Founders Square Ltd. v. Nova Scotia (Attorney General), (2001) 192 N.S.R.(2d) 127 (CA)

• Judge: Freeman, Roscoe and Flinn, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: January 23, 2001
• Jurisdiction: Nova Scotia
• Citations: (2001), 192 N.S.R.(2d) 127 (CA);2001 NSCA 49

Founders Square v. N.S. (A.G.) (2001), 192 N.S.R.(2d) 127 (CA);

 599 A.P.R. 127

MLB headnote and full text

Temp. Cite: [2001] N.S.R.(2d) TBEd. MR.024

Founders Square Limited (appellant) v. The Attorney General of Nova Scotia, representing Her Majesty the Queen in Right of the Province of Nova Scotia (respondent)

The Attorney General of Nova Scotia, representing Her Majesty the Queen in Right of the Province of Nova Scotia (appellant) v. Founders Square Limited (respondent)

(CA 164691; 164997; 2001 NSCA 49)

Indexed As: Founders Square Ltd. v. Nova Scotia (Attorney General)

Nova Scotia Court of Appeal

Freeman, Roscoe and Flinn, JJ.A.

March 22, 2001.

Summary:

Founders Square constructed an office complex on property leased from the prov­ince. Founders leased office space in the complex to the province. Founders argued that the province was obligated to lease 50,000 square feet of office space for the amortization period of Founders' mortgage on the complex. Founders sued the province, claiming that there was a parol contract that the province would lease the space on those terms. Alternatively, Founders claimed that the province negligently misrepresented that it would lease the space on those terms.

The Nova Scotia Supreme Court, in a decision reported at 183 N.S.R.(2d) 310; 568 A.P.R. 310, dismissed the action, holding that there was no parol contract or negligent misrepresentation. Further, the claims in contract and in tort were precluded by a term of the development agreement, which pro­vided that it and the ground lease constituted the entire agreement between Founders and the province. The court subsequently issued a costs decision at 186 N.S.R.(2d) 189; 581 A.P.R. 189. Founders appealed. The prov­ince cross-appealed costs.

The Nova Scotia Court of Appeal allowed Founders' appeal. The court held that there was a binding contract between Founders and the province that the province would lease 50,000 square feet for the amortization period at a specified rent. The court dis­missed the alternative claim for negligent misrepresentation, holding that the represen­tation to Founders was made in good faith and with the intention that it would be acted on as a term of an enforceable contract. The province breached the contract. The court dismissed the province's cost cross-appeal.

Editor's note: for a preliminary decision in this matter see 175 N.S.R.(2d) 391; 534 A.P.R. 391.

Contracts - Topic 1104

Formation of contract - General principles - Oral contracts - The province called for proposals to develop an office complex on provincial property that integrated historic buildings - Founders' proposal required the province to lease 50,000 square feet of office space for the mortgage amortization period (subsequently amortized over 30 years) at a specified rent subject to adjust­ments for changes in interest rates - Founders insisted that the long term lease and rental rate were necessary to subsidize the cost incurred in preserving the historic buildings and the risk involved in increas­ing the complex's total office space as demanded by the province - Founders claimed that a cabinet committee com­mitted to the long term lease and rent at an October 1983 meeting - Founders built the office complex - The province leased office space, but subsequently argued that there was no long term lease - The trial judge held that the October 1983 dis­cussions did not constitute a parol contract - The Nova Scotia Court of Appeal allowed Founders' appeal, holding that there was a binding agreement between Founders and the province based on the October 1983 meeting - See paragraphs 2 to 77.

Contracts - Topic 2116

Terms - Express terms - "Entire agree­ment" or "four corners" clause - The prov­ince called for proposals to develop an office complex on provincial property that integrated historic buildings - Founders submitted a proposal - Founders claimed that the province committed to lease 50,000 square feet of office space for the mortgage amortization period (subse­quently amortized over 30 years) at a specified rent subject to adjustments for changes in interest rates - The commitment was not included in the development agreement - Founders built the office complex - The province leased office space, but subsequently argued that there was no long term lease - Founders sued for, inter alia, breach of contract - The province sought to rely on a clause in the development agreement, which provided that it and the ground lease constituted the entire agreement between Founders and the province - The Nova Scotia Court of Ap­peal held that it would be unconsciona­ble to find that the long term lease was not enforceable because the development agreement did not refer to it - See para­graph 86.

Contracts - Topic 8008

Statute of Frauds - Part performance - When available - The province called for proposals to develop an office complex on provincial property that integrated historic buildings - Founders submitted a proposal - Founders claimed that the province com­mitted to lease 50,000 square feet of office space for the mortgage amortization period (subsequently amortized over 30 years) at a specified rent subject to adjustments for changes in interest rates - Founders' built the office complex - The province leased office space, but subsequently argued that there was no long term lease - The prov­ince argued, inter alia, that a commitment to lease for 30 years had to be in writing under the Statute of Frauds - The Nova Scotia Court of Appeal rejected the argu­ment, holding that it would be unconscio­nable to allow the province to rely on the Statute of Frauds given that there was part performance by both parties - See para­graphs 83 to 85.

Crown - Topic 655

Authority of Ministers - Authority to enter agreements on behalf of Crown - The province established a "cabinet committee" to negotiate a contract with a developer with respect to the developer's proposal to develop an office complex on provincial property - The committee was made up of certain cabinet ministers, including the Minister of Government Services - Subse­quently, the province argued that the com­mittee lacked jurisdiction to bind the gov­ernment because no order-in-council was passed authorizing it to bargain with the plaintiff in place of the Department of Government Services - The Nova Scotia Court of Appeal rejected the argument - The court stated that because the Minister of Government Services was on the com­mittee, the Department was not displaced but continued to exercise its authority through the committee - The court further stated that it was not persuaded that an order-in-council was a statutory require­ment, particularity in these circumstances, but if there was such a requirement, the absence of an order-in-council would not have defeated the purpose the committee sought to achieve (i.e., to enter into a binding contract) - See paragraphs 12 to 17.

Crown - Topic 1010

Contracts with Crown - Authority of employees and agents to bind Crown - [See Crown - Topic 655 ].

Landlord and Tenant - Topic 2264

The lease - Statute of Frauds - Part per­formance - [See Contracts - Topic 8008 ].

Practice - Topic 7117

Costs - Party and party costs - Special orders - Lump sum in lieu of taxed costs - Founders Square, owners of an office complex, sued the province for a declara­tion or damages, alleging that the province was obligated by, inter alia, a parol con­tract to lease 50,000 square feet of office space for the amortization period of Founders' mortgage on the complex - The trial judge dismissed Founders' action - The province sought costs under tariff which would range from $210,000 to $280,000 based on the amount involved (approximately $7 million) - The province was represented by Department of Justice lawyers - The trial judge held that lump sum costs ($60,000 less a $10,000 adjust­ment) were appropriate because tariff would have produced an amount approach­ing or exceeding full indemnity - The Nova Scotia Court of Appeal allowed Founders' appeal and overturned the trial judge's decision on the merits - The court held that the trial judge properly exercised his discretion in determining costs, al­though the court switched the costs order given the determination on the merits - See paragraph 96.

Cases Noticed:

Western Canada Wilderness Committee v. Alberta et al. (1993), 146 A.R. 245 (Q.B.), refd to. [para. 14].

Somerville Belkin Industries Ltd. v. Mani­toba (1988), 51 Man.R.(2d) 232 (C.A.), refd to. [para. 15].

CAE Industries Ltd. and CAE Aircraft Ltd. v. Canada (1985), 61 N.R. 19; 20 D.L.R.(4th) 347 (F.C.A.), refd to. [para. 15].

Verreault (J.E.) & Fils Ltée v. Quebec (Procureur général), [1977] 1 S.C.R. 41; 5 N.R. 271 (Fr.); 8 N.R. 72 (Eng.), refd to. [para. 15].

Parker v. Parsons (1997), 160 N.S.R.(2d) 321; 473 A.P.R. 321 (C.A.), refd to. [para. 39].

MacIsaac et al. v. Catholic Episcopal Corp. of Antigonish (1996), 154 N.S.R.(2d) 214; 452 A.P.R. 214 (C.A.), refd to. [para. 40].

Dartmouth (City) v. Dartmouth Police Association (1998), 172 N.S.R.(2d) 352; 524 A.P.R. 352 (C.A.), refd to. [para. 41].

Barrett v. Reynolds et al. (1998), 170 N.S.R.(2d) 201; 515 A.P.R. 201 (C.A.), refd to. [para. 42].

Mitsui & Co. (Point Aconi) Ltd. v. Jones Power Co. et al. (2000), 189 N.S.R.(2d) 1; 590 A.P.R. 1 (C.A.), refd to. [para. 72].

Queen (D.J.) v. Cognos Inc. (1993), 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626 (S.C.C.), refd to. [para. 80].

Carvery v. Fletcher (1987), 76 N.S.R.(2d) 307; 189 A.P.R. 307; 34 D.L.R.(4th) 739 (T.D.), refd to. [para. 84].

Société Générale du Commerce et de l'In­dustrie en France v. Farina (Johann Maria) & Co., [1904] 1 K.B. 794 (C.A.), refd to. [para. 89].

Granitile Inc. et al. v. Canada et al. (1998), 82 O.T.C. 84 (Gen. Div.), refd to. [para. 89].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract (4th Ed. 1999), p. 5 [para. 16].

Counsel:

George W. MacDonald, Q.C., and Jane E. O'Neill, for Founders Square Ltd.;

Michael T. Pugsley, for the Attorney Gen­eral of Nova Scotia.

This appeal and cross-appeal were heard on January 23, 2001, by Freeman, Roscoe and Flinn, JJ.A., of the Nova Scotia Court of Appeal. Freeman, J.A., delivered the follow­ing judgment for the Court of Appeal on March 22, 2001.