Strategy Summit Ltd. v. Remington Development Corp., (2011) 523 A.R. 329 (QB)

• Judge: Verville, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 08, 2011
• Citations: (2011), 523 A.R. 329 (QB);2011 ABQB 549

Strategy Summit  v. Remington Dev. Corp. (2011), 523 A.R. 329 (QB)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. SE.097

Strategy Summit Ltd. (plaintiff) v. Remington Development Corporation (defendant)

(0601 01094; 2011 ABQB 549)

Indexed As: Strategy Summit Ltd. v. Remington Development Corp.

Alberta Court of Queen's Bench

Judicial District of Calgary

Verville, J.

September 8, 2011.

Summary:

Strategy Summit Ltd. entered into an offer to purchase with Remington Development Corporation, to purchase a portion of unsubdivided contaminated lands. The offer was contingent on Remington obtaining subdivision approval and a Phase III environmental report. Remington failed to obtain either within the time frame set out in the offer and refused to grant Strategy's request for an extension. Strategy registered a caveat, and sued for specific performance or damages in the alternative. Remington alleged that the caveat had prevented it from dealing with the lands, and claimed resulting damages by way of counterclaim.

The Alberta Court of Queen's Bench dismissed the claim and the counterclaim. The court found that: (1) Remington acted in good faith and used reasonable commercial efforts; (2) Strategy had reasonable cause for filing the caveat, and Remington had not established that it suffered a loss as a result of the filing; and (3) if it had been established that Remington did not act in good faith or use reasonable commercial efforts, Strategy would not have been entitled to specific performance, but would have been entitled to damages based on a price of $350,000 per acre.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The plaintiff (Strategy) asserted that the defendant (Remington) failed to consider in good faith the plaintiff's requests for extension of the timelines in the offer to purchase - The Alberta Court of Queen's Bench stated that "[i]n my view, from reviewing the authorities, whether or not there is good faith is dependent on the facts, circumstances and contractual terms. The concept of good faith in the commercial context does not preclude a party from considering its own self interest. It does connote at a minimum that Remington would not dismiss "out of hand" a request for an extension, or refuse it for reasons not within the reasonable contemplation of the parties at the time of execution of the Offer. The onus is upon Strategy to establish, either through direct or circumstantial evidence, that Remington did not consider in good faith its request for an extension" - See paragraph 187.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The plaintiff (Strategy) entered into an offer to purchase with the defendant (Remington) to purchase a portion of unsubdivided contaminated lands - The offer was contingent on Remington obtaining subdivision approval and a Phase III environmental report - Remington failed to obtain either within the time frame set out in the offer - The offer required Remington consider a request for an extension of the timelines in good faith - Remington refused to grant Strategy's request for an extension - Strategy asserted that Remington failed to consider its request in good faith - The Alberta Court of Queen's Bench found that the phrase "in good faith consider" did not require Remington to commit to an extension it knew it could not meet, nor to an extension which would have tied up the lands for over a year past the deadlines initially contemplated - "In my view, 'in good faith consider' implies a discretion, and in exercising that discretion Remington was not bound to consider only Strategy's interests. The fact that market conditions were rising is merely one among many relevant factors before the Court. The reality was that with remediation and subdivision being indeterminate, any effective extension would have to have been very lengthy, if not indefinite. If Remington had information to the effect that the deal could close within a couple of months, I might be inclined to find that refusal of a corresponding extension would, in the circumstances, have demonstrated bad faith" - See paragraph 199.

Contracts - Topic 3519

Performance or breach - Obligation to perform - Reasonable commercial efforts clause - The plaintiff entered into an offer to purchase with the defendant to purchase a portion of unsubdivided contaminated lands - The offer was contingent on the defendant obtaining subdivision approval and a Phase III environmental report - The defendant failed to obtain either within the time frame set out in the offer and refused to grant the plaintiff's request for an extension - The plaintiff asserted that the defendant acted in bad faith and claimed for specific performance or in the alternative damages - The Alberta Court of Queen's Bench dismissed the claim - "'Reasonable commercial efforts' is something less than 'best efforts'" - The court found that the defendant used reasonable commercial efforts within the time lines set out in the offer, and that it continued to use reasonable commercial efforts to ultimately obtain environmental and subdivision approval - See paragraph 176.

Contracts - Topic 4110

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

Contracts - Topic 7415.1

Interpretation - General principles - Good faith - [See first Contracts - Topic 3502 ].

Evidence - Topic 465

Functions of counsel, judge and jury - Acceptance of opinion evidence - [See Evidence - Topic 7018 ].

Evidence - Topic 7018

Opinion evidence - Expert evidence - Special knowledge and experience - What constitutes - A commercial real estate lawyer (Durante) gave expert opinion evidence on behalf of the defendant with respect to commercial real estate practice in the context of a purchase agreement that dealt with contaminated lands and subdivision - His evidence dealt with the difference between an offer to purchase and option to purchase, true conditions precedent, and waiver of conditions, where the contract contained an environmental clean-up condition and subdivision condition - The plaintiff submitted that Durante's evidence was not relevant and should be ruled inadmissible - The Alberta Court of Queen's Bench admitted the evidence - Durante had significant experience and expertise with respect to the type of contract entered into between the parties - While certain aspects of his evidence were not the proper subject of expert testimony, such as principles of contract law and the desire of parties to a real estate transaction to gain the benefit of a rising or falling market, "to the extent that his evidence was outside the experience and knowledge of the Court, it was of assistance and accordingly was both relevant and admissible" - See paragraphs 131 to 134.

Libel and Slander - Topic 8204

Slander of title - Elements of action - The plaintiff registered a caveat on the title to the defendant's lands and claimed specific performance - The defendant, by way of counterclaim, asserted that the plaintiff wrongfully filed its caveat and did so strictly for leverage - The Alberta Court of Queen's Bench stated that a statutory cause of action pursuant to s. 144 of the Land Titles Act, and the common law cause of action of slander of title was "essentially the same cause of action as the test is whether the party filing the caveat acted reasonably" - The case law established that the "the test is whether or not a party had a reasonable belief at the material time that it had an interest in the property, and that a caveat may reasonably be filed, notwithstanding that ultimately the caveator is not found to be entitled to specific performance. As well, malice must be established in order to rely on slander of title" - In the case at bar, the court was satisfied that the plaintiff reasonably believed that it had a sufficient interest in the land at the time it filed the caveat, and that malice on its part had not been established - See paragraphs 203 to 208.

Real Property - Topic 7937

Title - Registration of instruments, etc. - Caveats or cautions - Filing without reasonable cause - [See Libel and Slander - Topic 8204 ].

Real Property - Topic 7946

Title - Registration of instruments, etc. - Caveats, cautions or miscellaneous interests - Damages for wrongful filing - The plaintiff registered a caveat on the title to the defendant's unsubdivided land (the Western Block) - The defendant asserted that the caveat prevented it from developing, selling, financing or otherwise dealing with the Western Block, and claimed resulting damages by way of counterclaim - It relied on two damage scenarios, namely, loss of profit which would have been realized from developing the Western Block in conjunction with the Eastern Block, or alternatively losing the opportunity to sell the Western Block as raw land at the peak of the market - The Alberta Court of Queen's Bench, in case it was wrong in concluding that the caveat was reasonably filed, determined that the defendant had not established that it had suffered a loss sufficient to support a claim for damages - Both scenarios were based on speculation and assumptions - See paragraphs 209 to 213.

Sale of Land - Topic 8551

Remedies of purchaser - Specific performance - When available - The plaintiff entered into an offer to purchase with the defendant to purchase a portion of unsubdivided land (the Western Block) - It envisaged developing an arena complex (the Arena Concept) - The offer was contingent on the defendant obtaining subdivision approval and an environmental report - The defendant failed to obtain either within the time frame set out in the offer and refused to grant an extension - The plaintiff sued for specific performance, asserting that the land was unique with respect to the Arena Concept - The Alberta Court of Queen's Bench held that the plaintiff was not entitled to specific performance - The plaintiff clearly understood that the Arena Concept might never be approved by the City - The court found on a balance of probabilities that the Arena Concept would not have gone ahead as part of the City's arena development strategy - It was speculative that the plaintiff would or could have pursued the project without the City's support - Further, one purpose for the plaintiff entering into the agreement was the potential sale of the land - "[T]he Arena Concept was always simply a possibility and although [the plaintiff] might have been able to pull a rabbit out of the hat at some point, on a balance of probabilities assessment, the Western Block was ultimately merely good commercial property. I find that it was not unique and irreplaceable" - See paragraphs 215 to 222.

Specific Performance - Topic 506

When available - General principles - Contractual obligations - [See Sale of Land - Topic 8551 ].

Cases Noticed:

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 131].

Taubner Estate, Re (2010), 485 A.R. 98; 2010 ABQB 60, refd to. [para. 133].

Best et al. v. Hoskins et al. (2006), 390 A.R. 1; 2006 ABQB 58, refd to. [para. 138].

C.A.H. v. M.W.S. (2008), 439 A.R. 379; 2008 ABQB 34, refd to. [para. 140].

Kusick v. Wildeboer et al. (1987), 81 A.R. 131 (Q.B.), refd to. [para. 144].

Anderson et al. v. Canada Safeway Ltd. (2004), 357 A.R. 6; 334 W.A.C. 6; 2004 ABCA 239, refd to. [para. 144].

Digger Excavating (1983) Ltd. v. Bowlen (2001), 286 A.R. 291; 253 W.A.C. 291; 2001 ABCA 214, refd to. [para. 157].

Barnett v. Harrison, [1976] 2 S.C.R. 531, refd to. [para. 159].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (No. 3) (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), refd. to. [para. 162].

364511 Ontario Ltd. v. Darena Holdings Ltd. (1998), 55 O.T.C. 12 (Gen. Div.), affd. (1999), 120 O.A.C. 280 (C.A.), refd to. [para. 172].

Nelson v. 535945 British Columbia Ltd. (2007), 63 R.P.R.(4th) 224; 2007 BCSC 1544, refd to. [para. 172].

Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072; 20 N.R. 500; 9 A.R. 308, refd to. [para. 179].

Shenkman Corp. v. Pondev Gardens Ltd. et al., [2005] O.T.C. Uned. 53; 27 R.P.R.(4th) 302 (Sup. Ct.), refd to. [para. 179].

Mesa Operating Limited Partnership v. Amoco Canada Resources Ltd. (1994), 149 A.R. 187; 63 W.A.C. 187 (C.A.), leave to appeal denied (1994), 179 N.R. 80; 162 A.R. 318; 83 W.A.C. 318; 21 Alta. L.R.(3d) xxxvii (S.C.C.), refd to. [para. 179].

Greenberg v. Montreal Trust Co., Meffert and Melfi (1985), 9 O.A.C. 69; 50 O.R.(2d) 755 (C.A.), leave denied [1985] 2 S.C.R. ix; 64 N.R. 156, refd to. [para. 179].

Salah et al. v. Timothy's Coffees of the World Inc., [2009] O.T.C. Uned. P94; 65 B.L.R.(4th) 235 (Sup. Ct.), affd. (2010), 268 O.A.C. 279; 2010 ONCA 673, refd to. [para. 179].

Caldwell & Ross Ltd. v. New Brunswick (Minister of Transportation) (2002), 252 N.B.R.(2d) 112; 658 A.P.R. 112; 2002 NBQB 153, affd. (2003), 256 N.B.R.(2d) 395; 670 A.P.R. 395; 2003 NBCA 7, refd to. [para. 180].

Muhammad v. Mental Health Program Services of Metropolitan Toronto et al., [2006] O.T.C. 751 (Sup. Ct.), affd. [2008] O.A.C. Uned. 303; 2008 ONCA 322, refd to. [para. 180].

Lounsbury v. 712125 Ontario Ltd. (1998), 67 O.T.C. 1 (Gen. Div.), refd to. [para. 180].

TSP-Intl Ltd. et al. v. Mills et al., [2005] O.T.C. 132; 74 O.R.(3d) 461 (Sup. Ct.), revd. (2006), 212 O.A.C. 66 (C.A.), refd. to. [para. 180].

San Francisco Gifts Ltd. et al., Re (2005), 378 A.R. 361; 2005 ABQB 91, refd to. [para. 180].

Gichuru v. Palmar Properties Inc. et al., [2011] B.C.T.C. Uned. 827; 2011 BCSC 827, refd to. [para. 180].

Nickol v. M.P. Crushing Ltd. (2003), 340 A.R. 149; 2003 ABQB 572, refd to. [para. 206].

Re/Max Real Estate Ltd. v. Dachlter (1984), 53 A.R. 383 (Q.B.), refd to. [para. 206].

Singh v. 862500 Alberta Ltd. (2010), 490 A.R. 56; 496 W.A.C. 56; 2010 ABCA 117, refd to. [para. 206].

MB Realty Services Inc. v. Lehndorff Management Ltd. et al. (1999), 254 A.R. 78; 1999 ABQB 856, refd to. [para. 206].

Neher v. Marathon Homes Inc. (2011), 509 A.R. 295; 2 R.P.R.(5th) 249; 2011 ABQB 92, refd to. [para. 206].

Fayad and Fayad v. Pacula and Pacula, [1974] 2 W.W.R. 446 (Alta. D.C.), refd to. [para. 206].

Norfolk v. Aikens (1989), 41 B.C.L.R.(2d) 145 (C.A.), refd to. [para. 215].

1244034 Alberta Ltd. v. Walton International Group Inc. et al. (2007), 422 A.R. 189; 415 W.A.C. 189; 82 Alta. L.R.(4th) 259; 2007 ABCA 372, leave denied (2008), 387 N.R. 383; 400 A.R. 149 (S.C.C.), refd to. [para. 216].

Covlin v. Minhas et al. (2009), 469 A.R. 250; 470 W.A.C. 250; 2009 ABCA 404, refd to. [para. 216].

Dodge (John E.) Holdings Ltd. v. 805062 Ontario Ltd. (2003), 168 O.A.C. 252 (C.A.), leave denied (2003), 326 N.R. 195; 194 O.A.C. 197 (S.C.C.), refd to. [para. 216].

Roma Construction Ltd. v. Excel Venture Management Inc., [2007] A.R. Uned. 509; 81 Alta. L.R.(4th) 77; 2007 ABQB 396, refd to. [para. 216].

365733 Alberta Ltd. et al. v. Tiberio et al. (2008), 439 A.R. 371; 2008 ABQB 328, affd. (2008), 440 A.R. 177; 438 W.A.C. 177; 2008 ABCA 341, refd to. [para. 216].

410675 Alberta Ltd. v. Trail South Developments Inc. et al. (2001), 293 A.R. 181; 257 W.A.C. 181; 2001 ABCA 274, leave to appeal dismissed (2002), 293 N.R. 190; 312 A.R. 340; 281 W.A.C. 340 (S.C.C.), refd to. [para. 216].

Statutes Noticed:

Land Titles Act, R.S.A. 2000, c. L-4, sect. 144 [para. 205].

Authors and Works Noticed:

Burton, Steven J., Breach of Contract and the Common Law Duty to Perform in Good Faith (1980), 94 Harv. L. Rev. 369, generally [para. 180]; p. 373 [para. 184].

Hall, Geoff, Canadian Contractual Interpretation Law (2007), pp. 209-210 [para. 173].

Counsel:

Graham McLennan, Q.C., and Joseph Oppenheim (McLennan Ross), for the plaintiff/defendant by counterclaim;

Grant Vogeli, Michael Donaldson and Marika Strobl (Burnet, Duckworth & Palmer LLP), for the defendant/plaintiff by counterclaim.

This action was heard on May 4 to 25, 2011, before Verville, J., of the Alberta Court of Queen's Bench, who delivered the following judgment, with reasons, dated at Edmonton, Alberta, on September 8, 2011.