410675 Alberta Ltd. v. Trail South Developments Inc., 2012 ABCA 351

• Judge: Ritter, Rowbotham and Bielby, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: May 04, 2012
• Citations: 2012 ABCA 351;(2012), 539 A.R. 157

410675 Alta. v. Trail South Dev. (2012), 539 A.R. 157; 561 W.A.C. 157 (CA)

MLB headnote and full text

Temp. Cite: [2012] A.R. TBEd. NO.117

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

(1103-0216-AC)

410675 Alberta Ltd. (appellant/plaintiff) v. Trail South Developments Inc. (respondent/defendant)

(1103-0217-AC; 2012 ABCA 351)

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

Alberta Court of Appeal

Ritter, Rowbotham and Bielby, JJ.A.

November 27, 2012.

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, in a decision reported at 508 A.R. 208, dismissed the actions. The plaintiffs appealed.

The Alberta Court of Appeal dismissed the appeals.

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 trial judge rejected the assertion - The plaintiffs appealed - The Alberta Court of Appeal dismissed the appeals - The trial judge did not err in rejecting the plaintiffs' argument regarding estoppel - When the parties had sought to extend or waive other deadlines in the purchase agreement, they did so by written agreement - The defendant's letters of October 27 and 29 seeking a specified extension of the deadlines in clause 4(a) of the agreement, were consistent with this practice - The letters did not demonstrate an intention to abandon the deadlines, but rather a request to extend them to a specified date - The trial judge's finding that the actions of the defendant were consistent with its obligation to cooperate was entitled to appellate deference - There was ample evidence upon which she could base this conclusion, and she made no palpable and overriding error in reaching that conclusion - See paragraphs 20 to 31.

Contracts - Topic 8008

Statute of Frauds - Part performance - When available - 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 plaintiffs argued that negotiations which began on February 23, 2000, including drafts exchanged up to April 3, 2000, resulted in either an amendment of the deadlines in the purchase agreement or in a new agreement - The trial judge found that there was no new agreement in writing because, although 410675 executed the proposed new agreement, the defendant did not - The plaintiff submitted that there was also an oral agreement and that there had been part performance of the new agreement - The trial judge declined to find part performance - The plaintiffs appealed - The Alberta Court of Appeal dismissed the appeals - The plaintiffs had not persuaded the court that the trial judge erred in her conclusion that there was no part performance - Moreover, it was not possible to determine the terms of the alleged new agreement - The terms of the new agreement were uncertain - "Negotiations, however advanced, do not constitute an enforceable agreement where (1) there is uncertainty as to essential terms; (2) the provisions of what has been agreed are insufficiently certain; and (3) it is the intention that a binding agreement should not arise until a formal document has been executed." - See paragraphs 32 to 40.

Contracts - Topic 8405

Collateral agreements - General - When valid - [See first 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, 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 trial judge 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 - The Alberta Court of Appeal dismissed the plaintiffs' appeals - See paragraphs 42 to 56.

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 trial judge noted B & R was not nominated under the terms of the agreement - No nominee was named - The deal unravelled 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 - The Alberta Court of Appeal dismissed the plaintiffs' appeals - See paragraphs 57 to 63.

Equity - Topic 3607

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

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 trial judge dismissed the actions - Had he allowed the actions, he 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 - The Alberta Court of Appeal dismissed the plaintiffs' appeals - See paragraphs 64 to 77.

Trusts - Topic 4

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

Trusts - Topic 1907

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

Trusts - Topic 2310

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

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 19].

Naylor Group Inc. v. Ellis-Don Construction Ltd., [2001] 2 S.C.R. 943; 277 N.R. 1; 153 O.A.C. 341; 2001 SCC 58, refd to. [para. 19].

Spartacus Holdings Ltd. v. Building 400 Ltd. et al. (2011), 515 A.R. 1; 532 W.A.C. 1; 2011 ABCA 18, refd to. [para. 19].

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, refd to. [para. 21].

Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50; 125 N.R. 294; 47 O.A.C. 333, refd to. [para. 22].

Erie Sand and Gravel Ltd. v. Seres' Farms Ltd. et al. (2009), 254 O.A.C. 377; 312 D.L.R.(4th) 111; 2009 ONCA 709, refd to. [para. 35].

Deglman v. Brunet Estate, [1954] S.C.R. 725; [1954] 3 D.L.R. 785, refd to. [para. 35].

Troika Land Development Corp. et al. v. West Jasper Properties Inc. (2009), 481 A.R. 242; 2009 ABQB 590, refd to. [para. 45].

Hawrish v. Bank of Montreal, [1969] S.C.R. 515; 2 D.L.R.(3d) 600, refd to. [para. 46].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191; 110 D.L.R.(3d) 424, refd to. [para. 46].

Carman Construction Ltd. v. Canadian Pacific Railway Co. and C.P. Rail, [1982] 1 S.C.R. 958; 42 N.R. 147; 136 D.L.R.(3d) 193, refd to. [para. 46].

A.M.K. Investments Ltd. (Bankrupt) v. Kraus (1996), 13 O.T.C. 254 (Gen. Div. Bktcy.), refd to. [para. 60].

DiFrancesco v. Annapolis Valley Peat Moss Co. (2005), 232 N.S.R.(2d) 115; 737 A.P.R. 115; 2005 NSCA 57, refd to. [para. 61].

Fobasco Ltd. v. Cogan (1990), 72 O.R.(2d) 254 (H.C.), refd to. [para. 61].

Indutech Canada Ltd. v. Gibbs Pipe Distributors Ltd. et al. (2011), 508 A.R. 1; 2011 ABQB 38, refd to. [para. 69].

Eastwalsh Homes Ltd. v. Anatal Developments Ltd. (1993), 62 O.A.C. 20; 12 O.R.(3d) 675; 100 D.L.R.(4th) 469 (C.A.), leave to appeal refused [1993] 3 S.C.R. vii; 162 N.R. 399, refd to. [para. 69].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99; 57 D.L.R.(3d) 386, refd to. [para. 70].

British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways, [1912] A.C. 673 (H.L.), refd to. [para. 71].

Windmill Place v. Apeco of Canada Ltd., [1978] 2 S.C.R. 385; 19 N.R. 124, refd to. [para. 71].

Authors and Works Noticed:

Hall, Geoff R., Canadian Contractual Interpretation Law (2012), p. 5.1 [para. 37].

Waddams, S.M., The Law of Contract (6th Ed. 2010), pp. 197-211 [para. 57].

Waters, D.W.M., Law of Trusts in Canada (2nd Ed. 1984), pp. 302, 305 [para. 60].

Counsel:

D.T. Parkatti and H.P. Hait, for the appellants;

W.J. Kenny, Q.C., and S.J. Hammel, Q.C., for the respondent.

This appeal was heard on May 4, 2012, by Ritter, Rowbotham and Bielby, JJ.A., of the Alberta Court of Appeal. The following memorandum of judgment of the Court of Appeal was delivered on November 27, 2012.