged trust - 410675 did not act as B & R's agent - Further, the relationship between 410675 and B & R could not be categorized as one of vulnerability of B & R to the exercise of power by 410675 - 410675 did not somehow compel B & R to pay the deposits for the land - Further, there was no evidence of an undertaking that 410675 would act in B & R's best interest - Instead the de facto relationship between the two plaintiff corporations was one of equality of power in a commercial setting - Neither a constructive nor resulting trust arose on these facts - B & R was not a party to the agreement and therefore could not obtain damages on the alleged breach of that contract - See paragraphs 189 to 197.

Contracts - Topic 9000

Rights and liabilities of strangers to contract - General - Privity of contract - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - 410675 entered into an agreement with the defendant to purchase the property - 410675 was a shell corporation used by Mastroprimiano for the purpose of acquiring property for his other corporation B & R - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - While B & R was not a party to the agreement, B & R's claim was based on the allegation that, inter alia, a collateral contract included it as a party - The plaintiffs alleged that four documents, together with evidence of earlier involvement of B & R showing that B & R was the builder involved, proved a collateral agreement with B & R to build a multi-family complex subject to re-zoning and subdivision - The Alberta Court of Queen's Bench rejected the allegation - The extension of the collateral agreement to include B & R as a contracting party was inconsistent with the terms of the agreement - A primary purpose of utilizing 410675 to acquire the land was to take advantage of limited liability - While the documents clearly referred to B & R, there was no evidence that those in authority at the defendant knew that the agreement was being changed - Nor was there evidence from Mastroprimiano that he intended to forgo the advantage of the limited liability provided by the agreement - See paragraphs 198 to 205.

Contracts - Topic 9000

Rights and liabilities of strangers to contract - General - Privity of contract - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - 410675 entered into an agreement with the defendant to purchase the property - 410675 was a shell corporation used by Mastroprimiano for the purpose of acquiring property for his other corporation B & R - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - While B & R was not a party to the agreement, B & R's claim was based on the allegation that, inter alia, a collateral contract included it as a party - The plaintiffs alleged that four documents, together with evidence of earlier involvement of B & R showing that B & R was the builder involved, proved a collateral agreement with B & R to build a multi-family complex subject to re-zoning and subdivision - The Alberta Court of Queen's Bench rejected the allegation - The alleged collateral contract was never reduced to writing, as required by the Statute of Frauds - The equitable doctrine of part performance did not apply - See paragraphs 206 to 212.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - [See first Contracts - Topic 9000 ].

Evidence - Topic 2401

Special modes of proof - Presumptions - Specific presumptions - Inference from failure to call or adduce available evidence - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The plaintiffs sought a ruling that 1. letters of October and November 1999 evidenced a collateral agreement between the defendant and B & R that the defendant would undertake re-zoning and subdivision with cooperation from B & R; the agreement to hire IBI and to share fees was a collateral agreement with B & R; or 2. the letters provide evidence of waiver of those portions of the agreement that regulated deadlines for re-zoning and subdivision - Kolbuc had substantial involvement on defendant's behalf - He was its only representative at the two meetings - The defendant did not call Kolbuc as a witness - The plaintiffs alleged that there opened a natural inclination that the defendant, in failing to call Kolbuc, feared what he had to say - Accordingly, the plaintiffs sought an adverse inference - The Alberta Court of Queen's Bench rejected an adverse inference on two bases: 1. Kolbuc's authority was limited, which was relevant to a prima facie case, and 2. the words in the documents he wrote were an adequate basis to evaluate his intentions - See paragraphs 147 to 165.

Sale of Land - Topic 873

The contract - Uncertainty - Uncertainties resulting in void contracts - [See Contracts - Topic 1505 and second Contracts - Topic 5643 ].

Sale of Land - Topic 1325

The contract - Necessity for writing - General - Statute of Frauds - Circumstances within statute - [See third Contracts - Topic 9000 ].

Sale of Land - Topic 1353

The contract - Necessity for writing - Part performance in lieu of writing - Application of doctrine - [See third Contracts - Topic 9000 ].

Sale of Land - Topic 1901

The contract - Duties of seller - General - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The plaintiffs asserted that the defendant acted in bad faith by delaying the process 1. with the first requests for extensions; 2. by the hiring of IBI (effectively 15 days); 3. by directing the public notices go out after Christmas, and 4. by changing its mind on the easement (under 15 days) - The Alberta Court of Queen's Bench rejected the plaintiffs' assertion of bad faith - The delays could not be ascribed with intent inconsistent with bad faith - The plaintiffs were very experienced and successful land developers who had to have been aware of what was a realistic timeline for a land-purchase transaction that involved a third party (the City of Edmonton), public consultation, and the complex administrative processes necessary where land was re-zoned and subdivided - In all of the circumstances, the facts did not support a finding of bad faith - See paragraphs 243 to 247.

Sale of Land - Topic 2010

The contract - Validity of contract - Consensus - Uncertainty - General - [See Contracts - Topic 1505 and second Contracts - Topic 5643 ].

Sale of Land - Topic 8752

Remedies of purchaser - Damages - General damages - Two plaintiffs (410675 Alberta Ltd. and B & R Development Corp.) brought separate actions against the defendant, with respect to the alleged breach by the defendant of a purchase and sale agreement - The deal collapsed as a result of noncompliance with strict deadlines with respect to re-zoning and subdivision - The Alberta Court of Queen's Bench dismissed the actions - Had it allowed the actions, it would have evaluated that B & R lost an opportunity to develop the land that would have resulted in profits of $5,886,000 - The lost opportunity was replaced with another - Given mitigation and that the development here would have been done in a joint venture with B & R holding about 37 percent, the court set damages and interest on $5,886,000 from January 1, 2003, to the date of completion of the alternate project (three years), reduced to 37 percent to account for B & R's portion of the hypothetical project, plus prejudgment interest - See paragraphs 248 to 255.

Trusts - Topic 4

Definitions - Trustee defined - [See first Contracts - Topic 9000 ].

Trusts - Topic 1907

Resulting trusts - General principles - Circumstances when not imposed - [See first Contracts - Topic 9000 ].

Trusts - Topic 2310

Constructive trusts - General principles - Circumstances when not imposed - [See first Contracts - Topic 9000 ].

Cases Noticed:

ATCO Electric Ltd. v. Energy and Utilities Board (Alta.) (2004), 361 A.R. 1; 339 W.A.C. 1; 2004 ABCA 215, refd to. [para. 4].

Murray v. Saskatoon, [1952] 2 D.L.R. 499; 4 W.W.R.(N.S.) 234 (Sask. C.A.), refd to. [para. 151].

Lynch & Co. v. United States Fidelity & Guaranty Co., [1971] 1 O.R. 28; 14 D.L.R.(3d) 294 (Ont. H.C.), refd to. [para. 151].

Keelan et al. v. Norray Distributing Ltd. et al. (1967), 62 D.L.R.(2d) 466; 60 W.W.R.(N.S.) 129 (Man. Q.B.), refd to. [para. 151].

Foley v. Administrator, Motor Vehicle Accident Claims Act (Alta.) et al. (2002), 330 A.R. 1; 299 W.A.C. 1; 2002 ABCA 297, refd to. [para. 151].

Mallett and Mallett v. Alberta (Administrator of Motor Vehicle Accident Claims Act) et al. - see Foley v. Administrator, Motor Vehicle Accident Claims Act (Alta.) et al.

Koor v. Metropolitan Trust Co. of Canada (1993), 48 C.C.E.L. 216; 41 A.C.W.S.(3d) 332 (Ont. Gen. Div.), refd to. [para. 152].

Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al. (1996), 195 A.R. 1; 8 C.P.C.(4th) 328 (Q.B.), affd. (1993), 193 A.R. 273; 135 W.A.C. 273; 144 D.L.R.(4th) 30 (C.A.), leave to appeal denied (1997), 216 N.R. 159; 212 A.R. 24; 168 W.A.C. 24 (S.C.C.), refd to. [para. 152].

Allied Signal Inc. v. Dome Petroleum Ltd. - see Canada Southern Petroleum Ltd. et al. v. Amoco Canada Petroleum Co. et al.

Weedon v. Sherritt Inc. et al., [2003] A.R. Uned. 802; 130 A.C.W.S.(3d) 1132; 2004 ABCA 160, refd to. [para. 152].

R. v. Jolivet (D.), [2000] 1 S.C.R. 751; 254 N.R. 1; 2000 SCC 29, refd to. [para. 153].

Decoine v. Firstrider et al. (1993), 141 A.R. 74; 46 W.A.C. 74; 9 Alta. L.R.(3d) 113 (C.A.), refd to. [para. 153].

McNamara v. Porteus et al., [2003] A.R. Uned. 285; 13 Alta. L.R.(4th) 253; 2003 ABQB 35, refd to. [para. 153].

Hibberd et al. v. Hurricane Hydrocarbons Ltd. et al. (2006), 407 A.R. 1; 2006 ABQB 707, affd. (2007), 422 A.R. 18; 415 W.A.C. 18; 2007 ABCA 408, refd to. [para. 154].

Anderson et al. v. Canada Safeway Ltd. (2004), 357 A.R. 6; 334 W.A.C. 6; 2004 ABCA 239, refd to. [para. 154].

Jones v. Smith, [1999] 1 S.C.R. 455; 236 N.R. 201; 120 B.C.A.C. 161; 196 W.A.C. 161; 169 D.L.R.(4th) 385, refd to. [para. 155].

Harmony Shipping Co. SA v. Davis, [1979] 3 All E.R. 177 (C.A.), refd to. [para. 155].

Westward Farms Ltd. and Deniau v. Cadieux et al. (1982), 16 Man.R.(2d) 219; 138 D.L.R.(3d) 137 (C.A.), leave to appeal refused (1982), 18 Man.R.(2d) 269 (S.C.C.), not folld. [para. 170].

Chomichuk v. Merrifield and Merrifield (1983), 20 Man.R.(2d) 256; 16 A.C.W.S.(2d) 356 (Q.B.), affd. (1983), 20 Man.R.(2d) 251; 18 A.C.W.S.(2d) 432 (C.A.), refd to. [para. 172].

Fung v. 3714994 Manitoba Ltd. (2003), 179 Man.R.(2d) 47; 2003 MBQB 249, refd to. [para. 172].

Causeway Shopping Centre Ltd. v. Muise, [1969] S.C.R. 274; 70 D.L.R.(2d) 720, refd to. [para. 173].

Causeway Shopping Centre Ltd. v. Muise (1967), 4 N.S.R. 1965-69 315; 63 D.L.R.(2d) 26 (C.A.), refd to. [para. 175].

Grewal v. Singh et al., [2003] B.C.T.C. 1836; 19 R.P.R.(4th) 85; 2003 BCSC 1836, refd to. [para. 175].

Kemp v. Lee (1983), 44 B.C.L.R. 172; 28 R.P.R. 141 (S.C.), refd to. [para. 175].

Kemp v. Lee (1984), 58 B.C.L.R. 219; 41 R.P.R. 20 (C.A.), refd to. [para. 177].

Caplan v. Coles (1982), 43 B.C.L.R. 78; 27 R.P.R. 83 (S.C.), refd to. [para. 177].

Lomac Holdings Ltd. v. Prijatelj et al. (1982), 38 B.C.L.R. 238 (S.C.), refd to. [para. 177].

Santelli v. Bifano Enterprises Ltd. (1981), 33 B.C.L.R. 266 (S.C.), refd to. [para. 177].

Polaris Realty (1995) Ltd. v. Minchau et al. (2010), 491 A.R. 209; 2010 ABQB 116, refd to. [para. 178].

331399 Alberta Ltd. v. Worthington Properties Inc. et al., [2010] A.R. Uned. 820; 77 B.L.R.(4th) 136; 2010 ABQB 543 (Master), refd to. [para. 178].

London Drugs Ltd. v. Brassart and Vanwinkel [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1; 97 D.L.R.(4th) 261, refd to. [para. 185].

London Drugs v. Kuehne & Nagle International Ltd. et al. - see London Drugs Ltd. v. Brassart and Vanwinkel.

Elder Advocates of Alberta Society et al. v. Alberta et al. (2011), 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 2011 SCC 24, refd to. [para. 190].

Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., [1987] 1 S.C.R. 2; 74 N.R. 360; 21 O.A.C. 4; 34 D.L.R.(4th) 208, refd to. [para. 195].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 200].

Motkoski Holdings Ltd. v. Yellowhead (County) (2010), 474 A.R. 367; 479 W.A.C. 367; 2010 ABCA 72, refd to. [para. 200].

Troika Land Development Corp. et al. v. West Jasper Properties Inc. (2009), 481 A.R. 242; 2009 ABQB 590, refd to. [para. 200].

Austie v. Aksnowicz (1999), 232 A.R. 118; 195 W.A.C. 118; 1999 ABCA 56, leave to appeal refused (2000), 253 N.R. 197; 255 A.R. 400; 220 W.A.C. 400 (S.C.C.), refd to. [para. 206].

Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69; 206 N.R. 299; 157 N.S.R.(2d) 81; 462 A.P.R. 81; 142 D.L.R.(4th) 230, refd to. [para. 207].

Erie Sand and Gravel Ltd. v. Seres' Farms Ltd. et al. (2009), 254 O.A.C. 377; 97 O.R.(3d) 241; 2009 ONCA 709, refd to. [para. 207].

Haskett v. O'Neil, [1939] 4 D.L.R. 598 (Ont. C.A.), refd to. [para. 209].

1159465 Alberta Ltd. v. Adwood Manufacturing Ltd. et al., [2010] A.R. Uned. 145; 70 B.L.R.(4th) 183; 2010 ABQB 133, refd to. [para. 215].

Saskatchewan River Bungalows Ltd. and Fikowski v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490; 168 N.R. 381; 155 A.R. 321; 73 W.A.C. 321; 115 D.L.R.(4th) 478, refd to. [para. 223].

Global First Ltd. v. 1237007 Alberta Ltd. et al. (2008), 439 A.R. 220; 2008 ABQB 65, refd to. [para. 225].

Landbank Minerals Ltd. v. Wesgeo Enterprises Ltd. and Tri-Link Resources Ltd. (1981), 30 A.R. 300; 21 R.P.R. 220 (Q.B.), refd to. [para. 225].

Digger Excavating (1983) Ltd. v. Bowlen (2001), 286 A.R. 291; 253 W.A.C. 291; 2001 ABCA 214, refd to. [para. 225].

Salama Enterprises (1988) Inc. v. Grewal (1992), 12 B.C.A.C. 96; 23 W.A.C. 96; 90 D.L.R.(4th) 146 (C.A.), refd to. [para. 225].

Basra et al. v. Carhoun et al. (1993), 31 B.C.A.C. 288; 50 W.A.C. 288; 82 B.C.L.R.(2d) 71 (C.A.), refd to. [para. 225].

Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072; 20 N.R. 500; 9 A.R. 308; 85 D.L.R.(3d) 19, refd to. [para. 243].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract in Canada (5th Ed. 2006), p. 564 [para. 222].

Waddams, Stephen M., The Law of Contracts (6th Ed. 2010), pp. 197 to 211 [para. 189].

Counsel:

David T. Parkatti and Dawn Pentelechuk, Q.C. (Cleall Barristers & Solicitors), for the plaintiffs, B & R Development Corporation Ltd. and 410675 Alberta Ltd.;

William J. Kenny, Q.C., and Darin J. Hannaford (Miller Thomson LLP), for the defendant, Trail South Developments Inc.

These actions were heard between January 31 and February 16, and April 21, 2011, by Smith, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on July 20, 2011.