1244034 Alberta Ltd. Plaintiff - v. -, 2011 ABQB 398

Court of Queen’s Bench of Alberta Citation: 1244034 Alberta Ltd. v. Walton International Group Inc., 2011 ABQB 398 Date: 20110624 Docket: 0603 15357 Registry: Edmonton Between: 1244034 Alberta Ltd.

Plaintiff - and - Walton International Group Inc., Shun King Chan, Joseph To Pui Choi, Cora Hoi Yee Chiu, Jeremy Chun Kit Wong, Hong Yao, Wenqin Shi, Benjamin Fu,Craig Argyll, Armour, Andy Ka Wai Cheung, Sophie Shuk Fai Lau, Grace Chi Sze Ho, Richard Way, Georgiana Hang Kuen Lam, Tak Ming Cheng, Wilkie Wai Kei Lo, Shadow Shu Ling Ho, Bik Yee Chan, Amy Suk Yee Chan, Lisa Mun Wai Lam, Rajammal Anandan Swamickannu, Kim Hoon Ng, Velayutham V.

Ramasamy, Kasthuri Thilaga Munikrishnan, Karunakaren Balasundram, Asha Kumari Chhunnu Lal, Fook Tien Ngiam, Chuan Huat Tan, Chiew Moi Chong, Chee Keong Yap, Lie Yuen Chia, Wai Hoong Lee, Cheng Lim Lee, Meng Hon Yong, Chow Joon Lee, 322842 Alberta Ltd.

Yuh Wen Low, Li Li Low, Tse Peng Low, Loon Kee Lee, Yew Kee Phang, Choon Chiew Goh, Hajeedar Abdul Majid, Mun Yoong Wong, Min Chung Siew, Ven Tjin Siew, Geok Kwong Sim, Tow Koon Tan, Li Kian Christina Chan, Claudio Giovanni Balestra, Vince Tucker, Nasri Gebrail Tarzibashi, Daisy Tarzibashi, Lynda Lillies, Allan Lillies, Terry Langridge, Linda Lou Leszczak, Ellen Hill, Shel J. Laven, Svetlana Shklarov, Catherine Bunton, Frank Nishimura, Juliette Nishimura, 631752 Alberta Ltd., Kam Wan Chan, IB C.

Moller, Quill Lake Investments Ltd., Ian Gent, Cheryl Gent, Jonathan Craig Blocksom, David Walker, Brenda McClellan, Sovereign Financial Services Ltd., David Marriner, Dawn Whitworth, Hasnah Mohammed, Allen Leong Yew Tuck Leong, Linda Siu Lai Kong, Julian Szirtes, Elizabeth Szirtes, Glen D. Andrews, Shanott Holdings Ltd., Dennis Riske, Ulf Broda, Donna Broda, Larry Poon, Nancy Poon, Deborah Pratt, Gregory Pratt, Bob Marks Pontiac-Buick Ltd., Gloria Ureta, Better Built Homes

(1977) Ltd., Darrel Bender, Marianne Bender, Erin Eileen Fetter, Wilson Si-Fu Pong. Yu-Ping Li Pong, Julita Nisperos, Aurora Tabios, Doran R. Larson, Kum Yuet Lui, QuenYee Wong, Jiri Bartek, Pavla Bartek, Swee Chong Ow Yong, Ah Leng Toh, Philip Hoe Wai Lam, Charles Kok Wee Ng, Florence Carmela Choon Kheng Goh, Eng Chun Tan, Yin Yin Teo, Cheok Wah Thong, Poh Choo Tan, Robert L. Morris, Joe Gustafson,

Siti Nuraishah Ishak, Valerie Stevenson, Gordon Stevenson, 1100539 Alberta Ltd., Central Rehabilitation Centre Ltd., T.

Shirt ‘N Things (Wholesale) Ltd., Deborah Christina Schmidt, William Glen Campbell, Alex Che Keng Chia, Vanessa Suay Suay Quek, Desmond Robert Soo, Conceptrix Advanced Solutions Inc., Raymond Chi Fai Leung, Richard Norman Nickel, Marlis Karen Nickel, David Nobrega, Teresa Nobrega, Brent Bailey, John Froese, Judith Froese, Linda MacKid, Selina Lai Ping Lam, Anthony Vincent Gabriel, Yaoqiang Hu, Horng Jen Lee, Franky Espehana, Titiek Semiarti Erawan, Siew Lian Chia, Leong Chuan Philip Yoo, Kenneth Kwok Shion Low, Lawrence Kwow Leon Low, Stacey Grantham, Robert Leggott, Linda Leggott, Seng Huat Koh, Doran R.

Larson, Man Hin Chow, Grace Kwan Sin Mak, Shirley Voeller, Martin Voeller, Lai Kuen Ko, Kin Shing Wong, Alan Wan Lung Wong, Winny Wan Nei Wong, Shepherd Industrial Supply Company Ltd., Poo Teck Tan, Guet Ngoh Koh, Ham Finny Melia Hamdani, Guat Leng Chew, CES Technologies Inc., Wai Har Yuen, Damian Man Ching Chan, Barry Edmonson, Jean Campbell Edmonson, Gigi Shou Har Yuen, Chun Hung Cheng, Shuk Wa Chan, Peters Ho Ming Leung, Lori Bowes, Don Bowes, Rob Koski, Kristin Koski, Kaslmuthu, Somasunthare T.

Appavu, Chong Hun Sia, Mei Hang Liu, Joe Kok Wai Lam, Catherine Heung Ying Ho, Conrad Kwan Hon Mak, Cheuk Hung Lee, Ngan Yoke Poon, Bee See Chew, Wong Hwee Sung, Lam Hong Grace Teo, Kong Pang, Chiew Yim Tan, Huey Jiuan Kam, Yeen Lee, Amin Suleman, Shainil Jessa, Chi Wah Leung, Walter Ping Kwan Chan, Ka Tan Ng, Vincent Shu Wah Yu, Dave Ogunnaike Defendants And Between: Walton International Group Inc. Plaintiff by Counterclaim - and - 1244034 Alberta Ltd. Defendant by Counterclaim _______________________________________________________ Memorandum of Decision of W.S.

Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This is an application and a cross application to compel answers at the questioning. 124's Application

[ 2 ] The Plaintiff (“124") seeks answers to undertakings: 12, 21, 26 and 40. Undertaking 21 and 40 were answered over the course of the hearing. The remaining two undertakings (12 and 26) are outstanding. [ 3 ] This part of the application stems from paragraph 10 of Walton International Group Inc.’s (“Walton”) Amended Counterclaim: 10 As a result of 124's Wrongful Acts, Walton has suffered the following damages: (

a) the sum of $1,625,000.00 representing payments made to the Accepting Riverview Owners between July and September 2008, to compensate them for the opportunity cost for the loss of use of the net proceeds from the sale of the Lands for the period from the Original Closing Date to the Actual Closing Date, calculated on the basis of 14.8% (compounded) per annum, and additional nominal consideration.

Those payments were made in connection with securing the release from the Accepting Riverview Owners of Claims against Walton resulting from Walton’s inability to earlier close the sale of the Lands, and the assignment to Walton of the Accepting Riverview Owners’ cause of action against 124 arising from the delay in the sale of the Lands; [ 4 ] The undertakings relate to the $1.625 million payment.

The outstanding undertakings and the responses are as follows: U/T 12 To advise of the process by which it was decided to make the proposal that is set out in Exhibit D-1, i.e., what were the internal discussions, what documents reflect those discussions, how were the numbers decided upon and who was involved in the process. RESPONSE: Communications in respect of Exhibit D-1 were with legal counsel and are privileged.

The lump sum payment was calculated on the basis of 14.8% per annum (compounded) on the net proceeds from the sale of the property for the period from December 15, 2006 (the original closing date) to May 27, 2008 (the actual closing date) plus $10 additional consideration. 14.8% is the approximate weighted average return (compounded) on exited projects as of the time the letter was prepared and is also the approximate average annual return (compounded) to the original Riverview investors, had the transaction closed on December 15, 2006. The accrual of any mortgage liability was suspended after December 16, 2006.

U/T 26: To advise who counsel was, what advice was given and when it was given with regards to the phrase “Walton acted on the advice of Counsel” in D-1. RESPONSE: Counsel was FMC. The remainder of the question regarding what advice was given is refused on the basis of solicitor and client privilege. [ 5 ] The evidence relating to paragraph 10(

a) of the counterclaim is central to two issues: the existence of damages to complete a cause of action and mitigation. [ 6 ] The response to undertaking No. 12, shows the manner of calculation of the $1.625 million payout. It will be open to the Defendant by Counterclaim to challenge the reasonableness of the calculation and, in general terms, whether the Plaintiff by Counterclaim’s attempts to mitigate were reasonable. [ 7 ] However, a fuller response to the first part of the question is required.

It is not enough to say that a mitigation efforts arose because of the advice of counsel. 124 is entitled to know, for example, whether the amounts were paid out voluntarily or under compulsion. Furthermore, there may be non-privileged internal discussions and meetings that were documented with minutes and or resolutions that led to the mitigation payout.

[ 8 ] Walton has been transparent in the manner in which the mitigation payout was calculated and there is enough information for the Defendant by Counterclaim to challenge the reasonableness of the amount. However, further information may significantly assist in an assessment of damages and an evaluation of the reasonableness of the mitigation efforts. It is not necessary to give further directions with respect to UT #26, given the direction with respect to UT #12.

Walton’s Application [ 9 ] In very general terms, 124 alleges it entered into a binding agreement to purchase some land from Walton but that Walton refused to complete and sold the land to somebody else. Walton answers 124's claim, in part, by saying that 124 never had the wherewithal to complete the transaction. The disputed questions sought by the Defendant fall within that category. [ 10 ] Stony Plain Estates Ltd. sold the ‘Stony Plain lands’ to raise money to close the deal. This company was solely owned by the principal of 124.

The purchaser was a company called FIC Investments USA Corp., which is an unrelated, ‘arms length’ party.

The sale of the Stony Plain lands raised approximately 7 million dollars cash. [ 11 ] Disputed undertaking 43 is to produce the Purchase and Sale Agreement entered into between Stony Plain Estates Ltd. and FIC with respect to the sale of the Stony Plain lands; to advise when that transaction closed and to produce the statement of closing adjustments with respect to that sales transaction. [ 12 ] Prior to this application 124's counsel sent Walton’s counsel a letter with enclosures that substantially answered the latter part of disputed undertaking number 43.

These documents, together with answers to undertakings 23 and 25, appear to show the ability of 124 to close the deal - at least in terms of available funds. [ 13 ] FIC is apparently unrelated to any of the parties: Stony Plain Estates Ltd. however is not, though it is a notionally legal entity.

The situation is not completely analogous to obtaining documents from an outsider to the lawsuit. [ 14 ] I am not convinced that production of the sale agreement is relevant and material or will significantly help determine one or more of the issues raised in the lawsuit. [ 15 ] A number of documents have been produced to show that 124 had the cash in hand necessary to complete the deal with Walton. To my mind, it is going too far afield to probe the sale between Stony Plain and FI, even though Stony Plain may have been closely held by a principal of 124.

Accordingly, 124's objection to undertaking number 43 is upheld. [ 16 ] Requested undertaking number 45 relates to what was done with funds that had been raised for the purchase of the Walton lands. I find that this requested undertaking is validly objected to for the reasons set out in 124's Reply Brief. It may be that 124 may have a slightly heavier onus with respect to mitigation, given that it may have had a large amount of cash on hand but the operative question is what constituted reasonable mitigation efforts. What it actually did with the funds is not determinative. [ 17 ] There has been mixed success.

Costs of the application and cross application will be in the cause. Heard on the 20 th day of April, 2011. Dated at the City of Edmonton, Alberta this 24 th day of June, 2011.

W.S. Schlosser M.C.C.Q.B.A. Appearances: Carmen Plante Bishop & McKenzie LLP for the Plaintiff Kenneth J. Warren, Q.C. Gowling Lafleur LLP for the Defendant