Triple D & G. L. Ranches Ltd. v. Duncan, 2011 ABQB 401

Court of Queen ’ s Bench of Alberta Citation: Triple D & G. L. Ranches Ltd. v. Duncan, 2011 ABQB 401 Date: 20110623 Docket: 1001 16812 Registry: Calgary Between: Triple D & G. L. Ranches Ltd. Applicant - and - Edward Duncan Respondent _______________________________________________________ Oral Reasons for Decision of the Honourable Madam Justice S. L. Hunt McDonald _______________________________________________________ Facts [ 1 ] The Applicant Triple D & G. L. Ranches Ltd. (“Triple D”) is a privately held family corporation.

It is the registered owner of a 60-acre parcel of land located in Calgary, Alberta bordered by the Elbow River and Tsuu T’ina Reservation located along the river just east of the Elbow Springs Golf Course in southwest Calgary. [ 2 ] Edward Duncan (“Duncan”) entered into an agreement on October 25, 2000 with Triple D wherein he was granted an option to purchase an interest in 7 acres of land owned by Triple D.

Duncan purchased the interest of one of the original optionee’s interest in an Option and Joint Venture Agreement dated February 16, 1994 (“1994 Option”). [ 3 ] The 1994 Option was originally granted to fourteen purchasers and described the land optioned as follows: That portion of Triple D Lands as outlined in the diagram attached as Schedule”B” hereto containing at least 7 acres

Excepting thereout all mines and minerals together with all the privileges and appurtenances thereto, free and clear of all encumbrances, liens or other restrictions or interest, except for (“Permitted Encumbrances”): (

a) any subsisting reservations or exceptions contained in the original grant from the Crown; (

b) utility right-of-ways and other easements that do not materially impair the value of the Option lands either as one parcel or as subdivided into 14 parcels of approximately equal size; on and subject to the terms and conditions herein set out. “option lands” [ 4 ] The interest that Duncan purchased had reverted back to the ownership of Triple D due to default of the original Optionee. [ 5 ] The 1994 Option had a rough diagram attached thereto marked as

Schedule B showing the approximate location of the 7 acres referred to in the agreement. [ 6 ] In 1997 a further 3 acres was optioned to another group of six purchasers, who executed an Option and Joint Venture Agreement (“1997 Option”). It was contiguous to the original 7 acre area of the 1994 Option. The total number of participants relating to the 10 acres was now 20 prospective purchasers. [ 7 ] These two tracts of land, totaling 10 acres, were to be situated in the northern portion of the lands owned by Triple D which was furthest from Guilio Simonelli’s home. He is one of the principals of Triple D. [ 8 ] The diagrams attached as

Schedule “B” to the 1994 Option and 1997 Option show the approximate location of the option lands. It was a rough diagram with a delineation line hand drawn thereon and was not to scale.

No survey had ever been done to position either the 7 or 3 acre option lands within the Triple D lands. [ 9 ] The 1994 Option and 1997 Option provided that the Optionees would undertake the severance and subdivision of the 10 acre option lands at their own risk and expense. [ 10 ] In November 1997, all twenty participants in the 1994 and 1997 Option Agreements executed a collective Joint Venture Agreement to govern their interest.

This relationship between the participants was referred to among themselves as the “West Elbow Joint Venture” (“WEJV”). [ 11 ] When subdivision of the 10 acre parcel was first discussed with the City of Calgary, the City advised they would only entertain a subdivision application of the entire 60 acre parcel. [ 12 ] Accordingly, the Optionees cooperated with Triple D with a view to a subdivision of all 60 acres of land owned by Triple D. [ 13 ] The first survey of the Triple D lands was commissioned by the WEJV and was completed in 2000 by Bill Hunter, an Alberta Land Surveyor. [ 14 ] A Land Use Amendment Plan and Outline Plan application relating to the entire 60 acre parcel intended to be subdivided were

submitted by the WEJV to the City of Calgary in December 2007 showing a 30 metre set back of lots from the Elbow River.

These Plans are the first step in the subdivision process. [ 15 ] Due to the delay between the first survey being prepared in 2000 and the time of application in 2007, Bill Hunter completed a second survey of Triple D lands in May 2009 to update and account for any movement in the Elbow River and the resulting boundaries of the Triple D lands since 2000. [ 16 ] Due to a change in the course of the Elbow River between 2000 and 2009, an approximate two acres of gravel and sand bar has accreted to the area adjacent to the ten acre parcel shown in Bill Hunter’s 2009 updated survey. [ 17 ] Over the years, many Optionees became disillusioned with the pace of the development and abandoned their investment, or could no longer afford to make their monthly option payments. [ 18 ] In December 2009, a meeting of the remaining Optionees was called by Triple D for December 21, 2009 to set the ten acre line on the Survey which would delineate the 10 acre parcel of option lands.

Duncan and one other Optionee did not attend. [ 19 ] The line was unanimously agreed upon by the attendees based on the survey completed by Bill Hunter prepared in 2000. Various option diagrams were provided by Triple D to the Optionees. Concept 8 was the diagram that the parties agreed upon, setting the division line between the 10 acre parcel and the balance of Triple D’s remaining lands. [ 20 ] Duncan did not agree with the placement of the 10 acre delineating line agreed to at the December 21, 2009 meeting. In March 2010 he requested that the matter should be submitted to arbitration.

The Respondent refused on the basis that the 10 acre delineation line had been fully resolved by a majority vote at the December 21, 2009 meeting. [ 21 ] Among other provisions, the following clauses were contained in the 1994 Option: (

a) The Optionees shall do what is necessary to seek approval for the severance and subdivision of the seven acres into fourteen one- half acre parcels or such other subdivision as may be desired by the Optionee. (

b) The Optionees shall form a Joint Venture for the purpose of purchasing and subdividing their land. (

c) The Joint Venture will strive to obtain subdivision approval for 14 parcels of equal size and equal river frontage, and if such subdivision approval is obtained, there will be a lottery among the Joint Venturers to determine which Joint Venturer gets which parcel. (

d) An Entire Agreement clause, (

e) A Further Assurances clause, (

f) An Arbitration clause - which provided that any dispute arising from the agreement that cannot be resolved by discussions or negotiations between the parties shall be submitted to arbitration if the parties have not agreed to a resolution of the dispute within thirty (30) days from the date upon which a party has given notice to the other party that a dispute has occurred. The clause then goes on to set out the applicable arbitration principles and cites the provisions of the Arbitration Act of Alberta should parties not be able to agree. [ 22 ] A similar arbitration clause was contained in the 1997 Option relating to the six additional purchasers.

[ 23 ] Clause 1.8(

d) of the 1994 Option provides that Triple D has “not represented or warranted to the Optionee that the Option Lands are now or ever will be subdividable or developable for any purpose whatsoever, and that the risk of obtaining any necessary municipal approvals lies solely with the Optionee”. [ 24 ] In addition, the 1994 Option contains a provision that an Optionee may sell or otherwise dispose of his or her interest in the venture and that other venturers will have a right of first refusal to purchase that Joint Venturer’s interest. [ 25 ] During the period of time from when the 1994 Option was signed to present, many Optionees dropped by the wayside and Triple D ended up with their interest in the scheme.

Duncan alleges Triple D did not provide the other Optionees with appropriate notice to acquire the interest of any defaulting Optionees as required by the right of first refusal contained in the 1994 Option. [ 26 ] It is not clear whether Triple D purchased the other Optionee’s interests or whether they ended up being forfeited to Triple D due to lack of payment. [ 27 ] The subdivision requirements of the City of Calgary include a setback from the Elbow River, environmental reserves, municipal reserves, storm water ponds, roads, and sidewalks.

From 2001 to 2007, the City of Calgary’s setback policy recommended a setback of 30 meters, but in 2007 that policy was amended to require a 50 meter setback of any lot from the Elbow River. [ 28 ] The City of Calgary demanded that the Land Use Amendment Plan and Outline Plan application received from the parties be amended to provide a 50 meter setback which significantly reduced the developable land.

This change decreased the number of lots contained within and without the 10 Acre Option Lands, which meant that within the 10 Acre Option lands there would be less than one lot per participant. [ 29 ] At the hearing of this application Duncan is now the sole Optionee out of the original 20 Optionees who has rights under the 1994 Option. Triple D now owns the 19 other option interests. [ 30 ] Duncan asserts he has a right to a lot one-half acre in size pursuant to the 1994 Option. Accordingly, he has filed a caveat on title to the Triple D lands, registered as instrument number 101113531 to protect his interest.

Duncan is also shown to hold a partial interest in Triple D’s lands by another caveat registered as instrument number 021402734. Triple D’s Position [ 31 ] Triple D requests the following in its Originating Application and Brief: (

a) A declaration that there is no valid agreement between Triple D and Duncan. Triple D relies on the principles of mutual mistake or uncertainty to say that the parties were not ad idem in what was being acquired under the 1994 Option and the Agreement to Purchase signed in 2000, and accordingly has offered to refund Duncan all monies paid pursuant to such agreements; (

b) In the alternative, a declaration that the agreement between Triple D and Duncan is uncertain and is thus void and unenforceable; (

c) Alternatively, if a valid agreement is found between Triple D and Duncan, then Triple D requests a declaration that Duncan is a party to the 1994 Option and that pursuant to that agreement he acquired an undivided 1/20 th interest in a 10-acre parcel of land delineated by a line shown in the survey attached as Exhibit”O” to the Affidavit of DaLaura Kader sworn November 9, 2010 and, (

d) Further, a declaration that Duncan did not acquire from the 1994 Option an option to purchase a specific lot of any specific size

or in any specific location within the 10 acre parcel, and specifically not a half-acre parcel or an 18,000 square foot parcel of land on the river front in a specific location in the 10-acre parcel. [ 32 ] Triple D also argues that it is too late for Duncan to demand arbitration to settle any dispute between him and Triple D given that there are no material facts in dispute.

Further, that they allege that Duncan has waived his right to arbitrate and consented to the within proceedings given that a Special Chambers hearing was scheduled, he has participated in cross-examination of Triple D’s officer, he has demanded answers and undertakings from that officer, he has submitted to his own cross-examination, he has accepted service of Triple D’s Brief of Argument and has filed his own Brief of Argument. [ 33 ] Lastly, Triple D seeks an order compelling the discharge of the caveat registered by Duncan as Instrument 101113531 registered against the option lands, and further a partial discharge of another caveat registered as instrument number 021402734 showing Duncan as one of the interest holders in the option lands. [ 34 ] Triple D states that it is relying on the provisions of Rule 1.2 of the Alberta Rules of Court in seeking to fairly and justly resolve issues between the parties in a timely and cost effective way. [ 35 ] Triple D also seeks costs from Duncan.

Duncan’s Position [ 36 ] Duncan agrees that his rights are set out in the 1994 Option, the 1997 Option, the WEJV and his 2000 Agreement to Purchase and these documents give him an option to purchase an undivided 1/20 th interest in the option lands. [ 37 ] Duncan says he is not mistaken about what his option relates to, or what the 1994 Option provides. [ 38 ] Duncan states in his Brief that he wants to exercise the rights he obtained under the 1994 Option and does not want payment of his money back. [ 39 ] Duncan asserts that the real purpose behind this application is to remove him, thus leaving Triple D free to develop the option lands in the way it wants to, without adhering to the limitations imposed upon Triple D by the 1994 Option and 1997 Option. [ 40 ] Duncan submits that the Claim should be dismissed on the basis of Rule 3.2(2) of the Alberta Rules of Court provide that this application should have been commenced by Statement of Claim rather than Originating Application as there are substantial factual disputes between the parties. [ 41 ] Duncan disagrees where the line was drawn on the Survey by Mr.

Hunter showing the separation line dividing the 10 acre option lands from the remaining 50 acres of land owned by Triple D. [ 42 ] The bed and banks of the Elbow River have changed significantly since the 1994 Option was first executed. In 2005 and 2007, in particular, there were significant floods which caused gravel beds to develop adjacent to the Triple D lands. The gravel beds cannot be developed and the ownership of those gravel beds is in dispute.

Duncan alleges that Triple D has taken the position that all or parts of the gravel beds and the floodway are to be included in 7 acres which significantly reduces the land available for development. [ 43 ] The 1994 Option clearly describes the 7 acres as “free and clear of all encumbrances, liens or other restrictions or interests.” Duncan alleges Triple D is now arguing that provision should be made from the 7 acres for the City of Calgary’s requirements for river setbacks of 50 meters, environmental reserves, municipal reserves, storm water ponds, roads and sidewalks.

[ 44 ] In particular, Duncan objects to the fact that the surveyor Mr. Hunter was requested by Triple D to fix the location of the delineation line for the 10 acre option lands from the balance of Triple D’s lands as it existed in 2000 and on the basis of the 2000 survey Hunter previously performed. [ 45 ] When Duncan objected, Triple D called a meeting for December 21, 2009 and those parties attending proceeded to vote unanimously to accept the line. Duncan and one other Optionee did not attend the December 21, 2009 meeting.

Duncan asserts that the decision made at the meeting held on December 21, 2009 effectively amounts to an attempt by Triple D to unilaterally amend the 1994 Option. [ 46 ] Duncan alleges that the compromise position which designated the 10 acre delineation line passed at the December 21, 2009 meeting gives him substantially less than he is entitled to and has been paying for since he first purchased his option in 2000. [ 47 ] Duncan claims there is no basis entitling Triple D to obtain an Order discharging his caveats as he has a clear interest in the option lands. [ 48 ] Accordingly, Duncan asks that Triple D’s application should be dismissed, with costs. [ 49 ] Additionally, if a valid agreement is found to exist between the parties, that no declaration should be granted and these proceedings should be stayed pursuant to section 7(1) of the Arbitration Act as the matters in dispute should be submitted to arbitration according to the agreements.

Issues [ 50 ] Both parties agreed at the Hearing before this Court that Duncan is a party to the 1994 Option and that pursuant to that agreement and the subsequent 1997 Option, the WEJV and his 2000 Agreement to Purchase he acquired an option to purchase an undivided 1/20 th interest in a 10 acre parcel of land owned by Triple D. [ 51 ] The issues before this Court are: 1. Is the dispute between the parties one that can be resolved by

summary disposition as requested by the Applicant in its Originating Application such that the Court should declare that Duncan did not acquire an option to purchase any specific lot of any specific size or in any specific location within the 10 acre parcel of Triple D option lands? 2. Should the Court give an order compelling the discharge of caveats registered against Triple D Lands as instruments number 101113531 and 021402734? 3.

Is there a valid agreement governing the parties or whether the agreement between Triple D and Duncan is invalid, void for uncertainty, or unenforceable relying on the principles of mutual mistake or uncertainty to say that parties were not ad idem in what was being acquired under the Option and Joint Venture Agreements? [ 52 ] Duncan also raises the following issues: 1. Whether Duncan may exercise his right to demand arbitration pursuant to the 1994 Option to resolve a number of factual disputes between the parties?

2. Whether the 10 acre parcel of land which the optionees purchased from Triple 3 is delineated by the line shown on the Survey marked as

Schedule D to Exhibit Q of the Affidavit of DaLaura Kader of November 9, 2010? Analysis [ 53 ] In this case, Triple D argues the application that they commenced by Originating Application is a proper one for

Summary Judgment as it can fairly be decided on the record before the Court. [ 54 ] Duncan’s main opposition to such argument is that there are too many facts in dispute. Accordingly, Duncan submits these should properly be brought before Court by Statement of Claim.

Duncan argues that he should be afforded the normal benefits of seeing relevant and material documents of Triple D, examining witnesses for discovery, to subpoena witnesses to testify at trial, to call expert witnesses on the technical issues, to raise defences such as waiver and estoppel properly based on full disclosure of the facts and to counterclaim for breach of the agreement regarding the rights of first refusal, once he has obtained full disclosure of information from Triple D. [ 55 ] In this case, Triple D bears the legal onus of proving that this case is appropriate for

summary judgment and there is no genuine issue for trial: Lee Sand and Gravel v. Lee (2007), 30 E.T.R. (3d) 305 (Ont. S.C.J.) at paras. 26-27 ; Murphy Oil Co. v. Predator , 2004 ABQB 688 , 365 A.R. 326 (Q.B.) aff’d, 2006 ABCA 69 , 384 A.R. 251. It must be “plain and obvious” that the action cannot succeed; Murphy Oil at para 24. [ 56 ] The principles were recently reiterated in Kwan v. Superfly Inc ., 2011 ABQB 343 at para 23 : 23 I agree with the proposition that in general the test for

summary dismissal is that it must be “plain and obvious that the action cannot succeed”, the action is “bound to fail” or the action has “no prospect of success”: Boudreault v. Barrett , 1998 ABCA 232 at para. 9 , 219 A.R. 67; De Shazo v. Nations Energy Co. , 2005 ABCA 241 at para. 17 , 367 A.R. 267. The burden of proof required in

summary dismissal applications was set out by our Court of Appeal in Murphy Oil Co. v. Predator Corp ., 2004 ABQB 688 at para. 17 , 365 A.R. 326, affirmed 2006 ABCA 69 at paras. 27-28 , 384 A.R. 251. The Court of Appeal agreed with the scheme provided at para. 17 of the chambers decision: 17 In

summary, the relevant principles are these: 1. A party bringing a motion for

summary judgment bears the legal onus of showing no genuine issue for trial. 2. There is no onus on the responding party to prove a genuine issue for trial. 3. If the applicant for

summary judgment discharges his/her onus on the material filed, a respondent who does not resist the application through admissible evidence risks judgment against him/her. That is an evidentiary burden. 4. There is no obligation on the respondent to file material. He/she can accept the risk described above. If the applicant fails to discharge his/her legal onus, the application will fail. 5. More commonly a respondent will provide admissible evidence opposing the motion.

In that event, the court will consider all the evidence to determine whether the applicant has shown that there is no genuine issue for trial. [ 57 ] Rule 7.3 of the Alberta Rules of Court provides that a plaintiff may apply for

summary judgment in respect of all or part of a claim on the ground that there is no defence. The rule provides: 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds:

(

a) there is no defence to a claim or part of it; [ 58 ] The new rule has not amended the test developed in Alberta jurisprudence for

summary judgment under the old Rule 159: Manufacturers Life Insurance Co. v. Executive Centre at Manulife Place Inc., 2011 ABQB 189 . [ 59 ] Rule 3.2 (2) of the Alberta Rules of Court provide that a Statement of Claim must be used to start an action unless there is no substantial factual dispute. [ 60 ] A

summary judgment should not be granted if opposing affidavits conflict on relevant facts: De Shazo v. Nations Energy Co. , 2005 ABCA 241 , 367 A.R. 267. However, the chambers judge should not assess the quality and weight of the evidence: Liu v. Tangirala, 2004 ABCA 171 , para 2 . The Alberta Court of Appeal in De Shazo , cautions against dismissing the action simply because the action is complex. The Court stated at para 19: When faced with a

summary judgment application of this type the court must ascertain whether there are undisputed facts that necessarily lead to the conclusion that it is plain and obvious the plaintiff’s claim is statute barred. [ 61 ] Applying the previous quote to this case - is it plain and obvious that Duncan did not acquire an option to purchase any specific lot of any specific size or in any specific location within the 10 acre parcel of option lands? [ 62 ] Duncan does not dispute that his option relates to an undivided interest in the option lands pursuant to the 1994 option and that his rights are governed by the terms of the 1994 option. [ 63 ] Duncan asserts that disputes exist between the parties relating to: a. the accretion of gravel beds and sand adjacent to the option lands which played a role in Triple D’s and the Optionees who attended the December 21, 2009 meeting setting the 10 acre delineation line; and b. reductions in the size of the option lands for certain municipal requirements that would result in an uncertain amount of non- developable land for river set backs, environmental reserves, municipal reserves, storm water ponds, roads and sidewalks. [ 64 ] Duncan asserts that Triple D now maintains that it is the owner of the majority of the interests in the option lands and can take decisions on the basis that they are binding on the WEJV and therefore are not required to honour the provisions of the arbitration clause in the 1994 option. [ 65 ] In a

summary application, an action is not to be dismissed unless it is plain and obvious that the action cannot succeed. [ 66 ] The accretion of land and the requirements necessary to achieve a subdivision of land are not factual matters that are beyond dispute between the parties. Such issues need to be determined based on the legal

interpretation of the provisions of the agreements governing the relationship between the parties. [ 67 ] One of the provisions of the 1994 option is any dispute arising from the agreement that cannot be resolved by discussions or negotiations between the parties shall be submitted to arbitration, which Duncan has requested. Mutual Mistake or Unenforceability [ 68 ] Whether there was a mutual mistake between the parties when they entered into the 1994 Option and the 2000 Agreement to

Purchase would require a legal

interpretation of the provisions of the agreements and perhaps require evidence from Guilio Simonelli who negotiated the agreements on behalf of Triple D with Duncan. That is the function of either an arbitrator or a judge in a trial proceeding - the validity and enforceability of the agreements cannot be determined summarily. Right to Arbitrate [ 69 ] Section 7(1) and 7(2)(

e) of the Arbitration Act of Alberta provides as follows: 7(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceeding.

(2) The court may refuse to stay the proceeding in only the following cases: .... (

e) the matter in dispute is a proper one for default or

summary judgment. [ 70 ] To date, Duncan has not yet commenced an application for arbitration with Triple D. [ 71 ] Section 7(2)(

e) of the Arbitration Act is a discretionary provision as set out in Sehdev v. Colours by Battistella Inc ., 2008 ABQB 248 . The decision of Strekaf J. of the Alberta Court of Queen’s Bench provides at paragraph 23 as follows: Section 7(2)(

e) is a discretionary provision. Patillo, J. in Apotex Inc. v. Virco Pharmaceuticals (Canada) Co. , [2007] O.J. 4817 (S.C.J.) at para. 17 described the Ontario equivalent of this provision as the court being called upon to “balance the strong public policy in favor of enforcing arbitration agreements with the equally important policy that proceedings should be resolved in the most just and expeditious way”.

There is merit to the following approach described at paragraph 19 of the judgment in that case: Given the policies at play in respect of this issue and having regard to Dewshaf , supra , it is my view that the discretion granted to the court to refuse to grant a stay of an action in respect of the

summary judgment exception should only be exercised in the simplest and clearest of cases where it is readily and immediately demonstrable on the record that the responding party to the proposed

summary judgment motion has no basis whatsoever for disputing the claim or claims of the moving party. It is only in such circumstances, in my view, that a party should be deprived of its agreed to arbitration rights. Decision [ 72 ] In this case, I am satisfied that Duncan should be entitled to refer the disputed matters to arbitration or commence a lawsuit if the dispute is beyond the scope of the arbitration clause. This is not the case where it is plain and obvious that the matter is a proper one for default or

summary judgment. [ 73 ] The Applicant argues that Duncan, by his conduct, has waived his right to rely on the arbitration clause in the 1994 Option and is thus precluded from insisting or referring the matter to arbitration. It is my view that Duncan should be entitled to raise defences such as waiver and estoppel properly once full disclosure has been obtained. [ 74 ] There are genuine issues to be tried and therefore the application ought not to be granted. [ 75 ] I accordingly dismiss the application of Triple D, with costs.

[ 76 ] As no formal arbitration has yet been commenced by Duncan, it is not necessary for the Court to exercise its discretion to grant a stay pursuant to section 7(2)(

e) of the Arbitration Act. Heard on the 21 st day of April, 2011. Dated at the City of Calgary, Alberta this 23 rd day of June, 2011. S.L. Hunt McDonald J.C.Q.B.A. Appearances: Munaf Mohamed for the Applicant Rinus de Waal for the Respondent