North West Geomatics Ltd. Plaintiff (Defendant by Counterclaim) - v. -, 2011 ABQB 421

Court of Queen ’ s Bench of Alberta Citation: North West Geomatics Ltd. v. Telford Services Group, Inc., 2011 ABQB 421 Date: 20110704 Docket: 0901 02241 Registry: Calgary Between: North West Geomatics Ltd. Plaintiff (Defendant by Counterclaim) - and - Telford Services Group, Inc. Defendant (Plaintiff by Counterclaim) _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.T.

McCarthy _______________________________________________________ Introduction [ 1 ] North West Geomatics Ltd. (North West) plaintiff (defendant by counterclaim) claims against Telford Services Group, Inc. (Telford) defendant (plaintiff by counterclaim) for an order for specific performance of an agreement in writing between the parties dated April 27, 2007 entitled “Transfer of Beneficial Interest Agreement” (TBIA). According to North West, the TBIA required Telford to transfer its interest in Bay 1 of the Hang Air Building to North West. North West also claims for damages, in addition to its claim for

specific performance, for breach of contract including rent, maintenance, resurfacing and repair expenses. [ 2 ] Telford denies any breach of the TBIA and counterclaims for certain declarations by the Court arising from its rights under the TBIA including an order of specific performance entitling Telford to substitute Bay 3 for Bay 1 of the Hang Air Building upon North West purchasing its interest in Bay 1. [ 3 ] In

summary, the rights and obligations of the parties under the TBIA are at issue in this lawsuit. [ 4 ] North West is in the business of digital aerial photography, laser topographical profiling and other related activities. It utilizes sophisticated digital camera equipment and installed abroad specially designed aircraft to carry out its business. [ 5 ] Telford is in the business of oil field services which includes air craft charter services. [ 6 ] This action concerns a hangar bay and office space in the Hang Air Building located in the City of Calgary, Alberta.

Background [ 7 ] In 1979, an aircraft hangar/office building complex known as the “Hang Air Building” was constructed at the southwest corner of the Calgary International Airport on lands leased from what is now the Calgary Airport Authority (CAA) formerly Transport Canada. The building was comprised of four similar aircraft bays (Bays 1 to 4) each with a two storey office portion facing west to 11 th Street northeast and a hangar facing east, accessing the Calgary International Airport taxiway and runway system.

A fifth bay (Bay 5) was added in the 1980's. [ 8 ] In 1999, North West Assets Ltd. purchased Bays 1 and 2 of the Hang Air Building. The purchase included an assignment of two Transport Canada leases. These two leases were later combined into a single 30 year term lease with the CAA. Bays 1 and 2 are the subject of one lease with the CAA and Bays 3, 4 and 5 are the subject of a separate lease. [ 9 ] North West Assets Ltd. Renovated and occupied Bay 2 in August, 1999. Bay 1 and a portion of the first floor office space associated with Bay 1 were leased to other tenants.

The upper level and a portion of the lower level of Bay 1 were renovated and used by North West Assets Ltd. [ 10 ] In 2000, Telford purchased a majority interest in North West Assets Ltd. [ 11 ] In approximately 2001, Telford purchased Bays 3, 4 and 5 of the Hang Air Building. Telford and its subsidiaries occupied Bays 4 and 5.

Bay 3 was leased to others prior to Telford’s purchase. [ 12 ] On December 31, 2001, North West Assets Ltd. reorganized as North West. [ 13 ] In October 2005, Telford sold Bays 3, 4 and 5 to Landsman Properties Ltd. and used its majority position in North West to occupy a portion of Bay 1 (Telford Interest) comprised of the Bay 1 hangar and ground level office/passenger waiting area spaces contained within the building as well as the parking, ramp and aircraft parking areas adjacent to Bay 1.

North West occupied the remainder of Bay 1 which included the upstairs office space, some main floor office space known as the “Leica Space” and the maintenance area. It also occupied all of Bay 2.

[ 14 ] In March 2007, the minority shareholders of North West purchased Telford’s shares in North West. The terms of the sale were set out in a Share Purchase Agreement dated March 15, 2007. The negotiations leading up to the Share Purchase Agreement started in 2003 and were not concluded until April 2007. A contentious issue during the negotiation was the occupancy of Bay 1.

Telford wanted to maintain its presence in Bay 1, while North West had expansion plans and also wanted to acquire the rest of Bay 1 for its future growth. [ 15 ] To accommodate the interest of both parties, a number of agreements were entered into in addition to the Share Purchase Agreement. The parties entered into a Transfer of Beneficial Interest Agreement (TBIA) and two leases the Leica Space Lease and the Telford Lease. Share Purchase Agreement [ 16 ] The minority shareholders in North West regained control from Telford by purchasing shares in North West.

The Share Purchase Agreement contemplated both the TBIA and the Telford Lease coming into existence upon the closing of the Share Purchase Agreement. It also contemplates North West selling to Telford a beneficial interest in that part of Bay 1 that Telford currently occupies (Telford Interest) but does not include the “Leica Space”. This beneficial interest was sold to Telford for $500,000. Both parties agree that this was an allocated price that did not necessarily reflect market value.

Transfer of Beneficial Interest Agreement [ 17 ] The rights and obligations of the parties under the TBIA are at issue in this lawsuit. Telford is the beneficial owner of the Telford Interest according to the terms of the TBIA. The TBIA states that both parties “acknowledge the intention of this agreement is to transfer an ownership interest in respect of the Building, subject to the provisions of the Head Lease, and a leasehold interest in the Head Lease as if the transferee was ‘Tenant’ pursuant to the head lease”.

Clause 2.3 states that North West holds the Telford Interest in trust as a bare trustee subject to the terms of the TBIA. [ 18 ] The TBIA provides two ways for the transfer of the Telford Interest (i.e. the beneficial interest back to North West) - (1) the exercise of an option to repurchase (the “Option”) or (2) a right of first refusal (the “ROFR”). Clause 4 of the TBIA sets out the ROFR.

If prior to the expiry of the Option (June 2008) Telford received a bona fide third party offer to purchase the Telford Interest and the offer was acceptable to Telford, Telford was required to provide notice of the offer to North West. Within 10 days of receiving this notice, North West could accept the offer, reject the offer outright, or reject the offer with a corresponding assertion of its right to exercise the Option within the next 90 days at the fair market value. [ 19 ] Fair Market Value of the Telford Interest would be determined by an accredited appraiser agreed upon by the parties.

If the parties could not agree on the appraiser, the purchase price would be determined by the average of the fair market value determined by accredited appraisers retained by each of the parties. [ 20 ] The TBIA also provided that if North West exercised the Option on the ROFR, Telford was entitled to provide North West with notice, on or before August 30, 2008 of its election to substitute hangar and office in Bay 3 (the substituted premises) in lieu of the Telford Interest in Bay 1 (the “Swap”). [ 21 ] Clause 3.12 of the TBIA provides that Telford is responsible for the full cost of any alterations that may be required to the office portion to bring it up to a standard which is the functional and aesthetic equivalent to the space over the Telford Interest currently occupied by North West in Bay 1. [ 22 ] The TBIA takes precedence if there is a conflict between the terms of the leases and the TBIA (clause 5.5 of the TBIA and clause 8.13(

b) of the Telford Lease). Leases

[ 23 ] As part of the arrangements leading up to the Share Purchase Agreement, North West gave Telford a lease over the Telford Interest from November 01, 2006 to March 31, 2009. The rent was zero because Telford is the owner of the Beneficial Interest.

Clause 5.12 of the Telford Lease states as follows: At the expiration or sooner termination of this lease, subject to the rights of renewal contained herein and the TBIA, the Tenant will peaceably surrender and give up the Demised Premises, without notice to the Landlord, any right or notice to quit or vacate being hereby expressly waived by the Tenant, any law usage or custom to the contrary notwithstanding. [ 24 ] There is also the Leica Space Lease which includes space in Bay 1 that is not included in the Telford Interest. The period of the lease was from May 15, 2007 to March 31, 2009.

By an order of this Court, North West was granted a writ of possession for this space on June 24, 2009 and possession was obtained on September 30, 2009. No rent was paid by Telford from April 01, 2009 to September 30, 2009. Telford is therefore indebted to North West in the amount of $11,228.55 including GST. The Offer [ 25 ] In a letter dated May 16, 2008, Telford notified North West that it had received a third party offer for the Telford Interest for $2,650,000 million and refined this offer later to state it included only the Telford Interest but not the Leica Space.

The Rejection [ 26 ] North West responded with a formal notice on May 30, 2008 of its rejection of the offer and asserted its right under the ROFR to exercise the Option as per clause 4.4(

c) of the TBIA. The Appraisals [ 27 ] North West retained an accredited appraiser, Mr. Cox of Colliers International Realty Advisors who appraised the fair market value of the Telford Interest at $1,120,000. Telford retained Mr. Pritchard of Linnell Taylor & Associates Ltd. to perform an appraisal which put the fair market value of the Telford Interest at $2,650,000. Notice of Substituted Premises [ 28 ] On August 29, 2008, Telford provided North West with a Notice of Substituted Premises under clause 3.12 of the TBIA indicating its intention to trigger the Swap.

This clause required Telford to bring the office portion of Bay 3 up to a standard which is the functional and aesthetic equivalent to the space occupied by the transferor. It also requires that prior to North West relocating to the Substituted Premises, the Substituted Premises will be in turn-key condition. All re-zoning, partitioning and refurbishment requirements are to be completed to North West’s satisfaction acting reasonably. Telford was to pay these costs in full.

Telford has counterclaimed for specific performance of the Swap in this action. [ 29 ] North West is required under 3.12 of the TBIA to obtain a petition or similar proceeding with respect to the Head Lease in order to provide Telford with privity of contract with the CAA for the entire premises located at Bay 1, on terms satisfactory to Telford. [ 30 ] Clause 7.9 of the TBIA requires both parties to do such further actions and to deliver such documents as may reasonably be required to fully perform and carry-out the intent as well as the terms and conditions of the agreement. [ 31 ] On August 29, 2008, Telford entered into an agreement with Landsman Properties the owner of Bay 3 to facilitate the Swap.

The closing of this agreement has been extended a number of times and has now been extended to December 31, 2011. This agreement was not entered as an exhibit in this action. No one from Landsman was called as a witness in this action. Was the offer received by Telford in May of 2008 a bona fide third party offer? [ 32 ] I am convinced that the third party offer that was received by Telford was not a bona fide offer by an arms-length third party as required by the TBIA for the following reasons: (

i) At the time of the third party offer, Mr. Kroontje, President, the officer produced by Telford at discovery and trial, directly held 25% of Telford’s and 97% of Kierland Capital’s voting rights. At the time of the third party offer, Kierland had entered into a letter of intent to acquire Genstate Development Corp., the third party that made the offer.

Obviously, Telford and Genstate were not at arms- length when a third party offer was signed. (ii) The third party offer was also in my view not a bona fide offer for the following reasons: 1) Evidence given at discoveries and at trial show the $750,000 deposit required by the offer had come from Kierland Capital Corporation and was redeposited to the account of Kierland Capital Corporation. 2) Telford refused to provide a copy of the third party offer despite many requests until August 19, 2008, the day before Mr. Cox’s appraisal was due. 3) During his examination for discovery on November 9, 2009, Mr.

Kroontje was asked the following: Question: Did you have any relationship at all with Genstate Development Corp.? Answer: No. Question: Did you know where the deposit monies came from? Answer: No. This answer was not true. 4) With regard to the truth about the offer Mr. Kroontje apparently regards the truth as a tool to be used for business purposes when advantageous to him. When the truth is not advantageous to him he discards it without a flicker of remorse.

This is what he did in this case at bar. 5) Kierland Corporation was a public company and none of this information was disclosed to the public or its investors. [ 33 ] It is clear to me that Mr. Kroontje knew when the offer was tendered that it was not a bona fide offer from a third party. By doing this Telford breached its obligation under the TBIA. I can only conclude that Mr. Kroontje concocted this offer in order to artificially inflate the value of the Telford Interest.

Specific Performance of the Option [34] With regard to the Genstate offer, North West was an innocent party. It had no knowledge or reason to suspect that this wasnot a bona fide third party offer. An innocent party is entitled to be put into the same position it would have been had the breach notoccurred. Mr. Welter’s evidence on behalf of North West is that had the breach not occurred it would have exercised its Option topurchase the Telford Interest in June of 2008 with a closing date of April 01, 2009 and would have retained Mr. Cox to provide therequired appraisal.

In this circumstance North West is entitled to specific performance at fair market value as at April 01, 2009. [35] Telford in argument states that North West relied on the third party offer in engaging its rights under

section 4.4(

c) of theTBIA. This might be the case if North West had stood by and not raised any issues if it had known that the offer was not a bona fidearms-length third party offer at relevant times. However, at relevant times North West was unaware that the offer was not as requiredunder the terms of the TBIA and therefore is not as Telford suggests “approbating and reprobating” with regard to the third party offer. [36] The grantor of a Right Of First Refusal ((ROFR) must act reasonably and in good faith in relation to that right. (See GATXCorp. v.

Hawker Siddeley Canada Inc. (1996) (ON SC), 27 B.L.R. (2d) 251 (Ont.Gen.Div.)) It is clear to me thatTelford did not act in such a manner in this instance.

The Appraisal Process [37] The relevant clause of the TBIA with regard to the appraisal process was 3.4 and states as follows: The repurchase price shall be the fair market value of the Telford Interest on the Retransfer Effective Date as determined by anaccredited appraiser satisfactory to both parties acting reasonably. [38] It further states that if the parties cannot reach an agreement on an appraiser, then both parties will retain an appraiser and theaverage of the two appraisals will be used. [39] The only appraiser to give evidence as to the fair market value of the property in question as at April 01, 2009 was Mr.

Cox. [40] Even if the ROFR had been properly triggered by Telford, its appointment of a second appraiser was not done on a timelybasis as required under the agreement. By its conduct, Telford from June of 2008 to August 19, 2008 accepted Cox as the “accreditedappraiser”. The ROFR was to be exercised on August 21, 2008.

On August 18, 2008, Kroontje wrote to Cox stating among other things: ...I am concerned about your approach in determining Fair Market Value and therefore submit the following information so that you canbe more accurately informed about the tight situation that exists at the Calgary International Airport. Also, I have included a discussionon many of the points so that hopefully your understanding of the context within which the appraisal is to be conducted is correct. You are to assess the “Fair Market Value”.

If we wanted the agreement to state fair value based on some sort of ‘replacementvalue’ or fair value based on some sort of ‘revenue model’ we would have stated that in the TBIA ...You have been charged withcoming up with FAIR MARKET VALUE and have been instructed to take the Purchase Price in the third party offer into consideration -that Purchase Price was $2,650,000! I am certainly available to meet ASAP to discuss any of the foregoing so that you can finalize your determination of Fair Market Valuebefore the end of August. [41] This letter tells me that Telford had accepted Cox as the accredited appraiser.

It also tells me that Mr. Kroontje wasdeliberately trying to mislead Mr. Cox with regard to the bona fides of the offer.

[ 42 ] Telford did not obtain an accredited appraiser until well after North West had tendered the amount set out in Cox’s appraisal as required under the terms of the agreement. [ 43 ] In 7.2 of the Agreement states that “time shall be of the essence of this agreement” . The Pritchard Appraisal [ 44 ] Even if the alleged offer had been a bona fide one which properly triggered the ROFR and even if Telford’s appraisal had been provided on a timely basis, I have some serious concerns with the appraisal done by Mr. Pritchard for Telford. The appraisal is about 150% more than the appraisal done by Mr. Cox for North West. These concerns are as follows: (

i) The $2,650,000 market value was determined using cost and income approaches only and yet the market value analysis which was used only for purposes of determining the capitalization rate indicates a market value of $1.6 million. Why were comparables used only for determining the capitalization rates? These comparables were fee simple property. There was no downward adjustment in Mr. Pritchard’s appraisal for leasehold properties. (ii) The lease in question expired in 2028 which is 20 years from the date of the appraisal.

The appraisal assumes it will be renewed in perpetuity. (iii) North West bought the entire leasehold interest in 1999 for $1,500,000 (i.e. Bays 1 and 2 of the Hang Air Building). If this was an arms-length sale why was it not used as the best comparable and adjusted for time? It seems to me that a sale of the subject property is always good evidence of value and if it is not used then an explanation should be given as to why not.

None was given. (iv) The appraisal states that although there is a limited pool of potential purchasers there is a strong demand for hangar properties on Calgary International Airport Lands. It seems to me that the only way this can happen is if the limited pool of purchasers are strongly motivated. There was no evidence given in this regard. (

v) The property directly to the south of the Hang Air Building sold in September 2005 for $3,556,000. The total building area of this sale was 54,822 square feet comprising of two hangars (16,375 square feet) an office space bays (23,400 square feet) which are similar to that owned by North West. In addition to these areas, the sale included a larger hangar (10,059 square feet) and attached office space (4,988 square feet) (Cox’s appraisal p. 64). Why was this sale not addressed in the Pritchard appraisal? Mr.

Pritchard says that no recent relevant sales were available as a basis for the direct comparison approach. This approach was not used. (vi) With regard to operating costs, Mr. Pritchard says they are $102,812 per year. It appears to me that the operating costs are as follows: Taxes: 21,500 per year (49.7% of 43,313.47 square feet) Rent: 25,000 per year (49.7% of 50,300.55) Insurance: 17,860 per year (see Cox’s Appraisal) Repairs/Maintenance: 16,742 per year (see Cox’s Appraisal) Utilities: 39,359 per year (see Cox Appraisal) ______ Total 120,466

The $120,466 amount is significantly higher than the $102,812 per annum that Cox attributed to operating costs in his appraisal. Mr. Pritchard states that costs were derived at 102,812. Why were actual costs not used as opposed to “derived” costs? (vii) With regard to hangar rent comparables, what rents were being paid for the space in the building of which the subject property forms part? Was there any vacant space available at the Hang Air Building? These issues do not appear to have been addressed in Mr. Pritchard’s appraisal. (viii) With regard to Mr.

Pritchard’s attribution of $54,000 per year in parking revenue potential at $50.00 per month for 90 parking spaces, there is no evidence that anyone was paying this amount at the time of the appraisal and for that matter there was no evidence of air fare income. (ix) Use of the surface parking lot, ramp area and aircraft parking area is permissive only and not secured. This factor that does not appear to have been taken into account in the appraisal. (

x) Mr. Pritchard assumed the building was 20 years old when it was actually 29 years old. (xi) The City of Calgary’s assessed value of the lands was at July 1, 2007, (arguably the height of the boom) significantly lower than Mr. Pritchard’s appraised value (i.e. it was about 40% of what Pritchard’s value was). Why was there no discussion on this point in this appraisal?

Does it not seem strange that the City would voluntarily be giving up this much property tax revenue in a circumstance such as this? [ 45 ] In my view, all of the above noted concerns if properly addressed would result in a significant reduction of Mr Pritchard’s appraised value of the subject property. The Cox Appraisal [ 46 ] In Mr. Cox’s first draft of his appraisal of the property on August 2008, he appraised the property at $1.6 million dollars. Mr.

Cox was an accredited appraiser and was required in my view to act reasonably in accordance with clause 3.4 of the TBIA which states as follows: The repurchase price shall be the Fair Market Value of the Telford Interest on the Retransfer Effective Date as determined by an accredited appraiser satisfactory to both parties acting reasonably. [ 47 ] After this first draft Mr. Welter who can hardly be described as impartial, together with his adviser became involved in the drafting of Mr. Cox’s appraisal. Mr. Cox adjusted his capitalization rate after discussions with Mr. Welter.

This resulted in his appraised amount being reduced in value. [ 48 ] Mr. Cox gave evidence at trial that any information with regard to the appraisal process would be useful. Mr. Welter knew that space in the Hang Air Building had been leased at $20.00 a square foot and failed to tell Mr. Cox about this. Mr. Welter also failed to tell Mr. Cox prior to the April 1, 2009 appraisal, that he had received a letter from DTZ Barnicke, a real estate brokerage firm, which indicated a value of $120 to $140 per square foot which would put the Telford Interest in the $1.6 million range. [ 49 ] Mr.

Cox admitted in cross-examination that he did not obtain any information with regard to leasing rates at the airport space but only with regard to the general industrial area in the northeast.

[ 50 ] Mr. Cox admitted errors in his initial appraisal in August of 2008 which would have increased his appraisal by $65,000. [ 51 ] The August 2008 appraisal by Mr. Cox of the Telford Interest space was $1.12 million. In September 2008 he appraised all of Bays 1 and 2 at $4,950,000 which is approximately $131 per square foot. According to his evidence in cross-examination this $131 per square foot amount put the value of the Telford Interest at approximately $1.6 million. This was one month after the August 2008 appraisal.

When asked to explain the difference, he gave evidence that the Telford Interest was a portion of the building and not the complete building. I find this explanation to be unacceptable. Bay 1 and 2 in themselves were a portion of the five bay Hang Air Building and not the complete building. Therefore, I am adjusting the August 2008 appraised value of the Telford Interest space upwards to be $1.6 million. The 2009 Appraisal [ 52 ] It was Mr. Cox’s evidence that external factors being a down turn in the economy in late 2008 and 2009 resulted in reduced market values on April 01, 2009.

I accept his evidence in this regard. Therefore in my view, Mr. Cox’s appraisal for April 01, 2009 should be adjusted downward to $1.3 million. This is the fair market value that North West is required to pay Telford for the Telford Interest under the TBIA. Specific Performance [ 53 ] North West therefore has a contractual right to reacquire the Telford Interest at the fair market value amount of $1.3 million and is entitled to an order for specific performance of this contractual rate. It does not appear to be in dispute that both parties agree that the subject matter of the contract i.e.

Telford Interest is a property which is unique. When a claim relates to real estate, damages will not be an adequate remedy where the property that is the subject matter of the contract is unique. (Robert J. Sharpe, Injunctions and Specific Performance looseleaf ed. (Aurora, Ont.: Canada Law Book, 2009) at 7-3 to 7-14.) The Swap [ 54 ] Telford is entitled to proceed with the Bay 1 for Bay 3 swap. However it is not in a position to do so since it has not purchased Bay 3 from Landsman Properties. As such Telford cannot obtain specific performance unless it is shown it is ready, willing and able to perform.

At this stage it has not. The “time is of the essence” argument with regard to the swap is not being pursued by North West so Telford’s rights under the swap are still available to it, if it wishes to pursue them. Clause 7.9 of the TBIA provides as follows: North West and Telford agree to do such further acts and deliver such documents as may reasonably may be required to fully perform and carry out the intent as well as the terms and conditions of this agreement. [ 55 ] It should be noted that based on the evidence at trial, it is clear that Mr.

Welter of North West has no real interest in swapping Bay 1 for Bay 3. However, if Telford chooses to proceed with its rights under the swap, North West is required under the agreement to fully cooperate in order to ensure the provisions under the TBIA are properly carried out.

For example, it is required to take the necessary steps and cooperate with Telford in order to ensure that appropriate approvals are obtained from the CAA in order to carry out the swap. [ 56 ] As things now stand between the parties, the general layout of the plans and drawings for Bay 3 appear to be acceptable to the parties except for the issue of access and egress. North West has demanded that the entire staircase within Bay 2 be replaced with a larger staircase. Mr. Murray, Telford’s architect stated in evidence that as it exists now, it is an emergency exit that needs to be renovated.

He further stated at trial that what North West currently has now is very nice, light and airy and that the current middle stairway which is an emergency/fire exit is not. Therefore North West is entitled to have this stairway changed as per its request to be the functional and aesthetic equivalent of what it now has and as confirmed by Mr. Murray. [ 57 ] Telford remains in occupation of the Telford Interest space. Telford is in breach of lease by failing to vacate the Telford Interest space when the term expired on August 31, 2009. It has continued to occupy the Telford Interest space for free.

Telford was served with a notice to quit by North West. Telford refused to surrender possession of the premises. North West refused rent amounts offered by Telford.

[58] This is a tenancy in sufferance which arises when a tenant continues in possession after expiry or termination of its lease.When a tenancy at sufferance exists the Landlord has no right to distrain and the remedy is for ‘use and occupation rent’. (See RichardOlson, A Commercial Tenancy Handbook, Vol. 1 (Toronto: Carswell, 2004) at 3-71.) [59] In Independent Laundry Rentals v. Fernwood Construction, (Alta. Q.B.) the court held that because thelandlord did not accept rent after the lease expired, the landlord’s entitlement was to ‘use and occupation rent’.

The measure of damagesfor use and occupation rent is the amount it would recover for the rental of the premises in the market place (see Kenmar Inns Ltd. v.Letroy (1993), (BC CA), 86 B.C.L.R. (2d) 167 (C.A.)). [60] Based on the evidence of Mr. Cox, an $18.00 per square foot gross lease rate was presented as reasonable as at April 01,2009. Mr. Welter testified that the market rent for the Telford Interest from April 01, 2009 to February 28, 2011 calculated at $17.00 persquare foot would have been $425,446.17.

It is very important to note that this figure includes $264,874.21 of operating costs. [61] Therefore at $17 per square foot North West is entitled to a further amount from March 01, 2011 of $647.28 per day fromTelford until Telford vacates the Telford Interest.

Although Telford is technically required to vacate the Telford space immediately, forpractical purposes I will grant declaratory relief to Telford and set the possession date at August 31, 2011. [62] North West is entitled to as follows: i) 11,228.55 Leica Space rent ii) 11,466.34 additional rent January 01, 2007 to March 31, 2009 iii) 73.50 maintenance costs (runway) iv) 8,639.07 taxiway resurfacing v) 1,330.35 repair expense Total of $32,737.81. [63] North West is entitled to $17,000 for rental of other facilities and additional costs resulting from Telford’s breach of contract.

Telford Counterclaim - The Swap [64] Telford in its counterclaim seeks a declaration that it is entitled to the substituted premises and an order for specificperformance in accordance with that declaration. To repeat, in order to obtain a judgment for specific performance, Telford must show itis ready, willing and able to perform the agreement. I agree with North West submissions that it would be entirely illogical to empowerNorth West by way of an order for specific performance to pay a purchase price for premises that are not available for conveyance andoccupation.

More importantly Telford has not yet purchased the property which when purchased would require other steps to becompleted under the TBIA which include re-zoning, refurbishment, partitioning and redoing the entrance stairs as previously stated. Conclusions [65] In the result, North West is granted the following orders:

1) Telford is to specifically perform the Transfer of Beneficial Interest Agreement by transferring the Telford Interest to North West for the sum of $1.3 million being the fair market value as at April 01, 2009. 2) North West is to be given possession of the Telford Interest by August 31, 2011. 3) Telford is to pay damages to North West for its wrongful occupation of the Telford Interest from April 01, 2009 in the amount of $425,446.17 to February 28, 2011 plus judgment interest on that amount from February 28, 2011 plus a per diem rate of $647.28 from March 01, 2011 until Telford vacates the space no later than August 31, 2011. 4) North West is awarded judgment from Telford for breach of contract in the amount of $17,000 for the rental of other hangar facilities and fuel costs. 5) North West is awarded judgment against Telford in the amount as set out as follows: i) 11,228.55 Leica Space rent ii) 11,466.34 additional rent January 01, 2007 to March 31, 2009 iii) 73.50 maintenance costs (runway) iv) 8,639.07 taxiway resurfacing v) 1,330.35 repair expense For a total of $32,737.81 plus Judgment interest on this amount from April 01, 2009. 6) The counterclaim of Telford’s is dismissed. [ 66 ] The parties may make an appointment to speak to costs.

Heard on the 28 th day of February, 2011 to the 10 th day of March, 2011. Dated at the City of Calgary, Alberta this 4 th day of July, 2011. J.T. McCarthy J.C.Q.B.A. Appearances:

Gordon C. Weatherill, Q.C./Clara C. Ferguson for the Plaintiff Patrick D. Fitzpatrick for the Defendant