581244 Alberta Ltd. v. Continental Mortgage Co., (1998) 238 A.R. 245 (QB)

• Judge: Coutu, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 23, 1998
• Citations: (1998), 238 A.R. 245 (QB)

581244 Alta. v. Continental Mortgage (1998), 238 A.R. 245 (QB)

MLB headnote and full text

Temp. Cite: [1999] A.R. TBEd. JA.029

581244 Alberta Ltd. (plaintiff) v. Continental Mortgage Co. Ltd. (defendant)

(Action No. 960311025 1998)

Indexed As: 581244 Alberta Ltd. v. Continental Mortgage Co.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Coutu, J.

December 23, 1998.

Summary:

The plaintiff purchased a lodge/motel from the defendant. Thereafter, the plaintiff sued the defendant, maintaining that it breached the express warranty in the purchase agree­ment which guaranteed that the lodge com­plied with the Fire, Health, and Building Codes. The plaintiff further alleged that there was an implied term in the agreement that the defendant would disclose all latent defects respecting the lodge.

The Alberta Court of Queen's Bench dis­missed the plaintiff's claim. However, the court provisionally assessed damages.

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - [See Contracts - Topic 7433 ].

Contracts - Topic 7433

Interpretation - Ambiguity - Contra pro­ferentem rule - The plaintiff purchased a lodge/motel from the defendant - The purchase agreement stipulated that it was subject to certain conditions - The condi­tions included "Addendum B" which pro­vided, inter alia, that it shall take "preci­dence" and that the "[p]roperty shall com­ply to local Fire, Health and Building Codes" - Thereafter, the plaintiff sued the defend­ant, maintaining that this addendum clause was a warranty which was not complied with - The defendant asserted that the contra proferentem rule applied - The addendum was drafted by the plaintiff - Moreover, it was ambiguous, particularly since the word "precedence" was incor­rectly spelled as "precidence" - The Alberta Court of Queen's Bench declined to invoke the rule because the defendant had the opportunity to par­ti­cipate in draft­ing it - The contra proferentem doctrine should only be applied when the other party had no meaningful opportunity to participate in the negotiation - See para­graphs 104 to 106.

Sale of Land - Topic 907

The contract - Essential terms and condi­tions precedent - Conditions precedent - [See Sale of Land - Topic 946 and second Sale of Land - Topic 6029 ].

Sale of Land - Topic 946

The contract - Conditions and warranties - Warranty - What constitutes - The plain­tiff purchased a lodge/motel from the defendant - The purchase agreement stip­ulated that it was subject to certain con­ditions - The conditions included "Adden­dum B" which provided, inter alia, that it shall take "precidence" and that the "[p]roperty shall comply to local Fire, Health and Building Codes" - Thereafter, the plaintiff sued the defendant, maintain­ing that this addendum clause was a war­ranty which was not complied with - The Alberta Court of Queen's Bench dismissed the plaintiff's claim - The addendum, which was drafted by the plaintiff, was a condition precedent and not a warranty - Therefore, when the transaction was com­pleted, the clause ceased to exist - See paragraphs 1 to 74 and 77 to 103.

Sale of Land - Topic 1832

The contract - Implied terms - Respecting fitness of houses - The plaintiff purchased a lodge/motel from the defendant - There­after, the plaintiff discovered that the lodge had several structural deficiencies which had to be repaired - The plaintiff sued the defendant, maintaining that there was an implied term in the agreement that the property would be fit for human habitation and fit for a motel - The Alberta Court of Queen's Bench reviewed the purchase agreement and dismissed the plaintiff's claim - See paragraphs 125 to 127.

Sale of Land - Topic 1904

The contract - Duties of seller - To dis­close quality defects - [See Sale of Land - Topic 6217 ].

Sale of Land - Topic 6029

Completion - Conditions precedent and subsequent - What constitutes a condition precedent - [See Sale of Land - Topic 946 ].

Sale of Land - Topic 6029

Completion - Conditions precedent and subsequent - What constitutes a condition precedent - The Alberta Court of Queen's Bench stated that conditions precedent in real estate transactions were not promises but, rather, contingencies or events upon which the birth or continuing existence of a binding contract may depend - See paragraph 79.

Sale of Land - Topic 6217

Completion - Seller's duties - General - Latent defects - The plaintiff purchased a lodge/motel from the defendant - There­after, the plaintiff discovered that the lodge had several structural deficiencies which had to be repaired - The plaintiff sued the defendant, maintaining that there was an implied term in the agreement that the defendant would disclose all latent defects respecting the lodge - The Alberta Court of Queen's Bench reviewed the purchase agreement and dismissed the plaintiff's claim - The defects in question were not latent defects - They were patent defects which were readily discoverable by ordi­nary inspection - However, even if the defects were latent, there was no evidence that they were actively concealed by the defendant and the caveat emptor rule applied - See paragraphs 128 to 132.

Sale of Land - Topic 7404

Remedies - General - Damages - The plaintiff purchased a lodge/motel from the defendant - The plaintiff sued the defen­dant, maintaining that the defendant breached the express warranty contained in the purchase agreement which warranted that the lodge complied with the Fire, Health, and Building Codes - The plaintiff further alleged that there was an implied term in the agreement that the defendant would disclose all latent defects respecting the lodge - The Alberta Court of Queen's Bench dismissed the plaintiff's claim, however, the court provisionally assessed damages.

Sale of Land - Topic 8107

Defences of vendor - Caveat emptor - General - [See Sale of Land - Topic 6217 ].

Sale of Land - Topic 8626

Remedies of purchaser - For quality defects - Patent defects - [See Sale of Land - Topic 6217 ].

Sale of Land - Topic 8631

Remedies of purchaser - For quality defects - Latent defects - [See Sale of Land - Topic 6217 ].

Sale of Land - Topic 8752

Remedies of purchaser - Damages - Gen­eral damages - [See Sale of Land - Topic 7404 ].

Cases Noticed:

Heilbut, Symons and Co. v. Buckleton, [1913] A.C. 30, refd to. [para. 82].

Fraser-Reid v. Droumtsekas et al., [1980] 1 S.C.R. 720; 29 N.R. 424; 103 D.L.R.(3d) 385, consd. [para. 84].

Davis v. Prince (1977), 21 N.S.R.(2d) 140; 28 A.P.R. 140 (C.A.), refd to. [para. 88].

Clarke v. Listro (1992), 23 R.P.R.(2d) 232 (Ont. Gen. Div.), refd to. [para. 89].

Zerafa v. Young (1976), 68 D.L.R.(3d) 632 (Ont. Co. Ct.), refd to. [para. 90].

Grewal v. Saanich (District) (1986), 43 R.P.R. 207 (B.C.S.C.), refd to. [para. 91].

Elkiw v. Harris (1990), 39 C.P.C.(2d) 121 (B.C.C.A.), refd to. [para. 98].

Richview Construction Co. v. Raspa (1975), 11 O.R.(2d) 377 (C.A.), refd to. [para. 99].

Ironside v. Smith (1998), 223 A.R. 379; 183 W.A.C. 379 (C.A.), refd to. [para. 105].

Recha and Klein v. Yeamans and Gere (1992), 126 N.B.R.(2d) 136; 317 A.P.R. 136 (T.D.), refd to. [para. 129].

McGrath v. MacLean (1979), 95 D.L.R.(3d) 144 (Ont. C.A.), refd to. [para. 129].

Ekkebus v. Lauinger (1994), 39 R.P.R.(2d) 23 (Ont. Gen. Div.), refd to. [para. 132].

Authors and Works Noticed:

Halsbury's Law of England, generally [para. 130].

Perell, Paul and Engell, Bruce, Remedies and the Sale of Land (2nd Ed.), p. 30 [para. 79].

Counsel:

Jennifer Klimek, for the plaintiff;

William Patrick, for the defendant.

This action was heard before Coutu, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on December 23, 1998.