Hole et al. v. Hole et al., (2014) 583 A.R. 340 (QB)

• Judge: Shelley, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 14, 2013
• Citations: (2014), 583 A.R. 340 (QB);2014 ABQB 170

Hole v. Hole (2014), 583 A.R. 340 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. MR.099

James F. Hole and Hole Consultants Ltd. (plaintiffs) v. James D. Hole, Jack Henry Hole, Harry Bruce Hole, Douglas Robert Hole, Hole Engineering Ltd., Keesa Holdings Ltd., Eloh Enterprises Ltd., and 512725 Alberta Ltd. (defendants)

(0103 05846; 2014 ABQB 170)

Indexed As: Hole et al. v. Hole et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Shelley, J.

March 24, 2014.

Summary:

This action arose in the context of the plaintiffs' withdrawal from a family business. The plaintiffs alleged that the defendants breached their legal obligations as set out in the February 1, 1993 "Letter of Understanding and Obligation for Payment of One Million Dollars". The defendants maintained that their only legal obligations to the plaintiffs were contained in a separate agreement executed by the parties on February 9, 1993, and that the defendants had fulfilled the obligations set out in that agreement.

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

Contracts - Topic 1465

Formation of contract - Intention - Intention to create a legal relationship - This action arose in the context of the plaintiffs' withdrawal from a family business - The plaintiffs alleged that the defendants breached their legal obligations as set out in the February 1, 1993 "Letter of Understanding and Obligation for Payment of One Million Dollars" - The defendants maintained that their only legal obligations to the plaintiffs were contained in a separate agreement executed by the parties on February 9, 1993, and that the defendants had fulfilled the obligations set out in that agreement - The Alberta Court of Queen's Bench dismissed the action - The plaintiffs failed to discharge their burden of proving, with any certainty, either the intent or effect of the Letter of Understanding - Some aspects of the context in which the Letter of Understanding was executed and delivered, some of the words and expressions used in the document, and some subsequent events (including some which occurred fairly quickly after it was signed) supported the plaintiffs' position that the Letter of Understanding was intended to create legal relations - However, other aspects of the context in which the document was executed and delivered, some of its words and expressions, and some subsequent events supported the defendants' position - The Letter of Understanding might have been intended to create a separate, binding legal obligation of the four individuals who signed it, used to induce the plaintiffs to then enter into an agreement at a lower price - However, it might also have been intended as a "gentlemen's agreement" - This was not a case in which the court could prefer the evidence of one party over that of the other - The parties' evidence conflicted in several key respects - Rather, the imperfection of memories, the significant amount of time that had elapsed since the events occurred, and the deep rift that had developed between the parties had undoubtedly shaped their recall of what they intended and what occurred prior to their falling out - It was not clear which of the two possible interpretations was established by the evidence - See paragraphs 43 to 73.

Contracts - Topic 5643

Unenforceable contracts - Uncertainty and vagueness - Uncertainty - This action arose in the context of the plaintiffs' withdrawal from a family business - The plaintiffs alleged that the defendants breached their legal obligations as set out in the February 1, 1993 "Letter of Understanding and Obligation for Payment of One Million Dollars" - The defendants maintained that their only legal obligations to the plaintiffs were contained in a separate agreement executed by the parties on February 9, 1993, and that the defendants had fulfilled the obligations set out in that agreement - The Alberta Court of Queen's Bench dismissed the action - The meaning of certain words and phrases in the Letter of Understanding , including "non-callable promissory note", "Company" and "success and financial stability" were uncertain - Accordingly, the Letter of Understanding was too uncertain to be enforceable - See paragraphs 74 to 89.

Contracts - Topic 6741

Illegal contracts - Contracts contrary to public policy - General - This action arose in the context of the plaintiffs' withdrawal from a family business - The plaintiffs alleged that the defendants breached their legal obligations as set out in the February 1, 1993 "Letter of Understanding and Obligation for Payment of One Million Dollars" - The defendants maintained that their only legal obligations to the plaintiffs were contained in a separate agreement executed by the parties on February 9, 1993, and that the defendants had fulfilled the obligations set out in that agreement - The defendants asserted that if there was an agreement to pay under the Letter of Understanding, it was structured to avoid the payment of taxes and, if so, it was void as against public policy - The Alberta Court of Queen's Bench rejected the assertion - The plaintiffs did not provide any evidence from an accountant to establish that deferral of taxes in this manner would be construed as tax avoidance under the Income Tax Act - Therefore, the court was not satisfied that the accounting treatment of the alleged $1,000,000 obligation was structured in an illegal manner and accordingly could not conclude that its payment would be void as against public policy - See paragraphs 94 and 95.

Limitation of Actions - Topic 2052

Actions in contract - Actions for debt - When time begins to run - This action arose in the context of the plaintiffs' withdrawal from a family business - The plaintiffs alleged that the defendants breached their legal obligations as set out in the February 1, 1993 "Letter of Understanding and Obligation for Payment of One Million Dollars" - The defendants maintained that their only legal obligations to the plaintiffs were contained in a separate agreement executed by the parties on February 9, 1993, and that the defendants had fulfilled the obligations set out in that agreement - The Alberta Court of Queen's Bench dismissed the action - It was impossible to establish an exact date upon which the $1,000,000 would have become due, if it were payable - However, it was clear that the corporate plaintiff was treating it as a doubtful account in 1993 - More importantly, the plaintiffs clearly knew by September 1994 that the defendants were taking the position that the $1,000,000 referred to in the Letter of Understanding was not an outstanding amount owing - The limitation period of six years would have commenced in September 1994 - The plaintiffs' action, having been commenced in February 2001, was not commenced within the limitation period and was therefore statute barred - See paragraphs 90 to 93.

Cases Noticed:

Catalyst Paper Corp. v. Companhia de Navegação Norsul (2008), 258 B.C.A.C. 273; 434 W.A.C. 273; 2008 BCCA 336, leave to appeal refused (2009), 395 N.R. 389; 301 B.C.A.C. 320; 510 W.A.C. 1 (S.C.C.), refd to. [para. 43].

Nexxtep Resources Ltd. v. Talisman Energy Inc. et al. (2013), 542 A.R. 212; 566 W.A.C. 212; 2013 ABCA 40, refd to. [para. 44].

Hillas & Co. v. Acros Ltd., [1932] 1 All E.R. Rep. 494, refd to. [para. 44].

Olivieri v. Sherman et al. (2007), 225 O.A.C. 227; 2007 ONCA 491, varied (2009), 264 O.A.C. 297; 2009 ONCA 772, refd to. [para. 46].

Bank of Montreal v. King, [2003] A.R. Uned. 357; 2003 ABQB 491 (Master), refd to. [para. 46].

Troika Land Development Corp. et al. v. West Jasper Properties Inc. (2009), 481 A.R. 242; 2009 ABQB 590, refd to. [para. 47].

Klemke Mining Corp. v. Shell Canada Ltd. et al. (2007) 419 A.R.1; 2007 ABQB 176, affd. (2008), 433 A.R. 172; 429 W.A.C. 172; 2008 ABCA 257, refd to. [para. 47].

Ghitter (Ron) Property Consultants Ltd. v. Beaver Lumber Co. (2003), 330 A.R. 353; 299 W.A.C. 353; 2003 ABCA 221, refd to. [para. 47].

Bourgeois v. Murphy (1982), 54 N.S.R.(2d) 305; 112 A.P.R. 305 (T.D.), refd to. [para. 52].

Mendelssohn v. Normand Ltd., [1970] 1 Q.B. 177 (C.A.), refd to. [para. 53].

Gallen v. Allstate Grainco Ltd. (1984), 9 D.L.R.(4th) 496 (B.C.C.A.), leave to appeal refused [1984] S.C.C.A. No. 171, refd to. [para. 53].

McRoberts v. Whissell, [2006] A.R. Uned. 719; 2006 ABCA 388, refd to. [para. 53].

Ko v. Hillview Homes Ltd. (2012), 536 A.R. 93; 559 W.A.C. 93; 2012 ABCA 245, leave to appeal denied (2013), 446 N.R. 395; 556 A.R. 400; 584 W.A.C. 1 (S.C.C.), refd to. [para. 54].

Hilditch v. Yott, [1909] W.L.R. 9, refd to. [para. 66].

Omers Energy Inc. v. Energy Resources Conservation Board (Alta.) et al. (2011), 513 A.R. 292; 530 W.A.C. 292; 2011 ABCA 251, refd to. [para. 74].

Jumbo King Ltd. v. Faithful Properties Ltd., [1999] H.K.C.F.A.R. 279, refd to. [para. 74].

Mitsui & Co. (Point Aconi) Ltd. v. Jones Power Co. et al. (2000), 189 N.S.R.(2d) 1; 590 A.P.R. 1; 2000 NSCA 95, leave to appeal refused (2001), 270 N.R. 196; 193 N.S.R.(2d) 400; 602 A.P.R. 400 (S.C.C.), refd to. [para. 74].

Bhasin v. Hrynew et al. (2013), 544 A.R. 28; 567 W.A.C. 28; 2013 ABCA 98, leave to appeal granted [2013] N.R. TBEd. Motion 355 (S.C.C.), refd to. [para. 75].

Swan Group Inc. v. Bishop (2013), 542 A.R. 134; 566 W.A.C. 134; 2013 ABCA 29, refd to. [para. 75].

Kensington Energy Ltd. v. B & G Energy Ltd. (2008), 432 A.R. 141; 424 W.A.C. 141; 2008 ABCA 151, refd to. [para. 76].

Toll (FGCT) Pty Ltd. v. Alphapharm Pty Ltd., [2004] H.C.A. 52, refd to. [para. 76].

Continental Insurance Co. v. Law Society of Alberta (1984), 56 A.R. 98 (C.A.), leave to appeal refused (1985), 58 N.R. 311; 58 A.R. 2 (S.C.C.), refd to. [para. 78].

FWC Holdings Ltd. et al. v. Virtue Films Inc. et al., [2009] B.C.T.C. Uned. 1563; 2009 BCSC 1563, refd to. [para. 79].

Choma (R.P.) Financial and Associates Inc. et al. v. McDougall et al. (2008), 451 A.R. 278; 2008 ABQB 359 (Master), refd to. [para. 91].

Ruzicka v. Costigan (1984), 54 A.R. 385 (C.A.), refd to. [para. 92].

James H. Meek Trust et al. v. San Juan Resources Inc. et al. (2005), 376 A.R. 202; 360 W.A.C. 202; 2005 ABCA 448, refd to. [para. 92].

Authors and Works Noticed:

Côte, J.E., An Introduction to the Law of Contract (1974), p. 10 [para. 46].

Elphinstone, Howard Warburton, Rules for the Interpretation of Deeds, generally [para. 66].

Counsel:

J.K. McFadyen, Q.C., for the plaintiffs;

W.J. Kenny, for the defendants.

This action was heard between April 29 and June 14, 2013, by Shelley, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on March 24, 2014.