Lake Manitoba Estates Ltd. and Dumont v. Communities Economic Development Fund, (1980) 2 Man.R.(2d) 295 (CA)

• Judge: Freedman, C.J.M., Hall and Matas, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: January 28, 1980
• Jurisdiction: Manitoba
• Citations: (1980), 2 Man.R.(2d) 295 (CA)

Lake Man. Estates v. Com. Economic Dev. (1980), 2 Man.R.(2d) 295 (CA)

MLB headnote and full text

Lake Manitoba Estates Ltd. and Dumont v. Communities Economic Development Fund

Indexed As: Lake Manitoba Estates Ltd. and Dumont v. Communities Economic Development Fund

Manitoba Court of Appeal

Freedman, C.J.M., Hall and Matas, JJ.A.

January 28, 1980.

Summary:

This case arose out of the plaintiffs' claim against the defendant Communities Economic Development Fund to be entitled to conveyance of land. The plaintiff had a right of first refusal on a lot of land suitable for resort development. The plaintiff was involved in a community resort development project and was willing to commit the land to the project, if he acquired it. When he had to exercise his right of first refusal, the plaintiff went to the Communities Economic Development Fund for the funds. To prevent the land from falling into foreign hands the Fund provided the funds for its purchase, but took the property in its own name with the intention of later conveying it to the community project, if it went ahead. The plaintiff understood that, if the project did not go ahead, he would be able to obtain a deed to the land. The community project did not proceed, but the Fund refused to convey the property to the plaintiff. The plaintiff and his assignee brought an action against the Fund for a transfer of the land.

The Manitoba Court of Queen's Bench in a judgment unreported in this series of reports dismissed the plaintiffs' action. The plaintiffs appealed.

The Manitoba Court of Appeal allowed the appeal and the plaintiffs' action. The Court of Appeal held that the Fund held the land under a constructive trust for the plaintiff, where the fund was unjustly enriched at the expense of the plaintiff. The Court of Appeal noted that the Fund acquired the land through the plaintiff and that the land was acquired for less than its value, which increased substantially since. The Court of Appeal held that the enrichment of the Fund was unjust to the plaintiff, because he was deprived of the opportunity to buy the land from the Fund after failure of the community project, because he kept his own land unproductively committed during the interim, and because development of the area by the plaintiff himself was prevented by the land being tied up by the Fund. The Court of Appeal held that, as a trustee, the Fund could not be permitted to benefit personally from the failure of the community project - see paragraph 60.

Sale of Land - Topic 1326

The contract - Necessity for writing - Statute of Frauds - Circumstances not within statute - The Manitoba Court of Appeal held that, where one party was found to hold property under a constructive trust for another, the defence of an absence of a memorandum in writing under the Statute of Frauds was not applicable - See paragraph 61.

Sale of Land - Topic 1728

The contract - Options - Option distinguished from right of first refusal - The Manitoba Court of Appeal defined and distinguished a right of first refusal and an option - See paragraph 51.

Trusts - Topic 2308

Constructive trusts - When imposed - The plaintiff had a right of first refusal on a lot of land suitable for resort development - The plaintiff was involved in a community resort development project and was willing to commit the land to the project, if he acquired it - When he had to exercise his right of first refusal, the plaintiff went to the Communities Economic Development Fund for the funds - To prevent the land from falling into foreign hands the Fund provided the funds for its purchase, but took the property in its own name with the intention of later conveying it to the community project, if it went ahead - The plaintiff understood that, if the project did not go ahead, he would be able to obtain a deed to the land - The community project did not proceed, but the Fund refused to convey the property to the plaintiff - The Manitoba Court of Appeal allowed the plaintiff's action and held that the Fund held the land under a constructive trust for the plaintiff, where the Fund was unjustly enriched at the expense of the plaintiff - See paragraphs 49 to 63.

Cases Noticed:

Rathwell v. Rathwell, [1978] 2 W.W.R. 101; 19 N.R. 91 (S.C.C.), consd. [para. 49].

Keech v. Sandford (1726), 2 Eq. Cases 741; 25 E.R. 223, appld. [para. 60].

Statutes Noticed:

Communities Economic Development Fund Act, C.C.S.M., c. C-155, sect. 3 [para. 2].

Statute of Frauds (Manitoba) [para. 61].

Authors and Works Noticed:

Di Castri, The Canadian Law of Vendor and Purchaser (2nd Ed.), p. 148 [para. 5].

Counsel:

D.C.H. McCaffrey, Q.C., for the plaintiffs/appellants;

D.G. Dilts, Q.C., for the defendant/respondent.

This case was heard on June 4 and 5, 1979, at Winnipeg, Manitoba, before Freedman, C.J.M., Hall and Matas, JJ.A., of the Manitoba Court of Appeal.

On January 28, 1980, Matas, J.A., delivered the following judgment for the Court of Appeal: