Richcraft Homes Ltd. v. Urbandale Corp. et al., 2016 ONCA 622

• Judge: Laskin, Lauwers and Roberts, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: May 30, 2016
• Jurisdiction: Ontario
• Citations: 2016 ONCA 622;(2016), 352 O.A.C. 186 (CA)

Richcraft Homes v. Urbandale Corp. (2016), 352 O.A.C. 186 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. AU.011

Richcraft Homes Ltd. (applicant/respondent) v. Urbandale Corporation , Urbandale Construction Limited and Riverside South Development Corp. (respondents/ appellant )

(C60910; 2016 ONCA 622)

Indexed As: Richcraft Homes Ltd. v. Urbandale Corp. et al.

Ontario Court of Appeal

Laskin, Lauwers and Roberts, JJ.A.

August 11, 2016.

Summary:

Urbandale Corp. and Richcraft Homes Ltd. entered into a limited partnership agreement (LPA), with Riverside South Development Corp. as the general partner, on October 23, 2001. On May 9, 2005, the principals of Urbandale Corp. and Richcraft signed a document related to the LPA (the 2005 document). Urbandale was a property developer, and was related to homebuilder Urbandale Construction Ltd., which was mentioned in the LPA. Richcraft was both a homebuilder and a property developer. The partnership's purpose was to develop some 3,000 acres of development land in the Riverside south area of Ottawa. At issue was the extent of Urbandale Corp.'s control of the partnership. Urbandale Corp. owned two-thirds of the partnership and Richcraft owned one-third. Issues arose between the limited partners about the interpretation of the LPA and the legal effect of the 2005 document. An application was brought on a cooperative basis for a determination of the issues.

The Ontario Superior Court (applications judge), in a decision with neutral citation 2015 ONSC 4725, made two declarations. First, the judge declared the 2005 document was enforceable and affected the way in which the homebuilders Urbandale Construction and Richcraft got access to the building lots that become available through the partnership's land development activities. Second, the applications judge declared that actions to be taken by the partnership under art. 8.2 of the LPA, which set out the consequences of a partner failing to advance funds to the partnership, had to be approved by the unanimous consent of both Richcraft and Urbandale Corp., as contended by Richcraft, not merely by an "Ordinary Resolution", as contended by Urbandale. Urbandale Corp. appealed. At issue was whether the 2005 document was enforceable; and whether partnership decisions under art. 8.2 of the LPA required unanimous consent.

The Ontario Court of Appeal affirmed the application judge's judgment that the 2005 document was enforceable. However, the court allowed the appeal on the second issue. The appeal court held that art. 8.2 of the LPA did not require unanimous consent.

Contracts - Topic 9

General principles - Options - See paragraphs 48 to 50.

Contracts - Topic 2103

Terms - Express terms - Options and rights of first refusal - See paragraphs 48 to 50.

Contracts - Topic 2685

Consideration - General - Consideration defined - See paragraphs 14 to 47.

Contracts - Topic 2721

Consideration - Necessity for - General - See paragraphs 14 to 47.

Contracts - Topic 2878

Consideration - What constitutes consideration - Clarification of unclear term in a long term contract - See paragraphs 14 to 47.

Partnership - Topic 5009

Relations between partners - General - Partnership agreement - See paragraphs 56 to 69.

Counsel:

Benjamin Zarnett and Peter Kolla, for the appellant;

K. Scott McLean and D. Elliott, for the respondent.

This appeal was heard on May 30, 2016, before Laskin, Lauwers and Roberts, JJ.A., of the Ontario Court of Appeal. The following decision was delivered for the court by Lauwers, J.A., on August 11, 2016.