Dielmann Holdings Ltd. v. 5318191 Manitoba Ltd. et al., (2015) 321 Man.R.(2d) 142 (QB)

• Judge: Pfuetzner, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: October 14, 2015
• Jurisdiction: Manitoba
• Citations: (2015), 321 Man.R.(2d) 142 (QB);2015 MBQB 163

Dielmann Holdings v. 5318191 Man. (2015), 321 Man.R.(2d) 142 (QB)

MLB headnote and full text

Temp. Cite: [2015] Man.R.(2d) TBEd. OC.027

Dielmann Holdings Ltd. (plaintiff/defendant by counterclaim) v. 5318191 Manitoba Ltd. and Cal Dudley Torgerson (defendants/plaintiffs by counterclaim)

(CI 08-01-58115; 2015 MBQB 163)

Indexed As: Dielmann Holdings Ltd. v. 5318191 Manitoba Ltd. et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

Pfuetzner, J.

October 14, 2015.

Summary:

The plaintiff, Dielmann Holdings Ltd., planned a commercial subdivision for farmland it owned in the Rural Municipality of Headingley. The defendants, 5318191 Manitoba Ltd. and Torgerson, agreed to purchase 11 lots in the subdivision and entered into an agreement of purchase and sale with Dielmann Holdings. As part of the purchase price, the defendants executed a second mortgage in favour of Dielmann Holdings for $418,981. A dispute ensued. Dielmann Holdings sued the defendants for $1,258,619.78, plus interest. Dielmann Holdings based that claim upon the original debt secured by a second mortgage in the amount of $418,981, plus additional costs that Dielmann Holdings incurred to complete the roadwork, legal costs and interest. The defendants argued that their liability for roadwork was limited to $581,018, and that they were not responsible for any additional costs. The defendants counterclaimed, arguing that, pursuant to a clause (clause 9) in the purchase and sale agreement, they were entitled to the value of certain topsoil.

The Manitoba Court of Queen's Bench allowed the plaintiff's action, holding that according to the purchase and sale agreement and the second mortgage, the defendants were responsible for the principal sum on the second mortgage of $418,981, plus interest of 9% per annum calculated as set out in the mortgage. However, the defendants' responsibility for roadwork was limited to $581,018 and they were not responsible for any additional costs for roadwork. The court also allowed the counterclaim, holding that pursuant to clause 9 of the purchase and sale agreement the defendants were entitled to the topsoil as claimed, and calculated damages accordingly ($373,578). The counterclaim also was subject to pre-judgment interest of 9% per annum. The court declined to order that the amounts be set off because the parties did not address that matter in argument at trial.

Contracts - Topic 7401

Interpretation - General principles - Intention of parties - The Manitoba Court of Queen's Bench stated that "Prior drafts of contracts and evidence of negotiations are normally not admissible in connection with the construction of contracts as evidence of the parties' subjective intention. However, to the extent that prior drafts provide evidence of the factual matrix, they are relevant, provided that they are not taken as evidence of the parties' subjective intention" - See paragraph 185.

Contracts - Topic 7401

Interpretation - General principles - Intention of parties - In a case involving the interpretation of a "topsoil clause" in a purchase and sale agreement, prior drafts of the agreement were admitted at trial - The Manitoba Court of Queen's Bench stated that it did not rely on those drafts to provide evidence of the subjective intention of the parties - To the extent that the drafts were relevant, it was only to illustrate the commercial objective and purpose of the topsoil clause - See paragraph 186.

Contracts - Topic 7521

Interpretation - Surrounding circumstances - General - The Manitoba Court of Queen's Bench stated that in construing a contract, "The court is to give effect to the intention of the parties, at the time the contract was entered into, as expressed in their written agreement. However, this is not an exercise to be done in a vacuum. The court is entitled, if not obligated, to take into account the surrounding circumstances, or factual matrix, in which the contract was made" - See paragraphs 41 to 43.

Interest - Topic 5004

Interest as damages (prejudgment interest) - General principles - Discretion of judge - The parties were involved in a dispute over the interpretation of a second mortgage - The Manitoba Court of Queen's Bench found that the defendant purchasers were liable under the mortgage - The purchasers argued that the full 9% per annum of interest should not be payable - The court held that the award to the vendor would bear prejudgment interest at the rate of 9% per annum, calculated in accordance with the terms of the second mortgage - Section 82 of the Court of Queen's Bench Act prevented the court from awarding a different interest rate where the parties had reached an agreement regarding prejudgment interest - See paragraphs 232 to 248.

Practice - Topic 1841

Pleadings - Counterclaim and set-off - Set-off - General - The parties were involved in a dispute over the interpretation of a second mortgage and purchase and sale agreement respecting the purchase of subdivision lots - The Manitoba Court of Queen's Bench found that the defendant purchasers were liable under the mortgage and agreement of purchase and sale and that the plaintiff vendor owed the defendant purchasers an amount for topsoil under the agreement of purchase and sale - The court declined, however, to order a set off as the parties did not address that issue in argument at trial - The court held that if the parties could not agree on whether or how to set off their respective awards, they could appear to argue the point - See paragraph 258.

Sale of Land - Topic 4001

Operation and interpretation of the contract - General principles - [See second Contracts - Topic 7401 ].

Sale of Land - Topic 4001

Operation and interpretation of the contract - General principles - The plaintiff sold 11 subdivision lots to the defendants and took a second mortgage back - A dispute ensued over a clause in the purchase and sale agreement respecting topsoil - Clause 9 provided: "That all topsoil will be removed from the Land by the Purchaser and shall be stock piled on the lots specified by the Vendor (adjacent to lots 23 and 24). The Purchaser will be entitled to 48% of the topsoil and the Vendor will receive 52% of the topsoil" - The defendants claimed entitlement to 48% of the topsoil removed from the roadways and the land, both prior to an after the date of the purchase and sale agreement - The Manitoba Court of Queen's Bench, considering context of the entire agreement and the surrounding circumstances, agreed with the defendants' interpretation - See paragraphs 153 to 201.

Sale of Land - Topic 7826

Remedies of vendor - Sale of land - Subdivisions - The plaintiff sold 11 subdivision lots to the defendants for $1,400,000, and took a second mortgage back for $481,981 - A dispute ensued - The plaintiff sued the defendants, seeking the principal amount of $481,981 and additional road construction costs - The defendants claimed that their responsibility for roadwork was limited to a fixed sum of $581,018 - The Manitoba Court of Queen's Bench allowed the plaintiff's claim for the $418,981 - In light of the surrounding circumstances, the documents clearly meant that the defendants were only responsible for $581,018 for roadwork - The essence of the purchase and sale agreement was that the defendants agreed to pay $1,400,000 for the lots, including completed roads - However, the parties did not agree that the defendants would pay for additional roadwork required by the municipality or to reimburse the plaintiff for fixing defects in the road and ditch construction - See paragraphs 17 to 55.

Cases Noticed:

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 41].

King v. Operating Engineers Training Institute of Manitoba Inc. (2011), 270 Man.R.(2d) 63; 524 W.A.C. 63; 341 D.L.R.(4th) 520; 2011 MBCA 80, refd to. [para. 43].

Missilinda of Canada Ltd. v. Husky Oil Operations Ltd. (2007), 212 Man.R.(2d) 252; 389 W.A.C. 252; 2007 MBCA 24, refd to. [para. 161].

535951 British Columbia Ltd. v. Penlea Investments Ltd., [2001] B.C.T.C. 49; 2001 BCSC 49, refd to. [para. 173].

Shewchuk v. GFK Capital Base Corp. (2011), 267 Man.R.(2d) 102; 2011 MBQB 189, refd to. [para. 243].

Manufacturers Life Insurance Co. v. Elgie et al., [2006] O.T.C. 467; 2006 CarswellOnt 3106 (Sup. Ct.), refd to. [para. 258].

2088300 Ontario Ltd. v. 2184592 Ontario Ltd. et al., [2011] O.T.C. Uned. 2986; 2011 ONSC 2986 (Master), refd to. [para. 261].

Statutes Noticed:

Court of Queen's Bench Act, S.M. 1988-89, c. 4; C.C.S.M., c. C-280, sect. 65 [para. 257]; sect. 82 [para. 239].

Counsel:

William R. Murray and Brenden Collins, for the plaintiff/defendant by counterclaim;

Richard J. Handlon and David E. Silver, for the defendants/plaintiffs by counterclaim.

This matter was heard before Pfuetzner, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following decision on October 14, 2015.