SaskEnergy Inc. v. Adag Corp. Canada Ltd., (2015) 475 Sask.R. 65 (QB)

JudgeR.S. Smith, J.
CourtCourt of Queen's Bench of Saskatchewan (Canada)
Case DateMay 19, 2015
JurisdictionSaskatchewan
Citations(2015), 475 Sask.R. 65 (QB);2015 SKQB 143

SaskEnergy v. Adag Corp. (2015), 475 Sask.R. 65 (QB)

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. JN.008

SaskEnergy Incorporated (plaintiff/defendant by counterclaim) v. Adag Corporation Canada Ltd. (defendant/plaintiff by counterclaim) and Geschlossene Grundstücksgesellschaft GGG 10 (plaintiff by counterclaim)

(2011 QBG No. 2396; 2015 SKQB 143)

Indexed As: SaskEnergy Inc. v. Adag Corp. Canada Ltd.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

R.S. Smith, J.

May 19, 2015.

Summary:

SaskEnergy occupied an office tower pursuant to a lease from "ADAG", the general partner of a limited partnership. The lease granted SaskEnergy an option to purchase. SaskEnergy claimed that it exercised the option and that ADAG refused to honour its commitment to sell. ADAG asserted that the option was unenforceable. SaskEnergy sought specific performance.

The Saskatchewan Court of Queen's Bench held that the option was enforceable, and that SaskEnergy was entitled to specific performance.

Contracts - Topic 9

General principles - Options - [See Contracts - Topic 7401 ].

Contracts - Topic 2103

Terms - Express terms - Options and rights of first refusal - [See Contracts - Topic 7401 and first Partnership - Topic 3404 ].

Contracts - Topic 3860

Performance or breach - Time for performance - Options - The plaintiff occupied the subject property pursuant to a lease from the defendant - The lease granted the plaintiff an option to purchase (OTP) - The plaintiff claimed that it exercised the OTP, and that the defendant refused to honour its commitment to sell - The defendant asserted that the plaintiff's exercise of its option to renew precluded the exercise of the OTP - The defendant focussed on the date the plaintiff tendered all deposits and payments required under the OTP - By then, the initial term of the lease had expired, and the parties were operating within the renewal term - The Saskatchewan Court of Queen's Bench held that the defendant's focus was on the wrong date - The plaintiff exercised its OTP when it delivered written notice of its intention to exercise the option - At that time, the initial term had not expired - Accordingly, the OTP was exercised during the initial term - See paragraphs 152 to 154.

Contracts - Topic 3860

Performance or breach - Time for performance - Options - The plaintiff occupied the subject property pursuant to a lease from the defendant - The lease granted the plaintiff an option to purchase (OTP) - The plaintiff claimed that it exercised the OTP, and that the defendant refused to honour its commitment to sell - The Saskatchewan Court of Queen's Bench rejected the defendant's technical argument that the plaintiff failed to comply with the terms of the OTP - The terms of the OTP were neither ambiguous nor internally contradictory - Clause 3.2 provided that the OTP could be exercised by giving written notice during the initial term - The initial term expired on September 30, 2011 - The OTP was exercised on August 25, 2011 - Clause 3.6 provided that the closing date for the sale, triggered by the exercise of the OTP, was 60 days after the expiry of the initial term - The amount required for closing was tendered on that day - See paragraphs 155 to 159.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - [See Sale of Land - Topic 8551 ].

Contracts - Topic 7401

Interpretation - General principles - Intention of parties (incl. reasonable expectations of parties) - The central issue was the meaning of the words in an option to purchase - Each of the parties invoked "Sattva" (Creston Moly Corp. v. Sattva Capital Corp. (2014) (S.C.C.)) for their respective positions - Sattva articulated the principles of interpretation that courts should apply in addressing contracts under dispute - The Saskatchewan Court of Queen's Bench distilled the directions in Sattva as: "(1) To give meaning to the words used by the parties in their contract to govern their relationships, understood within the context of their use; (2) To interpret the contract in light of the factual matrix or the circumstances surrounding the formation of same, but not allow the factual matrix to overwhelm the clear meaning of the language used; and (3) To interpret the contract as of when it was formed and not as now characterized by hindsight." - See paragraphs 87 to 89.

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - The plaintiff occupied the subject property pursuant to a lease from the defendant - The lease granted the plaintiff an option to purchase (OTP) - The plaintiff claimed that it exercised the OTP, and that the defendant refused to honour its commitment to sell - The central issue was the meaning of the words in the OTP - The defendants asserted that in the interpretive contest the plaintiffs were burdened by the doctrine of contra proferentem - Specifically, if there was any ambiguity in the wording it should be interpreted against the plaintiff - The Saskatchewan Court of Queen's Bench held that contra proferentem was not engaged - The terms of the OTP were neither ambiguous nor internally contradictory - "Each of the parties was a sophisticated business operation, flanked, at all material times, by experienced lawyers." - See paragraph 92.

Landlord and Tenant - Topic 2364

The lease - Options to purchase - Conditions precedent - [See second and third Partnership - Topic 3404 ].

Landlord and Tenant - Topic 2365

The lease - Options to purchase - Interpretation of option - [See Contracts - Topic 7401 ].

Partnership - Topic 6

General - Nature of limited partnership - The Saskatchewan Court of Queen's Bench reviewed the nature of a limited partnership - See paragraphs 121 to 127.

Partnership - Topic 3404

Relations between partners and third parties - Contracts - Act of one binds all - SaskEnergy occupied the subject property pursuant to a lease from "ADAG", the general partner of a limited partnership - The lease granted SaskEnergy an option to purchase (OTP) - SaskEnergy claimed that ADAG, the registered owner, refused to honour its commitment to sell - ADAG asserted that the SaskEnergy was advised numerous times that it could not sell the property without limited partnership approval - SaskEnergy invoked the principle of "indefeasibility" - The Saskatchewan Court of Queen's Bench held that the principles of indefeasibility of title were not engaged - "At its core, the debate in the present case is not about indefeasibility. It is about the nature and quality of the OTP. If that document is fundamentally flawed, it would be wrong to allow SaskEnergy to bootstrap it into legitimacy simply because it dealt with the registered owner. If SaskEnergy knew ADAG did not have authority to consent to the sale of the Property, then the debate must be determined on the basis of that knowledge." - See paragraphs 100 to 110.

Partnership - Topic 3404

Relations between partners and third parties - Contracts - Act of one binds all - SaskEnergy occupied the subject property pursuant to a lease from "ADAG", the general partner of a limited partnership - The lease granted SaskEnergy an option to purchase the property - SaskEnergy claimed that it exercised the option, and that ADAG refused to honour its commitment to sell - ADAG maintained that SaskEnergy had specific knowledge of the restrictions on the general partner's power to contract (Partnership Act, ss. 7, 8 and 10, in relation to third-party relationships) and the OTP was unenforceable - The Saskatchewan Court of Queen's Bench held that the Partnership Act was of no assistance to ADAG - The sale of the property was "carrying on in the usual way business of the kind carried on by" ADAG - In any business dealing with a real estate investment, the selling of that real estate was a natural incident to such business - Further, the partnership agreement itself provided under the heading Management and Representation: "Purchase, sale and/or conveyance of the Partnership's real estate or parts thereof" - The Court also concluded that SaskEnergy reasonably believed ADAG had the power to enter into the lease and OTP - See paragraphs 114 to 136.

Partnership - Topic 3404

Relations between partners and third parties - Contracts - Act of one binds all - SaskEnergy occupied the subject property pursuant to a lease from "ADAG", the general partner of a limited partnership - The lease granted SaskEnergy an option to purchase (OTP) - SaskEnergy claimed that it exercised the option and that ADAG refused to honour its commitment to sell - ADAG asserted that the SaskEnergy was advised numerous times that it could not sell the property without limited partnership approval - It maintained that SaskEnergy knew, as did both Bodon (representing ADAG) and Aszmann (representing the limited partnership), that Bodon had no authority to grant an unconditional option to purchase - The Saskatchewan Court of Queen's Bench, "[l]ooking at the overall narrative of the facts" found that ADAG's assertion of lack of authority was "a recent construct" - The Court found that at the time the lease and OTP were entered into, Bodon and Aszmann thought they had solved the problem of limited partnership approval - Any option that SaskEnergy benefitted from was well beyond the contemplated expiry date of the limited partnership - ADAG's conduct was consistent with the belief that SaskEnergy benefitted from the options clearly laid out in the OTP - See paragraphs 137 to 151.

Sale of Land - Topic 8551

Remedies of purchaser - Specific performance - When available - The defendants argued that an order for specific performance would not be appropriate because there was nothing unique about the subject property, an office tower in Regina - The Saskatchewan Court of Queen's Bench held that the plaintiff, SaskEnergy, was entitled to specific performance - There was no other office tower currently available in the Regina marketplace - The property had some inherent qualities that made it particularly well suited to the plaintiff's needs: the large floor space (17,000 sq. ft.), lower operating costs, and underground heated parking - SaskEnergy spent over $4.3 million in renovations to make the property suit its specific needs, including a control room to monitor the pipeline gas distribution throughout the province - It was only speculation that a new building could be built to accommodate SaskEnergy - "In short, the 'justice of the matter' requires that SaskEnergy benefit from specific performance; damages would be a totally inadequate remedy." - See paragraphs 160 to 167.

Counsel:

Robert W. Leurer, Q.C., Jodi R. Wildeman and and Joanne V. Colledge-Miller, for SaskEnergy Inc.;

Peter T. Bergbusch and Kevin T. Miller, for ADAG Corporation Canada Ltd. and GGG 10.

This action was heard before R.S. Smith, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina. The Court delivered the following judgment, dated May 19, 2015.

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11 practice notes
  • Digest: ADAG Corp. Canada Ltd. v SaskEnergy Inc., 2018 SKCA 14
    • Canada
    • Saskatchewan Law Society Case Digests
    • February 23, 2018
    ...the property to SaskEnergy. He determined that damages were not an acceptable remedy and granted SaskEnergy specific performance (see: 2015 SKQB 143). In a separate fiat, the judge adjusted the purchase price to be paid by SaskEnergy including amounts for rent paid since the attempt to exer......
  • ADAG Corporation Canada Ltd. v SaskEnergy Incorporated, 2018 SKCA 14
    • Canada
    • Court of Appeal (Saskatchewan)
    • February 23, 2018
    ...Madam Justice Jackson In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr. Justice Caldwell On Appeal From: 2015 SKQB 143, Regina Appeal April 3, 2017 Counsel: Bradley Berg, Peter Bergbusch and Helen Richards for the Appellants Robert Leurer, Q.C., Jodi Wildeman, and Jar......
  • Saskenergy Incorporated v ADAG Corporation Canada Ltd, 2019 SKQB 263
    • Canada
    • Court of Queen's Bench of Saskatchewan (Canada)
    • October 2, 2019
    ...partners of GGG 10. [4] At trial, I determined, inter alia, that the OTP was enforceable (SaskEnergy Inc. v ADAG Corporation Canada Ltd., 2015 SKQB 143, 475 Sask R 65 ) [Trial Decision]. The defendants appealed the Trial Decision, and in ADAG Corporation Canada Ltd. v SaskEnergy Incorporat......
  • CNS DEVELOPMENT INC. v. LEE, 2019 SKQB 296
    • Canada
    • Court of Queen's Bench of Saskatchewan (Canada)
    • November 15, 2019
    ...Management Inc. v Seven Oaks Inn Partnership, 2014 SKCA 106, [2015] 5 WWR 129, and SaskEnergy Inc. v ADAG Corporation Canada Ltd., 2015 SKQB 143, 475 Sask R (a)  Interpretation of the Agreements [62]              &#x......
  • Request a trial to view additional results
9 cases
  • ADAG Corporation Canada Ltd. v SaskEnergy Incorporated, 2018 SKCA 14
    • Canada
    • Court of Appeal (Saskatchewan)
    • February 23, 2018
    ...Madam Justice Jackson In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr. Justice Caldwell On Appeal From: 2015 SKQB 143, Regina Appeal April 3, 2017 Counsel: Bradley Berg, Peter Bergbusch and Helen Richards for the Appellants Robert Leurer, Q.C., Jodi Wildeman, and Jar......
  • Saskenergy Incorporated v ADAG Corporation Canada Ltd, 2019 SKQB 263
    • Canada
    • Court of Queen's Bench of Saskatchewan (Canada)
    • October 2, 2019
    ...partners of GGG 10. [4] At trial, I determined, inter alia, that the OTP was enforceable (SaskEnergy Inc. v ADAG Corporation Canada Ltd., 2015 SKQB 143, 475 Sask R 65 ) [Trial Decision]. The defendants appealed the Trial Decision, and in ADAG Corporation Canada Ltd. v SaskEnergy Incorporat......
  • CNS DEVELOPMENT INC. v. LEE, 2019 SKQB 296
    • Canada
    • Court of Queen's Bench of Saskatchewan (Canada)
    • November 15, 2019
    ...Management Inc. v Seven Oaks Inn Partnership, 2014 SKCA 106, [2015] 5 WWR 129, and SaskEnergy Inc. v ADAG Corporation Canada Ltd., 2015 SKQB 143, 475 Sask R (a)  Interpretation of the Agreements [62]              &#x......
  • McCarron and Wood v. Wylie, 2018 NBQB 206
    • Canada
    • Court of Queen's Bench of New Brunswick (Canada)
    • November 6, 2018
    ...there are almost identical provisions to those found in s. 61 of the Act. 42 Recently, in SaskEnergy Inc. v. ADAG Corp. Canada Ltd., 2015 SKQB 143, [2015] S.J. No. 261 (QL), while examining the issue of indefeasibility of title, the Saskatchewan Court of Queen’s Bench [...] Specifically, th......
  • Request a trial to view additional results
1 firm's commentaries
  • Agricultural Law Netletter - Thursday, September 21, 2017
    • Canada
    • Mondaq Canada
    • September 28, 2017
    ...S.C.J. No. 71 (SCC), [1996] 2 SCR 415, which was quoted at length in SaskEnergy Inc. v ADAG Corporation Canada Ltd., [2015] S.J. No. 261, 2015 SKQB 143, 475 Sask R 65. In Semelhago, Sopinka J, speaking for the court, stated, among other 22 ...Specific performance should, therefore, not be g......
1 books & journal articles
  • Digest: ADAG Corp. Canada Ltd. v SaskEnergy Inc., 2018 SKCA 14
    • Canada
    • Saskatchewan Law Society Case Digests
    • February 23, 2018
    ...the property to SaskEnergy. He determined that damages were not an acceptable remedy and granted SaskEnergy specific performance (see: 2015 SKQB 143). In a separate fiat, the judge adjusted the purchase price to be paid by SaskEnergy including amounts for rent paid since the attempt to exer......

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