CIDC Mortgage Corporation v., 2011 ABQB 352

Court of Queen ’ s Bench of Alberta Citation: CIDC Mortgage Corporation v. 1279375 Alberta Ltd., 2011 ABQB 352 Date: 20110527 Docket: 0703 08354 Registry: Edmonton Between: CIDC Mortgage Corporation and Farrah Choudhary Plaintiffs - and - 1279375 Alberta Ltd., Baltic Holdings Ltd., Gerhard Messerschmidt and Jeannette Messerschmidt Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice K.G. Nielsen _______________________________________________________ I.

Introduction [ 1 ] This action arises out of a failed purchase and sale of lands situated in Stony Plain, Alberta. The facts with respect to the failed purchase and sale were not in dispute and the matter, therefore, proceeded as a

Summary Trial.

II. Background The Lands [ 2 ] The legal description of the lands involved is as follows: The North East Quarter of

Section Twenty Five

(25) Township Fifty Two

(52) Range Twenty Eight

(28) West of the Fourth Meridian, Containing 64.7 Hectares (160 Acres) more or less. Excepting thereout. Hectares (acres) more or less.

A) All that portion described as follows: Commencing at the north west corner of the said quarter section; Thence easterly along the north boundary thereof 336 feet; Thence southerly and parallel to the west boundary of the said quarter

section 317.4 feet; thence westerly and parallel to the said north boundary to the said west boundary, thence northerly along the said west boundary to the point of commencement, containing . . . . . . . . . 0.99 2.44

B) Plan 7520929 - subdivision 31.42 77.65

C) Plan 9924425 - road 0.322 0.80

D) Plan 9924427 - public work 2.851 7.04 Excepting thereout all mines and minerals and the right to work the same. (The Lands). The Parties [ 3 ] 1041813 Alberta Ltd. was the registered owner of the Lands. After the Certificate of Title to the Lands was registered in the name of 1041813 Alberta Ltd., it changed its name to Baltic Holdings Ltd. These parties shall be collectively referred to as Baltic. [ 4 ] 1279375 Alberta Ltd. (127) is a company incorporated in the Province of Alberta. Title to the Lands was transferred by Baltic to 127.

[ 5 ] Gerhard Messerschmidt and Jeannette Messerschmidt are principals of Baltic and 127. [ 6 ] Farrah Choudhary (Choudhary) entered into a Commercial Real Estate Purchase Contract with Baltic in relation to the purchase of the Lands (the Transaction). [ 7 ] Choudhary entered into a sub purchase agreement with 341752 Alberta Ltd. (341) in relation to the purchase of the Lands. [ 8 ] 341 entered into a sub-sub purchase agreement with CIDC Mortgage Corporation (CIDC) in relation to the purchase of the Lands. [ 9 ] Elegant Development Inc. (Elegant) purchased the Lands from Baltic. [ 10 ] Decker Properties Inc. (Decker) was the real estate agent acting for Baltic in the Transaction.

The Solicitors [ 11 ] Solicitor G acted for Choudhary throughout the Transaction. [ 12 ] Solicitor D acted for Baltic for a portion of the Transaction. [ 13 ] Solicitor M acted for Baltic and 127 for a portion of the Transaction and throughout the litigation arising in relation to the Transaction. Chronology [ 14 ] On May 31, 2006, Baltic and Choudhary entered into a Commercial Real Estate Purchase Contract (the Choudhary Contract) in relation to the Transaction. The purchase price was $1,656,000. Total deposits of $125,000 were paid.

The closing date was to be October 30, 2006. [ 15 ] On October 6, 2006 Choudhary entered into a Commercial Real Estate Purchase Contract with 341 (the 341 Contract) with respect to the sub purchase of the Lands. The purchase price was $1,800,000. The closing date was to be December 15, 2006. [ 16 ] On October 24, 2006, Solicitor D on behalf of Baltic forwarded, under certain trust conditions, a Transfer of Land to Solicitor G. As stated, the closing date on the Transaction was October 30, 2006. The cash to close the Transaction was identified.

Solicitor D in his trust letter stated that “it is imperative to our client that the transaction be completed on the 30th”. [ 17 ] On October 27, 2006, Baltic executed an Amendment to Purchase Contract (the Amendment) pursuant to which the closing date on the Choudhary Contract was extended to November 30, 2006. The Amendment was provided by Baltic on the condition that Choudhary provide an additional $50,000 non-refundable deposit (the Additional Deposit). Choudhary had until October 31, 2006 to pay the Additional Deposit. [ 18 ] On October 31, 2006, Choudhary paid the Additional Deposit to Decker.

[ 19 ] On October 31, 2006, Baltic entered into a Commercial Real Estate Purchase Contract with Elegant for the purchase of the Lands (the Elegant Contract). The purchase price of the Lands pursuant to the Elegant Contract was $2,200,000. The closing date was February 26, 2007. The Elegant Contract had a handwritten note placed on it which read “back up offer at this point”. [ 20 ] On November 3, 2006, 127 was incorporated. [ 21 ] On November 3, 2006, Baltic executed a Transfer of Land with respect to the Lands to 127.

The consideration on this Transfer of Land was shown as being the sum of $1,600,000. 127 provided a Promissory Note to Baltic in the sum of $1,600,000.

The Promissory Note was dated November 3, 2006. [ 22 ] On November 7, 2006, Solicitor M wrote to Decker advising that Baltic took the position that the Amendment was void as no proof of payment of the Additional Deposit had been provided confirming that the Additional Deposit had been paid by midnight on October 30, 2006. [ 23 ] On November 9, 2006, Decker provided Solicitor G with documents confirming that the Additional Deposit had been received by Decker on October 31, 2006.

The documents received by Solicitor G indicated that such confirmation had previously been provided to “Gerhard and Jeannette” and to Solicitor D. [ 24 ] On November 10, 2006, Solicitor G wrote to Solicitor M confirming that the Additional Deposit had been paid on October 31, 2006 and that Solicitor D had been provided with proof of such payment.

Solicitor G advised that Choudhary would strenuously resist any attempt by Baltic not to fulfill its contractual obligations. [ 25 ] On November 17, 2006, Solicitor G wrote to Solicitor D seeking amendments to the trust conditions imposed in the letter from Solicitor D dated October 24, 2006, so as to permit the closing of the sale of the Lands to Choudhary given the new closing date of November 30, 2006. [ 26 ] On November 29, 2006, Solicitor G wrote to both Solicitor D and Solicitor M indicating that it was his understanding that both solicitors continued to represent Baltic.

He advised that Choudhary continued to be prepared to complete the purchase of the Lands but was unable to do so as Solicitor G had not received a Transfer of Land under trust conditions consistent with the Amendment. Solicitor G indicated that as he had had no response to his previous correspondence, he concluded that Baltic continued to hold the position that it would not be completing the sale and in the circumstances, therefore, Choudhary had no obligation to tender the closing funds.

Solicitor G indicated that he anticipated receiving instructions to commence an action against Baltic for specific performance or damages. [ 27 ] On November 29, 2006, Solicitor M wrote to Solicitor G indicating that prior to providing any conveyance documents in trust with respect to the Lands, he required “proof of payment of the Additional Deposit”. [ 28 ] On November 30, 2006, Solicitor G wrote to Solicitor M stating that Choudhary had no obligation to provide Baltic with proof that the Additional Deposit was in fact paid.

Notwithstanding this position, Choudhary had provided to Solicitor G a copy of the bank draft representing the Additional Deposit and Solicitor G provided a copy of same to Solicitor M. [ 29 ] On December 1, 2006, Solicitor G wrote to Solicitor M with a copy to Solicitor D advising that as he had had no response to his letter of November 30, 2006 he presumed that the Transaction would not be closing and, accordingly, Choudhary would be commencing a specific performance action. [ 30 ] Later on December 1, 2006 Solicitor M faxed a letter to Solicitor G advising that he had met with his clients on the morning of December 1, 2006 and that they wished to proceed with the Transaction.

In the letter, Solicitor M stated, “Stop your worrying. I will get the Transfer to you on or before Tuesday.”

[ 31 ] On December 4, 2006, Solicitor G wrote to Solicitor M advising that he did not require a Transfer of Land as Solicitor D had provided such a document when it was contemplated that the Transaction would close on an earlier date. Solicitor G simply requested a new Statement of Adjustments and trust conditions replacing the trust conditions in Solicitor D’s letter of October 24, 2006. [ 32 ] On December 5, 2006, Solicitor M forwarded a letter to Solicitor G enclosing a Statement of Adjustments and a Transfer of Land executed by 127 as registered owner of the Lands, with the Transferee in blank.

The letter from Solicitor M provided, inter alia , as follows: The enclosed documentation is forwarded to you upon the following express trust conditions: 1. That you will provide our office with the cash required on closing shown in the enclosed Statement of Adjustments, by 12:00 noon on the 13 th day of December 2006, for unconditional release to our clients. [ 33 ] The letter concluded as follows: In the event you find any of the foregoing trust conditions to be unreasonable or otherwise require alteration, we must be notified immediately.

Otherwise, we will presume that you have accepted our trust conditions and are proceeding accordingly. We trust you will find the above to be in order, however, should you have any questions or concerns, please do not hesitate to contact the writer... [ 34 ] The letter from Solicitor M of December 5, 2006, was received by Solicitor G on December 6, 2006. [ 35 ] On December 12, 2006, Solicitor G wrote to Solicitor M with respect to details relating to closing the transaction.

He stated, inter alia , as follows: Finally, as this is a cash transaction and I anticipate sending the entire cash to close to you prior to use of your Transfer of Land, it would appear that a Transfer Back is unnecessary. [ 36 ] On December 13, 2006, Solicitor G wrote to Solicitor M advising that he had not yet received the cash to close.

In that letter, Solicitor G stated as follows: I had been advised that I would be in receipt [sic] the cash to close funds in sufficient time to meet you [sic] deadline for payment of noon today; however, I have just been contacted and advised that there is a delay which may delay the payment of funds to my office by as much as 48 hours. I am awaiting confirmation of the exact length of the delay and was advised that I would know before noon today.

Given that the Transfer and trust conditions were not received until December 6, after the closing date, and the requirement on your client as set out in clause 8.4 of the Contact, I do not think it unreasonable to seek an extension of time to close. Would you please canvass that with your client and I will get back to you as soon as I am able with respect to the length of time that is in fact required. [ 37 ] On December 13, 2006, Solicitor M wrote to Solicitor G and advised that his clients considered the Choudhary Contract void because of the failure of Choudhary to pay the cash to close.

Solicitor M demanded the immediate return of the Transfer of Land unused. [ 38 ] On December 13, 2006, Solicitor G wrote to Solicitor M stating, inter alia , as follows:

Your client chose not to close on November 30, 2006 and cannot arbitrarily impose a date for closing which is unreasonable. [ 39 ] Solicitor G went on to advise that if the Transaction did not close he anticipated receipt of instructions from Choudhary to commence an action for specific performance. [ 40 ] On December 14, 2006 Solicitor G returned the Transfer of Land unused to Solicitor M. [ 41 ] On December 21, 2006, Solicitor G wrote to Solicitor M advising that he now held the full cash to close as identified on the Statement of Adjustments provided by Solicitor M and that he was prepared to deposit those funds in Solicitor M’s trust account upon receipt of a registerable Transfer of Land from the current registered owner in blank with authority to insert the purchaser’s description of Choudhary’s choice.

Solicitor G indicated that if he did not receive a Transfer of Land by the close of business on December 22, 2006, he would return the cash to close to avoid further interest being incurred.

He repeated that if the Transaction did not close, his client would commence a specific performance action. [ 42 ] On December 21, 2006, Solicitor G was aware that 341 had entered into a purchase and sale transaction with CIDC with respect to the sale of the Lands to CIDC. [ 43 ] A registerable Transfer of Land was not received by Solicitor G by December 22, 2006, and the sale of the lands to Choudhary or subsequent purchasers was not completed. [ 44 ] On April 19, 2007, Choudhary assigned her interests pursuant to the Choudhary Contract and the 341 Contract to CIDC. [ 45 ] Caveats were registered against the Certificate of Title to the Lands with respect to the various purchase and sale agreements.

The Caveats were discharged pursuant to the Order of Shelley J. dated June 8, 2007. By the terms of that Order, 127 was directed to post the sum of $175,000 with its solicitor as security in respect of the Caveats which were discharged. In addition, the solicitors for 127 were directed to hold all deposits in respect of the sale of the Lands in their trust account. The security and the deposits were to be held pending the outcome of litigation by Choudhary which she was directed by Shelley J. to commence. [ 46 ] On June 28, 2007, Choudhary and CIDC commenced this action. III. Issues A.

What is the effect of the Transaction not closing on November 30, 2006? B. Was Baltic entitled to unilaterally impose a new closing date on Choudhary? C. Was time of the essence with respect to the new closing date? D. Was the closing date unilaterally imposed by Baltic reasonable? E. What remedy, if any, are the Plaintiffs entitled to? [ 47 ] In the Briefs submitted with respect to this

Summary Trial and in argument, the parties raised several other issues, particularly:

[ 47 ] In the Briefs submitted with respect to this

Summary Trial and in argument, the parties raised several other issues, particularly: the application of the Statute of Elizabeth , 1571 (13 Eliz. 1), c. 5 to the circumstances arising in this matter, and whether each of the parties to the Choudhary Contract had breached clause 7.2 of the Choudhary Contract by entering into agreements with subsequent purchasers in relation to the Lands. In light of my findings herein, and Baltic’s concession as outlined under heading IV E hereof, it is not necessary to consider these other issues. IV.

Terms of Agreements [ 48 ] The agreements that are particularly relevant to the issues before me are the Choudhary Contract, the Amendment and the 341 Contract. The terms from each of these agreements that are germane to the issues are set out below. The Choudhary Contract 2.2 The Buyer hereby offers to purchase the Property for the sum of $1,656,000 (the Purchase Price). 3.5 The Deposit shall be held in trust for both the Seller and the Buyer and shall be . . . (

d) refunded forthwith to the Buyer upon the Buyer’s cheque clearing the brokerage’s trust account if a condition is not satisfied or waived (as per

Section 4) or the Seller fails to perform this Contract; and (

e) forfeited to the Seller if this offer is accepted and all conditions are satisfied or waived and the Buyer fails to perform this Contract. 7.1 All time periods, deadlines and dates in this Contract shall be strictly followed and enforced. . . 7.2 Neither the Buyer or Seller shall assign its interest in the Property without the written approval of the other, such approval not to be unreasonably withheld. 8.1 Subject to compliance with the terms hereof, possession of the Property shall be available and given to the Buyer on or before 12:00 noon on the 30 th day of October 2006 (the Completion Day), subject to the rights of the Accepted Tenancies, if any. . . 8.3 Closing documents shall: (

a) consist of a transfer of land (the Transfer) in registerable form together with all applicable conveyancing documents normally expected in a commercial transaction of this nature; (

b) include estoppel certificates for each of the Accepted Tenancies (if applicable); and (

c) be prepared at the expense of the Seller and delivered to the Buyer’s lawyer within a reasonable time to confirm registration prior to the Completion Day. 8.4 In the event the Seller fails to deliver the Transfer to the Buyer’s lawyer within such reasonable time, then the Buyer shall not be

obliged to pay interest on that portion of the cash to close attributable to the Buyer’s own funds, excluding mortgages, provided that those funds are paid to Seller’s lawyer in trust, until the Buyer has a reasonable time in which to register the Transfer. 8.6 All money due and owing to the Seller including G.S.T., if applicable, shall be paid to the Seller’s lawyer on or before the Completion Day.

If the Seller agrees to accept payment after the Completion Day, the Buyer shall pay interest at a rate of 3% per annum above the prime rate set by the Alberta Treasury Branch on all monies owing to the Seller, from the Completion Day to and including the date that the monies owing have been unconditionally paid. The Amendment The following amendments shall be made to the Purchase Contract: 1. Amend 1. The Completion Date is extended to Nov. 30, 2006. 2. The Buyer will now pay to Decker Properties Management Inc. an additional non-refundable deposit in the amount of $50,000.00. 3.

The Buyers have until Oct. 31, 2006, to pay this additional deposit. 2. All other provisions in the Contract remain in full force and effect. 341 Contract 2.2 The Buyer offers to purchase the Property for the sum of $1,800,000 (the Purchase Price). V. Analysis A.

What Is the Effect of the Transaction Not Closing on November 30, 2006? [ 49 ] Clause 7.1 of the Choudhary Contract provided that “All time periods, deadlines, and dates in the Contract shall be strictly followed and enforced.” This provision in the standard form Alberta Real Estate Association Commercial Real Estate Purchase Contract has replaced the usual “time is of the essence” clause. Clauses similar to clause 7.1 have been found to signify that time was of the essence in a number of Alberta decisions: Valley View Hospitality Investments Ltd. v.

ARI Arirang Ltd. , 2004 ABQB 41 at para. 4 ; Calvert Home Mortgage Investment Corp. v. Ro/Lin Holdings Ltd. , 2007 ABCA 259 , 417 A.R. 315 at para. 3 ; and Ansell v. Sivacoe , 2007 ABQB 327 , 57 R.P.R. (4th) 137 at para. 17 . [ 50 ] The Amendment continued all clauses of the Choudhary Contract except as amended. Therefore, clause 7.1 continued and time was of the essence for the Transaction to close on November 30, 2006.

[ 51 ] Both Baltic and Choudhary had failed to act in accordance with their obligations pursuant to the Choudhary Contract as of November 30, 2006. Baltic had failed to deliver the closing documents to Choudhary’s lawyer within a reasonable time so as to permit confirmation of registration prior to the Completion Day, being November 30, 2006.

Choudhary had failed to deliver to Baltic’s lawyer all monies due and owing to Baltic on or before the Completion Day. [ 52 ] The issue then is the effect of these failures to act in accordance with the obligations pursuant to the Choudhary Contract. [ 53 ] Pursuant to clause 8.4 of the Choudhary Contract the failure on the part of Baltic to deliver the Transfer of Land within a reasonable time resulted in Choudhary not being obliged to pay interest on that portion of the cash to close attributable to Choudhary’s own funds (that is funds excluding mortgages), provided those funds were paid to Baltic’s lawyer in trust.

Therefore, the failure by Baltic to provide the necessary closing documents did not bring the Choudhary Contract to an end. Rather, it simply impacted on Baltic’s ability to seek interest on funds due and owing. [ 54 ] Pursuant to clause 8.6 of the Choudhary Contract, the failure by Choudhary to forward all monies due and owing to Baltic’s lawyer on or before November 30, 2006 could result in the Choudhary Contract being brought to an end.

This is so as time remained of the essence in relation to the Completion Day of November 30, 2006. [ 55 ] In my view, for two reasons, the Choudhary Contract was not brought to an end due to the failure of Choudhary to pay the cash to close by November 30, 2006. [ 56 ] First, Solicitor G wrote several letters setting out Choudhary’s position in this matter.

On November 10, 2006, Solicitor G wrote to Solicitor M taking the position that Choudhary was resisting any attempt by Baltic not to fulfill its contractual obligations to complete the Transaction based on Baltic’s apparent position that the Additional Deposit had not been paid in accordance with the terms of the Amendment. The Additional Deposit had been paid by Choudhary to Decker on October 31, 2006. The letter of November 10, 2006, was followed by a letter on November 17, 2006, from Solicitor G to Solicitor D seeking an amendment to the trust conditions set out in Solicitor D’s letter of October 24, 2006.

A copy of the letter of November 10, 2006, to Solicitor M was enclosed. On November 29, 2006, Solicitor G wrote to both Solicitor D and Solicitor M advising that no response had been received to either of his letters of November 10 or 17, 2006.

Solicitor G stated in that letter “I can only conclude that the Vendor [Baltic] continues to hold the position that ‘the Purchasers have not complied and therefore Baltic considers the Amendment and extension void’ and has no intention of completing the sale to my client.” Solicitor G went on to state that given the position being taken by Baltic, Choudhary had no obligation to tender the closing funds. [ 57 ] Based on the information conveyed to Choudhary’s solicitor, it appeared that Baltic had taken the position that Choudhary had not met the terms of the Amendment and, therefore, due to the operation of clause 7.1 of the Choudhary Contract, same was brought to a conclusion as of October 31, 2006.

Therefore, in the circumstances, as Solicitor G had had no indication to the contrary, he understood Baltic to take the position that the Choudhary Contract was at an end and there was, therefore, no reason for Choudhary to tender the closing funds. [ 58 ] V.

Di Castri, Q.C. in The Law of Vendor and Purchaser , 3 rd ed. (Toronto: Thomson Reuters Canada Ltd., 1998-), vol. 2, p. 14-37, § 616 states: The duty of a purchaser to tender the purchase money does not, in general, arise until the vendor has done that which it is incumbent on him to do to put himself in a position to complete. [ 59 ] To this point in the chronology, Baltic had made it clear that it was not intending on completing the Transaction.

There was, therefore, no reason for Choudhary to tender the closing funds. [ 60 ] Second, in any event, past the Completion Day of November 30, 2006, Baltic waived any breach of clause 8.6 of the Choudhary Contract by Choudhary.

[ 61 ] On November 29, 2006, Solicitor M wrote to Solicitor G stating that prior to providing Solicitor G with the conveyance documents in trust, he required proof of payment of the Additional Deposit. On November 30, 2006, Solicitor G provided proof of payment of the Additional Deposit although he took the position that Choudhary was under no obligation to provide proof of that deposit.

Solicitor G stated that he was awaiting reasonable trust conditions with respect to the use of the Transfer of Land which he had received from Solicitor D under his covering letter of October 4, 2006, and which remained on Solicitor G’s file. In response to this letter, Solicitor M faxed his letter of December 1, 2006, stating that his clients wished to proceed with the Transaction. [ 62 ] Di Castri at vol. 1, p. 10-7, § 385 states: Operative repudiation requires its acceptance by the innocent party.

If he elects not to accept the repudiation he keeps the contract alive for the benefit of the other party as well as his own; he remains subject to all his own obligations and liabilities under it, and enables the other party not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstance which would justify him in declining to complete it. [ 63 ] In this case, Baltic did not write to Choudhary on December 1, 2006, stating that the Choudhary Contract had been repudiated by Choudhary and that such repudiation was accepted by Baltic.

To the contrary, Solicitor M wrote to Solicitor G on December 1, 2006, advising that his clients wished to proceed with the Transaction. [ 64 ] Therefore, having regard to the manner in which the Transaction unfolded, Choudhary may very well not have been in breach of clause 8.6 of the Choudhary Contract as Baltic had provided no indication that it was prepared to complete the Transaction in light of its view that proof had not been provided that the Additional Deposit had been paid.

In any event, even if Choudhary had repudiated the contract by failing to pay the closing funds by November 30, 2006, such repudiation was not accepted by Baltic and it kept the Transaction alive by the letter from its solicitor dated December 1, 2006. B.

Was Baltic entitled to unilaterally impose a new closing date on Choudhary? [ 65 ] Di Castri at vol. 2, p. 12-99, § 454 states with respect to the unilateral imposition of a closing date: ...[w]hen both parties let the time go by, and one of the parties wishes to reinstate time as of the essence, it is necessary to service a notice on the other party, fixing a new date for closing which must be reasonable, and stating that time is of the essence with respect to the new date. [ 66 ] This reasoning has been followed in Alberta in considering new dates for closing which have been unilaterally imposed by one of the parties: Tanouye v.

KJM Developments Ltd. , (1980), 25 A.R. 200, [1980] A.J. No. 755 (S.C.T.D.) ; 1072194 Alberta Inc. v. Ninety North Construction & Development Inc. , 2005 ABQB 751 . [ 67 ] In his letter of December 5, 2006, Solicitor M, on behalf of Baltic, was therefore entitled to provide for a new closing date for the Transaction. However, that new closing date must be reasonable in the circumstances and it must have been conveyed to Solicitor G on behalf of Choudhary that time was of the essence once again with respect to closing the Transaction. C.

Was Time of the Essence with Respect to the New Closing Date? [ 68 ] Solicitor M in his letter of December 5, 2006, provided that the cash to close the Transaction was to be paid by 12:00 noon on December 13, 2006, for unconditional release to Baltic. The letter went on to state that in the event Solicitor G found any of the trust conditions to be unreasonable or otherwise required alteration, Solicitor M must be notified immediately.

While this letter imposed a new date with respect to the closing of the Transaction, in my view, it did not specifically convey that time was of the essence with respect to that new date. While it is fair to say that both parties wished the Transaction to close as quickly as possible, there is nothing in the evidence which would suggest that time was of the essence at the time the December 5, 2006 trust letter was forwarded.

[69] As there was no suggestion at this point that time was of the essence, there was no reason for Solicitor G to immediatelyadvise that any condition needed to be altered. In fact, the evidence of Solicitor G was that when he received the letter of December 5,2006, he “had no concerns in that the wheels then were in motion to get the funds into his trust account” (Transcript of examination ofSolicitor G on Affidavit sworn April 30, 2007 p. 28, ll. 23 and 24).

In the letter of December 13, 2006, Solicitor G stated that while hehad been advised that he would be in receipt of the cash to close in sufficient time to meet the deadline of 12:00 noon December 13,2006, he had just been contacted and advised that there had been a delay in obtaining the funds. [70] The trust letter from Solicitor M provided that Solicitor M must be notified immediately if any of the trust conditions werefound to be “unreasonable or otherwise require alteration”.

Based on the evidence of Solicitor G and his letter of December 13, 2006 toSolicitor M it is obvious that upon Solicitor G receiving advice that the cash to close would not be available by 12:00 noon December 13,2006, he immediately advised Solicitor M and sought an alteration to the closing date. In my view, Solicitor G complied with the termsof the trust conditions imposed by the solicitor for Baltic. [71] Therefore, Baltic did not reinstate time as of the essence when it unilaterally set a new closing date.

Rather, Baltic, through itssolicitor, imposed certain trust conditions on the closing of the Transaction, which trust conditions were complied with by Choudharyand her solicitor, including notifying Baltic of a required alteration to the closing date. D. Was the Closing Date Unilaterally Imposed by Baltic Reasonable? [72] While one party may unilaterally impose a new closing date, such new closing date must be reasonable. The Supreme Courtof Canada in its decision in Nepean Carlton Developments Ltd. v.

Hope, (SCC), [1978] 1 S.C.R. 427 concluded at page437 as follows: In the result, if there was to be another fixed date for completion, it was incumbent on either the vendors or the purchaser to give noticefixing a reasonable time. [73] In Robert Michaels Group v.

Shaw Communications Inc., 2004 ABQB 745, Moen J. held that when a vendor does impose aclosing date in such circumstances it must be reasonable. [74] Di Castri at vol. 2, p. 12-99, § 454 states: What is a reasonable time depends on the facts and circumstances of the particular case, and the diligence of the party receiving thenotice in remedying his default is an important consideration. [75] The cases in this area make it clear that it is within my discretion to determine whether the date unilaterally imposed forclosing the Transaction is reasonable and that this determination is highly fact specific: Bogue Electric of Canada v.

CrothersManufacturing Ltd., (SCC), [1961] S.C.R. 108; Allarco Developments Ltd. v. Moran, (AB KB),[1971] 2 W.W.R. 604, [1971] A.J. No. 58 (S.C.T.D.); Nepean Carlton Developments Ltd. v. Hope, supra; Bigham and De Cock v.Adam Yewchuk Management Ltd. (1981), 36 A.R. 148, [1981] A.J. No. 853 (Q.B.); Kapchinsky v. Begam Holdings Ltd. (1982), (AB KB), 46 A.R. 127, [1982] A.J. No. 783 (Q.B.); Burntwood Holdings Ltd. v. Salt (1988), (AB KB),93 A.R. 161, [1988] A.J. No. 1138 (Q.B.); Robert Michaels Group v.

Shaw Communication Inc., supra; and Jiro Enterprises Ltd. v.Spencer, 2008 ABCA 87. [76] In the circumstances of this case, I consider the 7 ½ days from December 6, 2006, to 12:00 noon December 13, 2006, to be anunreasonable period of time to close the Transaction. I say this for the following reasons. [77] First, the Transaction was originally to close five months from the time the Choudhary Contract was accepted (May 31 to

October 30, 2006). The Amendment provided for 30 days to close the Transaction (October 31 to November 30, 2006).

It was unreasonable to unilaterally impose a date which provided the Purchaser and her solicitor 7 ½ days to assemble the closing funds and proceed with the transfer of the Lands given the length of time previously provided for closing the Transaction. [ 78 ] Second, while the actual closing date was 7 ½ days from the date that Solicitor G received the closing documents from Solicitor M, there were, in fact, only 5 ½ days to complete the Transaction given that December 9 and 10, 2006 fell on a weekend.

The cash to close as identified by Solicitor M was received by Solicitor G and in his trust account on December 21, 2006. This was a further eight days (six business days) after the unilaterally imposed closing date of December 13, 2006. Solicitor G was, therefore, in receipt of the cash to close 15 days (11 business days) after receipt of the closing documents from the solicitor for Baltic. There is no evidence that Choudhary was not diligent in assembling the cash to close after December 6, 2006.

In all the circumstances, 11 business days to do so was reasonable. [ 79 ] Third, while Solicitor D in his trust letter of October 24, 2006, made it clear that Baltic was anxious to complete the Transaction and, in fact, his trust letter made it clear that time remained of the essence, there was no such similar indication in the trust letter of December 5, 2006, from Solicitor M. That is, there was nothing to suggest that there was any particular urgency or necessity to complete the Transaction in the comparatively short period of time.

In fact, Solicitor M, in his letter of December 1, 2006, conveyed a contrary impression by the casual nature of his advice when he stated, “Stop your worrying. I will get the Transfer to you on or before Tuesday”. Tuesday was four days after December 1, 2006. Solicitor G, in fact, did not receive the Transfer until Wednesday. [ 80 ] Fourth, Baltic knew full well that it had a back-up offer with Elegant which provided a purchase price for the Lands which was $544,000 higher than the purchase price in the Choudhary Contract.

I infer that the deadline imposed for closing the Transaction was influenced by this fact. [ 81 ] Fifth, Baltic had not been completely forthcoming with Choudhary and Solicitor G as to its dealings with the Lands. It had never disclosed the back-up offer from Elegant, which might have impressed upon Choudhary a greater sense of urgency in closing the Transaction.

Further, it was not until December 6, 2006, that Baltic disclosed to Solicitor G that title to the Lands had been transferred to 127. [ 82 ] Sixth, the contemplation of interest on late payment of closing funds would reasonably have reinforced Choudhary’s perception that Baltic was somewhat flexible on the precise closing date.

Although Solicitor G did not raise the matter of payment of interest on late payment of the closing funds beyond December 13, 2006, he did testify in examination on his Affidavit that the payment of interest would be appropriate and that he assumed when he heard back from Solicitor M with respect to the request for the extension, something would have been negotiated (Transcript on examination on Affidavit, p. 39, ll. 14 to 23).

Further, clause 8.6 of the Choudhary Contract specifically provided for interest to be paid if the seller accepted payment of funds beyond the closing date. [ 83 ] Given all of the foregoing and the history of the Transaction, I find that the imposition of the closing date in the trust letter from Solicitor M dated December 5, 2006, was unreasonable in the circumstances. Therefore, Choudhary was not in breach of the Choudhary Contract in failing to meet the unilaterally imposed closing date. Baltic was, as a result, not entitled to refuse to complete the Transaction. E.

What remedy, if any, are the Plaintiffs entitled to? [ 84 ] Choudhary and CIDC do not seek specific performance of the Choudhary Contract. Rather, damages are sought. [ 85 ] In light of Baltic’s failure to complete the Transaction, Choudhary is entitled to damages in this matter. Choudhary assigned her interests and obligations pursuant to the Choudhary Contract and the 341 Contract to CIDC after the Transaction was clearly not closing. There is no issue between Choudhary and CIDC. I therefore proceed on the basis that both Choudhary and CIDC are both entitled to any damages awarded.

The distribution of the damages as between Choudhary and CIDC is governed by the terms of the assignment between Choudhary and CIDC. [ 86 ] Choudhary and CIDC are, firstly, entitled to the return of the original deposit monies paid in relation to the Transaction in the total amount of $125,000 in accordance with clause 3.5(

d) of the Choudhary Contract. Baltic failed to perform the Choudhary Contract, as outlined herein. The ultimate failure to close the Transaction was not as a result of anything done or omitted to be done by Choudhary.

As set out, time was not of the essence with respect to the last extension and Choudhary was in a position to close the Transaction within a reasonable time following the amended Completion Day of November 30, 2006. Pursuant to clause 3.5(

d) of the Choudhary Contract, Choudhary and CIDC are, therefore, entitled to the return of the deposit in the sum of $125,000. [ 87 ] Choudhary and CIDC are not entitled to the return of the Additional Deposit in the sum of $50,000. The Amendment described this deposit as “an additional non-refundable deposit”. The sum of $50,000 was consideration paid by Choudhary to Baltic to extend the Completion Day from October 30, 2006 to November 30, 2006. The Amendment contemplated that this was simply consideration to extend the Completion Day and was not refundable to Choudhary.

Presumably, had Choudhary not obtained the extended Completion Day she would not have been able to complete the Transaction on October 30, 2006 and, therefore, she would have, pursuant to clause 3.5(

e) of the Choudhary Contract, forfeited the original deposit in the sum of $125,000 as she, then, would have been in breach of clause 8.6 of the Choudhary Contract. The Additional Deposit was described as “non-refundable” and there were no conditions placed on that term. The Additional Deposit does not fall within clause 3.5 of the Choudhary Contract.

Choudhary is, therefore, not entitled to damages in relation to the Additional Deposit. [ 88 ] Choudhary and CIDC are, secondly, entitled to the sum of $144,000 being the differential between the purchase price which Choudhary had agreed to pay to Baltic ($1,656,000) and the purchase price which 341 had agreed to pay Choudhary ($1,800,000). Baltic argued that there was no evidence to support this claim. This is not correct.

Solicitor G in his Affidavit in respect of this matter deposed in paragraph 26 that after December 21, 2006, he continued to act on behalf of Choudhary who he understood had sold the Lands to a corporation, who in turn had proposed to sell the Lands to CIDC. In cross-examination on that Affidavit, Solicitor G testified that he was acting for Choudhary in relation to the sale of the Lands to 341 and that he had numerous dealings with the solicitor for 341 with respect to that transaction and the subsequent sale of the Lands by 341 to CIDC.

The evidence before me is clear that Choudhary had sold the Lands to 341 for $1,800,000. It should be noted that the back-up offer from Elegant was $400,000 higher than the purchase price in the 341 Contract. Baltic cannot, therefore, argue that the purchase price in the 341 Contract was somehow not an appropriate price for the Lands. [ 89 ] In addition, Choudhary and CIDC are entitled to interest pursuant to the Judgment Interest Act , R.S.A. 2000, c.

J-1 from December 21, 2006, being the date that Choudhary had the funds necessary to complete the Transaction and was ready, willing and able to forward same to Solicitor M. [ 90 ] In argument, Solicitor M conceded that if it was found that Baltic was liable in this matter then 127 would also be liable, given the transfer of the Lands by Baltic to 127, the close relationship between 127 and Baltic, and the fact that the principals of the two companies are the same.

Therefore, the damages awarded herein are recoverable against both Baltic and 127. [ 91 ] Choudhary and CIDC also seek to recover the damages against Gerhard Messerschmidt and Jeannette Messerschmidt personally. Although Mr. and Mrs. Messerschmidt are the principals of both Baltic and 127, and must, therefore, have been involved in making decisions with respect to the Transaction and in instructing counsel in relation thereto, no basis was established for piercing the corporate veil and awarding damages against Mr. and Mrs. Messerschmidt personally.

Shelley J. in her Order, essentially, secured the position of Choudhary and CIDC in that she directed that Baltic post the sum of $175,000 with its solicitors or with the Court as security for any damages awarded and, as well, directed that deposits paid under the Choudhary Contract were to continue to be held by Baltic’s solicitors. [ 92 ] Finally, Choudhary and CIDC seek exemplary damages in the sum of $50,000. It is not uncommon for a commercial land transaction not to be completed as initially contemplated or at all.

I do not find any conduct on the part of the vendor in the Transaction to be so egregious as to attract exemplary damages. The vendor was simply acting in what it believed was its best interests. Those interests, obviously, conflicted with the interests of Choudhary and, ultimately, CIDC. That is not to say, however, that pursuing such interests would open the vendor to a claim for exemplary damages. It is also of note that Shelley J. awarded costs against Choudhary in relation to the application by Baltic to have the Caveats registered against the Certificate of Title to the Lands discharged.

The claim for exemplary damages is dismissed. VI. Conclusion [ 93 ] Choudhary was not in breach of the Choudhary Contract. Baltic was entitled to unilaterally impose a reasonable new closing date on Choudhary. Time did not remain of the essence on the final extension. The closing date for the Transaction of December 13, 2006, unilaterally imposed by Baltic was unreasonable. Choudhary and CIDC are entitled to damages in the sum of $269,000 plus

interest thereon from December 21, 2006 pursuant to the Judgment Interest Act . [ 94 ] The parties may speak to me within 30 days of delivery of these Reasons for Judgment if they are otherwise unable to agree on costs. Heard on the 20 th day of January, 2011. Dated at the City of Edmonton, Alberta this 27 th day of May, 2011. K.G. Nielsen J.C.Q.B.A. Appearances: Roger C. Stephens Simons & Stephens for the Plaintiffs Larry E. McConnell, Q.C. and Michael Jones McConnell Law Office for the Defendants