Real Life Homes & Investments Ltd. v. Wert, 2011 ABQB 447

Court of Queen ’ s Bench of Alberta Citation: Real Life Homes & Investments Ltd. v. Wert, 2011 ABQB 447 Date: 20110708 Docket: 0703 06998, 0703 06999 Registry: Edmonton Between: Action No. 0703 06998 Real Life Homes & Investments Ltd. and Viki Sabourin Plaintiffs - and - Grant Wert, Wert Homes Ltd. and Crystal Lake Estates Inc. Defendants And Between: Grant Wert Plaintiff by Counterclaim - and - Viki Sabourin, also known as Victoria Sabourin and Vickea Sabourin Defendant by Counterclaim

And Between: Action No. 0703 06999 Wert Homes and Investments Ltd. and Grant L. Wert Applicants - and - Real Life Homes and Investments Ltd. and Viki Sabourin Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice D.A. Sulyma _______________________________________________________ I. Introduction [ 1 ] This action and Counterclaim is founded on the partnership agreement reached between Ms. Viki Sabourin (“Ms. Sabourin), a named Plaintiff, and Grant Wert (“Mr. Wert”), the Plaintiff by Counterclaim in October of 2005.

These two agreed to develop a number of lots for sale of residential homes in Grande Prairie at that time and it was agreed by the parties in their Pleadings and at trial that oral agreement was reached in October of 2005, with a basic agreement of the two being 50-50 partners in a to be incorporated company. That company was Real Life Homes & Investments Ltd. (“Real Life”). As will be seen, there were other terms agreed upon. Ultimately, the parties had a falling out. Ms.

Sabourin claims through “Real Life”, a resurrected company formed in 2005 for amounts owed pursuant to the agreement and damages for breach of contract or alternatively damages claimed on the basis of resulting trust principles or alternatively compensation on the basis of quantum meruit. Mr. Wert denies the breach and other claims and counterclaims for his services in completing construction of homes on the lots purchased. He also alleges that Ms. Sabourin repudiated the contract between them. In his arguments at trial, counsel for Mr.

Wert submitted that the appropriate remedy given the facts here is a winding-up of the corporation and a distribution of the assets thereafter according to an accounting of sums advanced by each party to the company. [ 2 ] Ms. Sabourin, unrepresented at trial, does not dispute the ultimate remedy of winding-up but asserts her claims on that ultimate remedy. Ms. Sabourin had by amended Statement of Claim made a claim against Mr. Wert founded in defamation. At the conclusion of her evidence led on behalf of both Plaintiffs, Mr. Vaage applied for a nonsuit with respect to those claims and it was granted.

II Cases and Authorities

[3] Cited by the Court: Hunter Engineering Co v. Syncrude Canada Ltd, (SCC), [1989] 1 SCR 426, 57 DLR (4th) 321; Frame v. Smith, (SCC), [1987] 2 SCR 99, 42 D.L.R. (4th) 81; Peter Kiewit Sons Co v. Eakins ConstructionLtd, (SCC), [1960] SCR 361; Starrs v. Cosgrave Brewing & Malting Co of Toronto (1886), 1886 CanLII 8 (SCC), 12SCR 571; Aspen Wapiti Ltd v. Jensen, 2001 SKCA 63, 207 Sask R 189; Urbanplan Consultants Ltd v. Wicha (1977) (NS CA), 23 NSR (2d) 9 (CA); Irvine v. Parker (1903), 40 NSR 392 (NSCA), 1903 CarswellNS 50; Kemeridis v. Solomon, 2009 ABQB 16, 54 B.L.R. (4th) 78; Cooper v.

Fantasy Construction, 2004 ABQB 477, 364 AR 34; Douse v. Mascioli, 1997 CarswellOnt2435, 10 RPR (3d) 205 (Ont Gen Div); Sanko Steamship Co v. Eacom Timber Sales Co (1986), (BC SC), 32 D.L.R. (4th) 269, 1986 CarswellBC 355; Babcock & Wilcox Canada Ltd v. Sydney Steel Corp (1985), (NS SC), 69 NSR (2d) 34 (TD); Business Corporations Act, RSA 2000, c B-9, s.215(1(b)(ii); GHL Fridman, The Law of Contract in Canada, 5th ed (Toronto,Ont; Thomson Carswell Ltd, 2006) at 579. III Evidence [4] It is fair to summarize the evidence generally as proving an agreement was reached between Ms. Sabourin and Mr.

Wert todevelop and market a number of residential lots in Grande Prairie. It was established generally that Wert would provide the financialbacking for this project and Ms. Sabourin would provide the supervisory skills of a person with general contracting experience in thehome-building industry.

There is an ongoing dispute in the evidence of both of these parties as to the particulars of each of their roles, inparticular who was responsible for obtaining financing and importantly, ensuring the company was approved by the Alberta New HomeWarranty Program (New Home), which was essential to the success of this venture. [5] The evidence is clear that it was expected that the parties through the new incorporation of Real Life would after Novemberof 2005 be building homes. However, matters became stalled at the financing level and, importantly, at the stage of the application toNew Home.

Construction began on four of 12 lots that were purchased in the name of Mr. Wert personally without approval of thecompany’s application to New Home. Then, the initial application to that program by Real Life was turned down. This became an issuebetween the parties which led to the fatal falling-out. Although the two individuals attempted to negotiate their differences, that did notoccur. The 12 lots in question that had been in the name of Grant Wert were transferred in April of 2006 to a numbered company andthereafter to a company named Wert Homes Ltd.

The Defendant Wert does not dispute that prior to this falling-out, from January toMarch, there was work done on four of the 12 lots to construct residences as per the original agreement. [6] However, this action raises the legal significance of the other issues related to the application and denial of such to the NewHome program. [7] My review of the evidence called by both parties and of both parties will be brief and centred on clear relevant issues. IV Evidence of the Plaintiff Viki Sabourin [8] At the time of the trial before me Ms. Sabourin was self-represented.

She presented the case on her behalf and that of RealLife. Although at some point Real Life Homes Ltd. was struck from the corporate register for failing to file annual returns, sheresurrected the company and provided me with a corporate registry document to that effect subsequent to the end of trial. She claims as ashareholder of Real Life and as a continuing director. She did not appear to contest the proposition that any value of Real Life onwinding-up would be pursuant to the original agreement of a 50-50 shareholding split. [9] Ms. Sabourin testified that she entered into a partnership agreement with Mr.

Wert in October, 2005. They were interested in purchasing lots for residential development which were, according to her, at that time “going fast”. As a result on October 27th of 2005and pursuant to the parties’ plan lots were purchased in Mr. Wert’s name personally. She stated that at that time lots were selling quicklyand the to-be-formed company didn’t have an operating bank account. The company Real Life was incorporated by a Grande Prairielawyer, Mr. Lewis. During October and November Ms. Sabourin lined up trades and reviewed plans. In January of 2006 she signed apersonal guarantee for financing.

She testified that at that time she and her then husband were doing other contracting work in GrandePrairie in the name of a company called Masada Developments (“Masada”). By agreement with Mr. Wert, Masada and she were subjectto a restrictive covenant.

[ 10 ] By the terms of the agreement she was to receive $5,000 in respect to her construction supervising duties, to be paid at the end of construction for each home on a lot. She states she was to receive a real estate commission of 2.5 percent on each end of any transaction regarding a sale of a home. There was a clear division of responsibility. All financial issues were to be dealt with by Mr. Wert. “I was not to put in one dime”. She was to be in charge of choosing lots and of construction. She did this from October onward. After October she gathered quotes and supervised framing.

She testified to the scope of work she did in supervising construction from January at a time when the newly formed corporation did not have liability insurance. She stated that she ultimately obtained the required insurance. [ 11 ] Much was made of the importance of an application to New Home to this business venture. Although in cross-examination Ms. Sabourin maintained that she did not have the responsibility of arranging for coverage by New Home, she admitted that she ultimately sent for and obtained the application package. Ms. Sabourin in her testimony in chief maintained that she passed the package to Mr.

Wert to fill out and he passed it back as he didn’t have time to fill it out. It was put to her in cross-examination that it was her responsibility to apply to this program and that indeed she hired a clerical accountant to specifically perform that task. She denied that. Later in testimony she admitted she instructed the same accountant to deal with the application in late October and that the application was not sent until February 7, 2006. [ 12 ] Ms. Sabourin’s claims came under intense scrutiny in cross-examination.

Inconsistencies in prior testimony regarding her evidence on how the application was obtained, who filled it out and who provided it were pointed out. Her evidence was indeed inconsistent. This included testimony regarding her responsibility for and knowledge of the lack of insurance. She maintained in cross- examination that it was Mr. Wert’s responsibility to obtain insurance and although she did so at the beginning of February, she only did it because he had not fulfilled that responsibility.

It was put to her in cross-examination that this testimony was inconsistent with affidavits that she later filed in support of lien claims. She acknowledged the discrepancy. [ 13 ] Ms. Sabourin was cross-examined intensively with respect to claims in her Statement of Claim regarding construction and other work she allegedly performed. Mr. Vaage in cross-examination put to her that she had exaggerated these claims to put pressure on Mr. Wert initially and secondly, to exaggerate the lien claim which she later made on June 1, 2006. [ 14 ] Ms.

Sabourin was cross-examined with respect to her evidence-in-chief that she had signed a guarantee. It was put to her in cross-examination that this never resulted in encumbrances on her property. She stated that she understood that her assets were encumbered but did not produce in these proceedings documents from the ATB substantiating her understanding. It was also put to her that as money was never advanced on the line of credit, she was never at risk.

Her response was that she would have been at risk had they sued Real Life. (The evidence did indicate the guarantees were never enforceable as ATB did not advance on this line of credit.) [ 15 ] She was cross-examined regarding her evidence that it was Mr. Wert’s responsibility to apply to New Home and her position that she only participated in that process as it was “late” and she was “helping him”.

Although in previous testimony she had stated she never saw the Business Plan that was ultimately submitted to New Home, she then conceded that she had had input into numbers in the Business Plan submitted to New Home. Ultimately her position was “I didn’t see it when it went to New Home, I was just involved when we wrote it out”. [ 16 ] Although in her testimony Ms. Sabourin stated that the agreement regarding her real estate commissions was 5 percent in total, 2.5 on each end, it was put to her in cross-examination that the agreement was rather based on her 2.5 percent commission as she had previously earned.

She denied this. However, in cross-examination, it was pointed out to her that the Business Plan submitted to New Home (which she participated in) showed the commission to be received by her was 2.5 percent. She then stated that although she would have looked at the Business Plan prior to its production to New Home, that it “had been changed subsequently”. [ 17 ] She was cross-examined on discrepancies regarding trial and other evidence regarding the terms of the agreement. She confirmed that there were no written notes she took at the onset of this deal which reflected the initial terms. Mr. Vaage put to Ms.

Sabourin that there were no written notes of the agreement other than in the Business Plan and those contained in the documents of the lawyer Mr. Lewis. She maintained she herself took notes in Mr. Lewis’s office at some points. However, those notes she took with respect to the 2.5 versus 5 percent differ from the notation in the Business Plan and the Lewis documents. It was put to her that these notes were asked for in initial examination for discovery and not produced until a second examination for discovery had been completed. Her answer was “possibly”. It was suggested by Mr.

Vaage in cross-examination that she manufactured the notes sometime after the events.

[ 18 ] Ms. Sabourin testified that profit projections shown in the Business Plan submitted both to ATB and New Home were incorrect. She maintained that the delay in submitting the New Home application was based on late insurance coverage. She acknowledged that the rejection of the New Home application was in part based on her bad credit rating and a lack of disclosure of her debts. Although she did acknowledge some discrepancies between actual debts and those disclosed, she had explanations for the discrepancies and with respect to alleged misrepresentations to New Home.

She also stated “I can’t answer, I don’t know what’s done there”, (i.e., at New Home). [ 19 ] It was put to her that at examination for discovery she testified that the first time she saw the rejection letter was at the discovery but that she had called Rick at New Home on February 26, 2006 and he advised her that the application was rejected. She admitted to the phone call here at trial. She denied that he advised her not to use her name on any subsequent application.

However, by her evidence she acknowledged he advised her (i.e., Real Life) to reapply after certain liens were off her home and (contradictorily) that she ought not to be reapplying to New Home. She continued to maintain in cross-examination that the New Home rejection was not based on her negative credit rating. [ 20 ] She testified that after the New Home refusal, she moved quickly to apply to the National Home Warranty Program. This was also on the advice of Rick at New Home.

It was put to her that were she and Wert to be rejected from that program that financing would be in extreme jeopardy and the whole project would be a catastrophe. Her response was that Rick had assured her that the National Home Warranty Program would not reject the application. She was cross-examined vigorously with respect to the knowledge she had of the reasons for the rejection of the application to New Home. She did acknowledge that as a result of the rejection of that application that there was friction between the two partners. “He wanted me off immediately”.

She did not agree with anything in the rejection letter as to the true reasons for rejection although she acknowledged that the reasons were as stated. For instance, she testified she had told Mr. Wert that the main reason she was given for the rejection was Mr. Wert’s lack of experience in the housing industry. In cross-examination she stated that was what Rick had told her, although that was not stated in the rejection letter itself. [ 21 ] Ms. Sabourin was questioned over conversations she had with Mr. Wert and then Mr. Lewis, the lawyer, with respect to “calling it quits”.

She denied that she offered to call it quits if a certain number of lots were to be transferred to her. She denied she’d ever submitted in writing a plan to Mr. Wert to carry on the business. She denied discussing proposals for a payout plan with Mr. Lewis. [ 22 ] Ms. Sabourin acknowledged that at the very same time frame of discord with Mr. Wert, she presented him with seven invoices for framing on three homes, all done by Masada. She acknowledged these invoices were paid. It was put to her by Mr. Vaage that this had been her priority and that she had pressed Mr.

Wert to pay these invoices despite the fact she knew he had no funds. Her reply was that he chose to pay those on his own; the work had been done and the invoices were overdue. She believed some of the invoices were prepared “I believe after the fact” and that two subsequent invoices dated March 27 and 30, 2006 had been prepared by her son. She denied that the payment of invoices to a company in which she had a shareholding was a priority to her as opposed to dealing with the interests of Real Life. [ 23 ] Ms. Sabourin acknowledged that she had hired Masada without obtaining prior estimates.

She was questioned with respect to the rates charged. She stated that Mr. Wert could have objected to the invoices (presumably in their conversations) despite the fact that he had not been given them until he had actually paid them in full. Ms. Sabourin further testified that she had sent for the National Home Warranty Program application after the New Home rejection, but in the interim she learned that Mr. Wert had transferred the lots and made his own application. This occurred after the payment of the Masada accounts and his transfer of the lots to the numbered company and subsequently to Wert Investments.

This, apparently to explain the fact she never sent in the application. [ 24 ] There is a breach alleged with respect to the improper use of a charge account by Ms. Sabourin at Woodland Tim-Br Mart (“Woodland”). Her position is that Mr. Wert had given permission for her husband and son to collect goods and to charge them to the Real Life credit account. She admitted that some of the goods charged to that account were for personal use but stated that she had intended to pay back the funds to Real Life.

She was also questioned on hauling fill from the Real Life properties to her own property as a misuse of funds for personal expense, and as a breach of contract. [ 25 ] Although in her evidence-in-chief and her Pleadings she maintained that Mr. Wert had wrongfully converted the land lots to his own company, she admitted that at the time of the purchase of the lots she was aware that they were registered to him personally. However, she claimed that this was due to the lack of an operating bank account in the name of Real Life at the time. With respect to amounts that Mr.

Wert subsequently contributed to finishing construction, she stated that she had had no opportunity to contribute as that opportunity had been taken away.

[ 26 ] Ms. Sabourin was also vigorously cross-examined with respect to her claims against the lots by way of builder’s liens for her work done. In particular it was suggested that she misrepresented the dates of work done in order to file liens that were clearly out of time and that she exaggerated. [ 27 ] She was also vigorously cross-examined with respect to quantification of her claims. For reasons that will become obvious later, I do not find it necessary to cover this testimony in detail. V Evidence of Owen Lewis [ 28 ] Ms. Sabourin called Mr.

Lewis, who had met with the parties in October, 2005 and who had incorporated the company, and then later met with the two parties in late March. He was clearly aware of the dispute between the parties by the end of March. He understood that as a result of the rejection by New Home, there was trouble with financing and that construction mortgages from ATB could not be accessed with Ms. Sabourin involved. Ms. Sabourin questioned Mr. Lewis with respect to a memorandum and suggested that it was a memorandum of advice to her. He denied that to be the case. [ 29 ] The memo confirms Mr.

Wert’s evidence regarding negotiations. VI Other Evidence [ 30 ] Mr. Bullock is now a general contractor in Lethbridge who had been hired by Mr. Wert subsequent to the falling-out to perform frame inspections. In cross-examination he stated that in relation to his subpoena to attend here, Ms. Sabourin had threatened him: “I don’t want to have to come after you”. In re-direct Ms. Sabourin put it to him that he had been told by her it was up to him to clear his name. His answer was “Hopefully I have today”. [ 31 ] Ms. Sabourin also called Mr. Greg Ryan, a framer.

I did not find his evidence relevant to any of the issues. That is similar for the other witnesses Gerald Pollard, Elmer Dueck, Michael Wheaton and Jamie Stewart. VII Evidence of the Quantum of the Parties’ Claims [ 32 ] The parties agreed that a reconciliation report of Mr. Boyd be entered as evidence. The report reconciles Real Life accounts and the claims made. I do not find it necessary to review the details of that report or the cross-examination based on it in detail. [ 33 ] Similarly, Ms. Sabourin called Ms. Picco with respect to quantification of her claim.

I do not find it necessary to review her testimony in detail. VIII Evidence of the Defendant Grant Wert [ 34 ] Mr. Wert testified that he met Ms. Sabourin originally as a result of a reference and while she was working at a company named Avonlea Homes in Grande Prairie. In September she called to say she was no longer working with Avonlea Homes and was interested in pursuing a building venture with him. He was interested and later introduced her to Mr. Lewis, his lawyer. They both gave him details of their proposed venture. Mr.

Wert’s testimony of the details of the venture mirror the major details testified to by Ms. Sabourin. That is, they were to incorporate a new company, each would be a director and shareholder. [ 35 ] A banking resolution was passed and ATB was chosen as a finance vehicle.

[ 36 ] Lots at the time in Grande Prairie were being marketed through Crystal Lake Estates Inc. and its in-house salesperson, Mr. Dehaan. Ms. Sabourin arranged for Wert to meet with him. The parties were of the view that Grande Prairie was a hot market and they should quickly choose lots to develop. By the second meeting with Mr. Dehaan, ten lots were chosen by the parties for purchase. [ 37 ] At that time Mr. Wert asked if there was a discount for builders and was told that that would be the case if “they were a bona fide builder”.

It was explained to him that in turn meant the company would need warranty coverage from a program such as that offered by New Home. [ 38 ] Mr. Wert had no experience in construction or in applying to such a program. In the meeting Ms. Sabourin stated she could obtain the warranty program approval within one week and Mr. Dehaan then granted them a purchase discount. All agreements for the purchase of the ten lots were then put in Mr. Wert’s name personally. Mr. Wert testified that Ms. Sabourin in turn was aware that all contracts for purchase were in his name.

His testimony is that he put up the whole of the deposit money on the lots and for security deposits. Ms. Sabourin was aware of his investment. The idea was that as soon as the approval for building mortgages came from ATB that he would be repaid. Documents were prepared for submission to ATB. These included a business incorporation agreement and a Business Plan. [ 39 ] By his evidence Mr. Wert and Ms. Sabourin agreed that he would be the financier but also that the corporation would need two signatures in order to draw on any funds made available to Real Life through ATB.

At the time of the application to ATB he also deposited $50,000 in an account to cover any anticipated costs that would occur before building mortgages were advanced. [ 40 ] By the letter of acceptance for financing from ATB, the corporation was required to have confirmation of approval from New Home. [ 41 ] Mr. Wert testified that it was Ms. Sabourin’s job to apply for and follow the status of the New Home application and to give ATB appropriate confirming documents. Also to obtain such things as blueprints and site plans as “she had everything”.

Guarantees were executed, but in the end there was no money advanced by ATB and this becomes irrelevant. [ 42 ] Indeed at the time of signing guarantees (November, 2005), Mr. Wert was of the belief that all conditions precedent had been satisfied. It was later that he found out that the application to New Home hadn’t been submitted. He had prepared the Business Plan that was submitted to ATB and Ms. Sabourin picked it up along with the financial sheets sometime in mid- October. All of the numbers that related to the real estate business and expected profit and their own Business Plan came from Ms. Sabourin. Mr.

Wert testified that they also agreed that $200,000 would be the maximum investment and loan to start up this business. [ 43 ] The agreement between them was that she would earn $5,000 for supervising construction for each house built and, if she sold any home, she would earn a 2.5 percent real estate commission. The profit of the venture would be split 50-50. However, sale profits had to remain in the company for a period of one year. This in part as his investment funds were to be repaid before any distribution of profits. They did not have any discussion with respect to the possibility of loss. According to Mr.

Wert there was no way they could lose in the booming Grande Prairie real estate market. In terms of what he anticipated as profit as stated in the Business Plan, he stated he “just went on what she said we could do”. [ 44 ] Mr. Wert kept notes of the initial meeting with Mr. Lewis. At the same time documents of incorporation were signed. His notes indicate the 2.5 percent real estate commission and “Viki was not to build except for her immediate family”. This latter condition was as a result of his concern that he did not want Ms. Sabourin or the company Masada to be in competition with Real Life.

He did not recall Ms. Sabourin making any notes during the course of the meeting with Mr. Lewis. [ 45 ] By mid-December of 2005 the lots had been purchased, deposit monies had been paid on ten lots, the ATB credit line had been set up with his deposit of $50,000 and they had a commitment letter for building/construction mortgage financing from ATB. [ 46 ] Mr. Wert was not certain what went on in December of that year. By his own admission he was very green although he

thought Ms. Sabourin was doing all to ready construction on the lots. He also thought by that time that the financing and necessary applications were “all a done deal”. When asked when he learned that construction had commenced on four of the lots and how he learned, he stated that he found out either from an excavating bill or from a cribbing bill she submitted. This was in early February, 2006. Prior to that they had had no discussion regarding the commenced construction on the four lots. This despite the fact that ATB had approved building mortgages for only three lots.

By that time he started to get nervous as “we had four holes dug and no one to purchase the lots”. [ 47 ] He wrote a cheque dated January 17, 2006 as the application fee for New Home. He was shocked that the cheque was just being written at that time as he thought the application had been made months ago. However, he stated he did not think it was worthwhile to bring the matter up at the time. In any event, Ms. Sabourin said that her accountant had been working on the application (to explain the delay). [ 48 ] By that time Ms.

Sabourin had also persuaded him that the lots were still going fast and persuaded him to put deposits on six duplex lots. This was in January of 2006. By January 18, 2006 he had personally put $187,675 into the venture. At the same time he began to worry about his repayment from ATB construction mortgages as the ATB financing conditions had not been fulfilled, and he was beginning to pay more construction bills. At the same time his other companies were all being drained of cash. [ 49 ] He continued discussions with Ms. Sabourin.

He was reassured by her that all applications were “going in, all was being handled”. He provided a balance sheet for the application. That balance sheet did not show the corporation owned the ten lots or that the deposits had been paid. Mr. Wert testified that the reason was that at the time Mr. Wert himself was the owner of the lots and had paid the deposits, (i.e., not Real Life). [ 50 ] He assumed that Ms. Sabourin was dealing with liability insurance. He believes he signed the New Home application documents February 3, 2006. He had not seen the form of application before then.

He was aware that the application contained the same Business Plan as had been submitted to ATB. Ms. Sabourin picked up the documents from him at his home. His understanding was that on February 7, 2006 the application was finally sent to New Home. At that time he was on holiday and did not return to Alberta until February 18, 2006. [ 51 ] On March 1, 2006 he met with Ms. Sabourin and asked her to “get on the application”. She then told him they had been rejected as a result of his lack of experience in the industry. When Ms. Sabourin informed him of the rejection, he was distraught.

He stated he wasn’t to be a construction foreman, she was. Ms. Sabourin advised him to call Rick at New Home to straighten the matter out. [ 52 ] Mr. Wert called Rick and was advised that the rejection was as a result of unacceptable references of Ms. Sabourin. Secondly, that there was a six-figure lien on her home undisclosed in the documents and New Home didn’t want to do business with her, and finally that there was inadequate capitalization of Real Life as the balance sheet submitted showed zero assets. Mr.

Wert in turn advised Rick that there was $50,000 advanced to the ATB account plus the value of the lots he purchased. Rick replied “that really wasn’t the problem, that could be fixed”. Mr. Wert asked Rick what he should do and Rick replied that if Ms. Sabourin was “off the documents”, another balance sheet was provided and the company could show another experienced site foreman, then it was his belief that the application would be accepted. [ 53 ] Just prior to this date, Ms. Sabourin had demanded $20,000 be paid to Masada. Mr. Wert testified that Ms.

Sabourin made it clear that if he didn’t pay something to Masada, that they would stop working. At the same time other subcontractors were demanding payments. [ 54 ] On March 1 st on becoming aware of the New Home Warranty rejection, Mr. Wert immediately asked Ms. Sabourin to take her name off the company documents as a shareholder and director and offered instead to enter into a contract with him which preserved her financial rights according to the original contract. Her response was to say they should apply to the National Home Warranty Program.

However, by then, he testified, he wouldn’t take the chance of rejection with her name still on the company. At the same time Ms. Sabourin continued to say she’d “handle it” within two to three weeks. [ 55 ] By March 3 rd the amount Mr. Wert had advanced to Real Life was $230,000 and he testified that by the end of March he was “completely distraught”.

[ 56 ] Subsequently but around the same time frame he realized that the credit account at Woodland indicated that Ms. Sabourin and her husband and son all had authority to purchase goods there on the Real Life credit account. He was not aware of this incorrect authorization until after he had frozen that corporate account. He also stated at trial that the form had been altered. [ 57 ] In the middle of March Ms. Sabourin came to his home and told him that if he wanted her name off the company he could get it in exchange for transferring eight of the lots to her. He was “in awe” of this suggestion.

It was then obvious to him that she didn’t want to take up his offer of removing her name and entering into another contract between them with original terms. [ 58 ] Mr. Wert testified he did not realize that Ms. Sabourin had an interest in Masada when he wrote the February 28, 2006 cheque to Masada. He notes that she stated that she needed money to pay Masada without telling him about the New Home rejection until the next day, (March 1, as above). Further, as evidence of this breach, Mr.

Wert testified it was only later that he saw the actual Masada invoices and realized that he had been charged $10 per square foot for work done by Masada when Ms. Sabourin had previously told him the rate would be $7.50 per square foot. [ 59 ] Around March 15 th Mr. Wert froze the account at Woodland. By his evidence that was the last time Masada worked on the homes. Despite that, Ms. Sabourin was threatening to file builder’s liens on the lots. Ms. Sabrouin also demanded another certified cheque payable to Masada which was delivered to her April 13, 2006. Ms.

Sabourin subsequently filed liens on all lots on June 1, 2006, well after the date Mr. Wert testifies the last work was done by her or by Masada. [ 60 ] During March, 2006 negotiations continued. Mr. Wert testified he would phone Ms. Sabourin with proposals. For instance, he offered $10,000 and she laughed in return. He stated that every time he gave her a proposal she would increase her demand. Indeed he thought they had a deal and talked to his lawyer Mr. Lewis about it, and she reneged on it and she demanded more when that deal was not honoured. This is reflected in Mr.

Lewis’s notes of the March 31, 2006 meeting and Mr. Wert’s own notes. Mr. Lewis advised them he had a conflict. [ 61 ] By the end of March Mr. Wert started a new company with an intention to get a National Home Warranty to satisfy the ATB building mortgage requirements. He transferred the lots to a numbered company and then to Wert Homes on April 11, 2006. He then dealt with Crystal Lakes, the vendor of the property, and substituted Wert Homes as purchaser on the original purchase contracts in his own name. Crystal Lakes had “no problem” with that change. Thereafter Mr.

Wert was successful in being accepted to the National Home Warranty Program. As he had been successful in being admitted to that program, ATB approved the building mortgages and was prepared to advance. However, just before he was ready to draw on the mortgages, he discovered Ms. Sabourin had filed builder’s liens on the lots. Eventually the liens were removed by consent court orders and the ATB mortgages were drawn by Mr. Wert. [ 62 ] During the period of April onwards, Mr.

Wert did all the work to find subcontractors to complete construction, dealt with deficiencies and patrolling the lots, all at the same time as running his own original business. [ 63 ] The remainder of Mr. Wert’s evidence-in-chief related to his counterclaim for damages and his claim with respect to a winding-up of Real Life. He was referred to the report of Mr. Boyd which totalled his claim at $938,000 without interest. He was also referred to his own claims for loss of opportunity and anticipated profit.

As I have stated above, I do not find it necessary to detail his evidence in this regard given my ultimate conclusions. This also applies to his comments with respect to appraisal evidence of the possible value of the remaining lots unsold. [ 64 ] Mr. Wert was cross-examined by Ms. Sabourin herself over a period of one and a half days. Her cross-examination was very repetitive. I do not find it necessary to review the evidence she elicited in cross-examination save for that which is relevant to my findings.

He was cross-examined regarding the bank account set up in the name of Real Life, his deposit of $50,000 and thereafter his payment for the lots that were put into his name. Regarding the latter funds paid to Crystal Lakes for the purchase of the lots, he was questioned vigorously as to why the lots were put in his own name as opposed to that of Real Life and why the money he advanced for the purchase of the lots wasn’t put into the Real Life account and then provided to Crystal Lakes. Ms. Sabourin suggested that the original agreement was that the lots were to go in the name of Real Life.

He was adamant that he had agreed to “sign on and pay for the lots” and as soon as the ATB mortgages were advanced, that the agreement was that he was to be paid back. In response to a question, “But wasn’t this to be used for construction draws”, his answer was, “We never got that far”.

[ 65 ] He was further questioned on why he continued to advance money to Crystal Lakes for the purchase of the lots in the absence of their acceptance to the Alberta New Home Warranty Program. His response was otherwise Crystal Lakes wouldn’t hold the lots. Further, that if he forfeited the lots back to Crystal Lakes, he would have lost his deposit monies which were substantial. The cross- examination focused on the original agreement where Ms. Sabourin stated he had agreed that he would be capitalizing the company to the extent of $210,000.

When asked wasn’t that supposed to go into the Real Life bank account as “start-up”, he replied, no, that means I have that money available (i.e., for investment). [ 66 ] He was cross-examined regarding the New Home application and the fact that the rejection letter was mailed to his home (although addressed to Ms. Sabourin). When asked when he got the rejection letter, he stated “you handed it to me”. This despite it being mailed to his home. His response was that his wife would have handed the letter to Ms. Sabourin on receipt because Ms.

Sabourin collected the Real Life mail and he did not see the February 22, 2006 letter until Ms. Sabourin handed it to him in their meeting on March 1, 2006. Ms. Sabourin then conducted a long cross-examination on the topic of Mr. Wert’s contact with Alberta New Home Warranty Program and his reasons for transferring the lots to Wert Homes.

In the end, his response was, “I offered you the same contract after the letter”. [ 67 ] With respect to the original agreement and the lots being put into his name, he continued to maintain in cross-examination that the agreement did not contemplate lots being purchased in Real Life’s name or through Real Life’s account. Rather he stated that anything to do with the land, building or constructing of homes was “his loan to the company” and he was to be paid back those monies as a first charge from Real Life profits along with 6 percent interest.

It was put to him that he had not advised in his examination for discovery that part of the agreement was that the money was to stay in the company for one year. Also that he had not mentioned interest at examination for discovery and further, contradictorily, that he had previously testified that interest on money advanced to purchase the lots was not discussed. His answer was, “Why would I take money out of one company and put it into another company without being compensated?” He notes these matters were contained in the Business Plan submitted to ATB and New Home.

He continued to maintain his evidence at trial that he had expected interest to be paid back fairly quickly once the ATB mortgages were drawn upon; and that the $50,000 deposit into the Real Life bank account was to get it “rolling on construction”. [ 68 ] During the course of cross-examination Mr. Wert was on a number of occasions referred to evidence at trial being contradictory to his evidence at examination for discovery. There were indeed contradictions in his evidence from examination for discovery to the evidence at trial. As I will refer to later, each party had credibility issues.

However, in relation to the matters that are relevant and crucial to my findings, I prefer the evidence of Mr. Wert on a general basis as to the terms of the agreement between the parties and events that followed. Also, I prefer the evidence of Mr. Wert with respect to his position on noted matters that found the allegations of breach of contract by Ms. Sabourin. [ 69 ] There was much cross-examination with respect to the timing of a Real Life application made by Mr. Wert to the National Warranty Program as early as March 6. Mr.

Wert maintained that he did not recall the time frames but that the National package was one that Ms. Sabourin delivered to him and he in turn faxed to ATB which he believed was then filled in by somebody at ATB. With respect to a March application, he stated, “I didn’t apply for the National Home Warranty Program, you did”. Later, with respect to an application to the National Home Warranty Program dated April 9 th , he stated, “I believe I had my own package”.

He also was of the view that certain documents within the package that reflected the application still being maintained in the name of Real Life was “a mistake”. He maintained in cross-examination that the package was not sent on behalf of Real Life but rather on behalf of Wert Homes. Mr. Wert was not able to clarify the sequence of events and discrepancies in the documents sent to National Home Warranty Program, although at one point he stated he believed some documents were filled out by his lawyer Mr. McIver.

Despite his inability to reenact the sequence of events on this issue to explain some discrepancies in this evidence, I do not find this evidence crucial to the major facts that drive his claim. [ 70 ] Mr. Wert was cross-examined by Ms. Sabourin on the issue of the liens on her property being paid out and resulting in her and her husband having $366,000 in the bank (relevant to the New Home rejection). She suggested to Mr. Wert that she advised him of that information on March 1 st . He answered, “No, you just kept saying that same thing for three weeks, that you were expecting the mortgage money.

Then you wouldn’t take your name off the company”. It was pointed out to him that he had agreed to wait for the mortgage funds on her home and then they would apply to the National program. He stated, “You had other problems. This was not an agreement to wait three weeks. Each week you said the money was coming”. On March 22 nd he acknowledged that his diary notes stated “still no mortgage”. In response to her question that she had told him then that the mortgage funds were coming any day, he stated “you also said that before”. He also stated that “you at no time said you’d put money in”.

He denied threatening her with respect to transfer of the lots. [ 71 ] He was asked what he thought would result from his transfer of the lots to his new company and he responded, “I was trying to save the mortgages, also I was trying to get the assets in my name to pay myself and others”. In response to the question of whether he

took Real Life assets for himself, he stated, “I took them for the benefit of myself and to pay people off, I didn’t want a foreclosure”. [ 72 ] Mr. Wert was also cross-examined with respect to the negotiation in March, 2006. Ms. Sabourin put to him that she had just asked for two lots and he responded, “Absolutely not, you were demanding eight”. [ 73 ] In re-direct Mr. Wert confirmed that the date of Ms. Sabourin coming to his home was March 15 th . IX Findings of Fact [ 74 ] The evidence of the two partners involved in these actions is conflicting.

Both parties were challenged with respect to previous contradictory statements. Indeed it can be said that both parties did give contradictory evidence. Although Mr. Wert was challenged in the same manner as Ms. Sabourin, I prefer his testimony on the whole and to the matters that I find must be factually determined here. In particular, I prefer his evidence as a result of Ms. Sabourin’s final, and, late acknowledgment in testimony here that she was aware that the lots had been registered in Mr. Wert’s name from the time they commenced performing their agreement. [ 75 ] I find the following as facts: 1.

The parties entered into an oral agreement in October of 2005. 2. Both parties rely on that agreement. Indeed each party commenced performance in certain areas. 3. The agreement made contained the following terms:

a) A company would be incorporated. Each would have 50 percent of the shares.

b) The primary role of Mr. Wert was to provide financing, in particular at the beginning of the venture. The primary role of Ms. Sabourin was to act as a general contractor.

c) Ms. Sabourin was to bring experience and expertise to the venture. Clearly she was to provide that experience in areas related to construction and she did perform related tasks until this deal fell apart. That includes obtaining plans and commencing construction on the lots.

d) It is consistent with this evidence as a whole, and the evidence of Mr. Wert, that Ms. Sabourin had the obligation to apply to the Alberta New Home Warranty Program. The corporation’s acceptance to this program was essential to the plan to be partners in a building business. I accept Mr. Wert’s evidence that he had no experience in this area and relied on Ms. Sabourin to make the application in a very timely manner. Other terms of the contract including her construction fees and sales commissions I find properly outlined in the Business Plan submitted to both ATB and New Home.

e) Any profit from sales was to be held for one year and Mr. Wert’s financial investment was to be paid back to him as a priority charge with interest. 4.

a) Although Ms. Sabourin maintained the agreement contemplated investment money being put into the Real Life account and then paid to purchase the lots, clearly that did not occur. Ms. Sabourin was aware the lots were shown to be in Mr. Wert’s name and that money was not being advanced through any Real Life bank account. In my view that confirms Mr. Wert’s testimony that his investment was personal, to be repaid by Real Life after ATB financing was in place on sales occurred. That is, the agreement did not

entail lots being purchased in the name of Real Life. 5.

a) In the face of the requirement of the warranty plan approval by ATB, Ms. Sabourin was in breach of contract in commencing construction without having obtained that approval.

b) I find it was her responsibility to obtain liability insurance and she was in breach of the agreement in commencing construction without proper liability insurance.

c) She was in breach of contract when she commenced construction on four lots when ATB had only approved construction on three. 6. Construction was commenced. The primary subtrade used was Masada. On this issue, I do not accept Mr. Wert’s evidence that he was unaware of Ms. Sabourin’s particular shareholding in Masada. Rather, I find he approved the use of Masada in the face of her interest as a shareholder in Masada and only stipulated that she would not compete in business with Real Life through any other family- related company. 7.

It was agreed that were she to use Masada Developments that the price charged to Real Life for framing would be that charged to Avonlea Homes which by the evidence here was 7.50 per square foot. 8. In pursuing their contract the parties applied to Woodland for a credit account for Real Life. However, Mr. Wert did not give permission for Ms. Sabourin’s husband and son to purchase goods on that credit line. I conclude that in that regard she acted outside the terms of the agreement and also altered the credit application. 9. On Mr.

Wert’s part he commenced performance by arranging for ATB financing, funding the initial bank account and of course purchasing lots. He continued to fund lots as he was afraid of losing his original investment and afraid of possible foreclosure. He put a substantial amount of his own funds into the venture over the months from October, 2005 to the beginning of March, 2006. 10. I accept Mr. Wert’s evidence and find that Ms.

Sabourin was responsible for filling out details that related to construction and anticipated profit and indeed had a major input into the Business Plans presented to both ATB and Alberta New Home Warranty Program. As such, she was well aware of the representations made within the Plan. 11. I find that New Home rejected the application for the reasons outlined in its rejection letter dated February 22, 2006 and that the major reasons were a concern with Ms. Sabourin’s credit status and a concern that she lacked credibility as a builder or contractor in the construction industry in Grande Prairie. 12.

I accept that Mr. Wert was advised by an official at New Home that he had to take her name off the company to obtain approval. 13. I find that Ms. Sabourin was aware of the rejection on February 28, 2006 and the reasons therefor but purposely kept this information from Mr. Wert in preference to her own duties to Real Life and to obtain a large, quick payment of funds to Masada. 14. I find that Mr.

Wert by March, 2006 was indeed very concerned with matters in the face of the rejection and offered in good faith to maintain the basis of their contract re: a 50-50 profit split with her “removing her name from the company”. I find that she refused that and other offers to solve the problem. 15. I find that his decision to transfer the lots thereafter was made in the face of these facts and breaches above and her acts constitute breaches as I will summarize later in this judgment.

16. Many numbers regarding the agreement for his initial investment were referred to. I find the agreement was he was to provide capital up to $200,000. X Position of the Parties [ 76 ] Ms. Sabourin on her own behalf notes matters in the time line she feels are important. Importantly she notes that although the letter of rejection from Alberta New Home Warranty Ltd. was dated February 22 nd that she thinks nobody knew about the rejection until February 28 th or March 1 st .

She notes that by her evidence the two partners had an agreement regarding her financial affairs, that is, that she was waiting for her own mortgage and then liens would be discharged on her own home. She submits that the evidence is clear that Mr. Wert moved the assets of Real Life to his own corporations for his own benefit in breach of their agreement. She notes she only found out on April 18, 2006 that the transfer had occurred.

Further that the transfer was in breach of restrictive covenants that were implicit in the agreement they had. [ 77 ] She submits that he failed to capitalize the company to $250,000 as anticipated. Rather, he only provided $50,000 to the corporate account. She maintains the agreement was that he would get interest on his investment only if money were provided to Real Life. She notes that lots were to be put into the name of Real Life and that never happened. [ 78 ] In her lien claim she states construction was ongoing from January 12 th to April 18 th .

She states she filed liens on the land to protect her claim as she was a stranger to the new company Wert Homes. [ 79 ] She asserts that the counterclaim claws back on obligations that were formalized in the consent order of Justice Belzil, which dealt with the liens. She has further claims here for materials she personally paid for until April 18 th . She maintains that she improved the value of the lots, and land, by her services and maintains a loss of opportunity claim in her claim for damages. [ 80 ] She maintains throughout argument that her finances ought to have been irrelevant to New Home as Mr.

Wert was supposed to be the money man for the company. She submits he was in breach of the agreement in failing to make that clear in the application. [ 81 ] She submits that these acts were acts in breach of fiduciary duties owed by Mr. Wert. She notes that each party had a duty not to put his or her interests before that of the corporation. [ 82 ] She further notes that by these actions the Defendants Wert and Wert Homes were unjustly enriched and she was correspondingly deprived of assets. Thus she submits that the defendant holds the lands and any profits from sale on the basis of a resulting trust.

XI Position of the Defendant [ 83 ] Mr. Vaage, Mr. Wert’s counsel, begins by noting that in the course of cross-examination and by read-in it was clear that Ms. Sabourin was aware of the date of rejection by New Home as that of February 22 nd as she called Rick at New Home on February 24 th . Yet, clearly it was only on March 1 st that she advised Mr. Wert of the rejection. [ 84 ] Mr. Vaage characterizes her claim that interest would only be on monies advanced to Real Life as specious. He notes that it was clear that Mr. Wert was paying trades and suppliers directly.

With respect to her having bought supplies it is disingenuous for her to use Masada purchases as her investment into this business venture. This all shows she has difficulty separating her affairs from those of Masada.

[ 85 ] Mr. Vaage notes this claim is one of a shareholders dispute. The first issue for the Court to determine is whether the parties reached an agreement with respect to the house building business. In this case neither party denies such an agreement was made. The essential terms of this agreement clearly involved fiduciary duties. Although Ms. Sabourin at trial produced notes she stated reflected the terms of the agreement, at the commencement of the discovery process she had said she did not have any such notes. It was only after the first examination for discovery date that these notes were produced. Mr.

Vaage submits that this evidence indicates the so-called notes were made after the fact and that this severely impacts Ms. Sabourin’s credibility. [ 86 ] He submits that the essential terms in addition to the inherent ones of fiduciary duties are found in the Business Plan submitted to ATB and to New Home that each participated in and as are confirmed in the notes on Mr. Lewis’s file. The essential terms were that: 1. They agreed to go into business; 2. To form Real Life as the corporate vehicle; 3. They were to share 50-50 in profits; 4. Mr. Wert’s initial capital input would be between $150,000 and $200,000; 5.

Capital would be provided back to him at 6 percent interest as the construction mortgages were drawn from a bank; 6. Instead of capital she would provide contracting services and oversee all the work; 7. Her compensation for these services would be $5,000 per home and half of the profit; 8. She was to be given an opportunity to sell the homes and if she did so before completion, she would get 2.5 percent. Otherwise the houses would be sold after completion through MLS. [ 87 ] He notes that in reliance on the agreement Mr.

Wert immediately started advancing money, $50,000 to the ATB and the value of the lots which by January 8 th totalled $187,675. By mid-March $234,042 had been advanced, more than the sum that he had initially contemplated. The parties had expected mortgages to be in place well before that time. At the time of their falling-out Mr. Wert had more than lived up to his end of the agreement. [ 88 ] Secondly, his overall position is that Ms. Sabourin breached important fiduciary duties as the relationship continued, and as the breaches were discovered that destroyed the business relationship.

He submits the breaches are in three main areas: [ 89 ] Firstly: (

i) Hiring Masada without disclosing her interest in the corporation; (ii) This was in breach of the company Bylaw number 1;

(iii) The breach was exacerbated by the overcharging of Masada of the agreed $7.50 per square foot rate as based on charges of Masada to Avonlea; [ 90 ] Secondly: (

i) She charged personal charges to the Woodland credit account; (ii) She altered the credit application to Woodland by including her husband and son as persons who could charge the account; (iii) This in turn meant purchase orders were not required; (iv) Hauling fill. Although this is petty, this further broke down the relationship. [ 91 ] Thirdly: (

i) With respect to the application to New Home, she disregarded her own duty to make that application in a timely manner; (ii) In that regard it was pointless of her to argue Mr. Wert was responsible for the application given she had the application. Also evidence was that at a meeting with Mr. Dehaan in October, 2005 she stated she would look after the application shortly. She then hired Trudy, the accountant, to do so. All this indicates her original responsibility as stated by Mr.

Wert; (iii) She knew the developer and ATB required a warranty program be in place; (iv) The breach was made worse by her demanding $20,000 February 28 at a time she knew the application had been rejected and Mr. Wert was at the end of his financial rope. However she did not tell him of the rejection until one day after she demanded a cheque for Masada; (

v) The breach was exacerbated by her having started construction on four houses instead of three. This was contrary to the terms of the ATB financing approval. [ 92 ] Mr. Vaage submits these breaches destroyed the very fabric of the contractual relationship. By law the cumulative effect of her breaches constitutes a repudiation of the contract. If Mr. Wert did not accept this repudiation by his action of resigning as a director of Real Life, then his pleadings indicate he accepted the repudiation. [ 93 ] Mr. Vaage urges the Court to compare Mr. Wert’s actions to those of Ms. Sabourin.

That is, that after finding out about the New Home rejection, he still offered her a contract with the same roles and half the profit as confirmed in Mr. Lewis’s note. She simply would not agree and kept posturing. In any event, despite the negotiation Mr. Wert realized by March 15 th that they could not go on together in the future. This was a reasonable business decision and it was reasonable that he step in to complete the homes. It was pursuant to that decision that he told the Crystal Lakes representative that the lots had to be in his corporate name, Wert Homes. Mr.

Vaage questions how there could be a misappropriation of assets when the lots were all in Mr. Wert’s name and this was known to Ms. Sabourin and was part of the agreement. With respect to her choosing to not honour her obligations to Real Life, Mr. Vaage points again to the evidence that Ms. Sabourin demanded money for Masada and told Mr. Wert that if he did not pay the Masada bill that she would lien the property. This confirms the death of the business venture and her putting Masada’s interests before those of Real Life. Mr.

Wert paid the invoices and she still liened the property improperly, with no credibility and by inflating the claims. [ 94 ] Mr. Vaage urges the Court to wind up Real Life and distribute the assets according to sums advanced by each party. Then, Mr. Wert is owed $930,000 compared to what her actual cash input may be, whether it is $16,000 or as high as $20,000. (I note that in

this submission, he does not take into account her claims for money owed on the contract or her claim for damages.) [95] Mr. Vaage covers the bases of Mr. Wert’s counterclaim for damages for breach of the contract which are claimed in additionto the return of capital. I do not find it necessary to detail that argument. XII Analysis (

i) Is there a contract between Viki Sabourin and Grant Wert? [96] I refer to my findings of fact above. It is also noted that both parties in their pleadings and written submissions stated that theyentered into an agreement, albeit the Plaintiff characterized it as a partnership agreement and the Defendant as a business venture. I findtheir contract contained both oral and written coexisting terms: Bank of British Columiba v. Sanregret (1987), (ABKB), 77 AR 352, [1987] AJ No 151 (Alta Master); Kang v. Kang, [1996] AJ No 1148 (ABQB); Verma v.

Zinner (1994), 1994 ABCA341 , 157 AR 279, [1994] AJ No 816 (ABCA) at para 97. (ii) What are the terms of the contract? [97] The determination of the terms of the agreement between the Plaintiff and the Defendant in this matter is a question of factand the statements made by parties in a contract of this nature would constitute the terms of the agreement stating the set of obligationsimposed on the parties to the contract: Irvine v. Parker (1903), 40 NSR 392 (NSCA), 1903 CarswellNS 50. On this basis, I havespecifically addressed the scope of the terms of the agreement between Mr. Sabourin and Mr.

Wert in my findings of fact at paragraph75 above. (iii) Was there a breach of contract in this matter? [98] Non-performance of a contract in any way or to any degree, and whether deliberate, accidental, through negligence, orunintended action amounts to a breach of contract, unless excused, justified, or otherwise dealt with by the law: GHL Fridman, The Law of Contract in Canada, 5th ed (Toronto, Ont; Thomson Carswell Ltd, 2006) at 579 (“Fridman”); Aspen Wapiti Ltd v.

Jensen, 2001 SKCA63 at para 14, 207 Sask R 189. [99] A breach of contract is described as a fundamental breach where the conduct of one party deprived the other party of“substantially the whole benefit of the contract”: Hunter Engineering Co. v. Syncrude Canada Ltd, (SCC), [1989] 1SCR 426 at para 150, 57 DLR (4th) 321. As indicated earlier in my findings of fact Ms. Sabourin had the obligation to apply in a verytimely manner to the Alberta New Home Warranty Program and the corporation’s acceptance to this program was essential to thecontract between the parties here.

The evidence of her conduct indicates that she neglected this obligation which eventually resulted inthe rejection of the application by New Home. Also, Ms. Sabourin was responsible for filling out details that related to construction andhad a major input into the Business Plans presented to both ATB and New Home. In other words, she was well aware of therepresentations made in this respect. Nonetheless, Ms.

Sabourin commenced construction on four lots when construction on only threelots was pre-approved by ATB without having obtained the New Home approval and without, therefore, financing in place and withoutliability insurance. Further, she demanded payment for Masada at a time of crisis in the affairs of Real Life. These actions both singlyand cumulatively, in my view, go to the heart of the contract between these parties. In the result, I conclude that by the middle of MarchMs. Sabourin was, by her conduct, in breach of a number of provisions of the contract which in effect ultimately deprived Mr.

Wert of“substantially the whole benefit of the contract”. [100] The factual complexity of this case also demands a consideration of the legal concept of anticipatory breach of contract whichoccurs when “a party, by express language or conduct, as a matter of implication from what he has said or done, repudiates hiscontractual obligations before they fall due”: Fridman at pp. 605-606. In order to establish that there is an anticipatory breach ofcontract, three elements must be found by the court and they are: (

i) conduct which amounts to a total rejection of the obligations of thecontract; (ii) lack of justification for such conduct; and (iii) acceptance of the repudiation by the innocent party: Douse v. Mascioli, 1997CarswellOnt 2435 at para 14,10 RPR (3d) 205 (Ont Gen Div) (“Douse”).

[101] Based on my findings of facts in this case, I conclude that the conduct of Ms. Sabourin in respect of the New Home application,the commencement of construction on four lots without financing and without liability insurance and her demand for payment forMasada, all amount to a total rejection of the obligations of the contract.

Additionally, I note that the courts have held that if one partyreasonably apprehends that conduct by the opposite party is indicative of the likelihood of that party continuing to fail to perform underthe contract, then such conduct may properly be treated as repudiatory: Sanko Steamship Co v. Eacom Timber Sales Co (1986), (BC SC), 32 D.L.R. (4th) 269, 1986 CarswellBC 355 at para 28 (“Sanko”).

In the present matter, further relevant conduct offailure to perform the contract include: overcharging Real Life on the agreed $7.50 per square foot rate on charges to Avonlea; makingpersonal charges to the Woodland credit account; altering the credit application to Woodland by including her husband and son aspersons who could charge the account; hauling fill from Real Life properties to her own property; demanding $20,000 for Masada at atime she knew the New Home application had been rejected and concealing information about that rejection from Mr. Wert. In my viewit was reasonable for Mr.

Wert to become apprehensive of the above listed actions of Ms. Sabourin as conduct indicative of thelikelihood that she would continue to fail to perform her obligations under the contract between them. I am also of the view that it wasproper for Mr. Wert to treat these actions and conduct of Ms. Sabourin as repudiatory. [102] Ms. Sabourin was well aware of her obligations under the contract to apply on a timely basis to New Home, the conditions forcommencement of construction and the effect of all the representations made to ATB and New Home.

Again, such conduct constitutes atotal rejection by her of major responsibilities under the contract. [103] The evidence here does not establish any justification for this conduct. I conclude that there is a lack of justification for Ms.Sabourin’s conduct. In the result, I find that the second requirement for the establishment of an anticipatory breach of contract in Douseis met. [104] The third element required for the finding of anticipatory breach is the acceptance of the repudiation by the innocent party.

Thelaw requires that the evidence of acceptance of the repudiation must be clear by unequivocal declaration or conduct: Cooper v. FantasyConstruction, 2004 ABQB 477 at para 33, 364 AR 34. It is significant that after Mr. Wert found out about the New Home rejection, hestill offered Ms. Sabourin a contract with the same roles and half the profit as confirmed in evidence which includes Mr. Lewis’s note. However, the negotiation attempts failed and I accept that by March 15th Mr. Wert realized that both parties could not go on together inthe future. In my view, despite the fact of March negotiations, Mr.

Wert accepted Ms. Sabourin’s conduct as repudiation in his resigningas a director of Real Life in April, 2006 and in his transferring the lots. I note this action was commenced only after negotiations failedand find his acts did not constitute breaches on his part. I find his acts and the filing of his Statement of Defence and Counterclaimconstitute “clear and unequivocal” conduct and a declaration on his part that he accepted the repudiation of contract. [105] In the face of the breaches, I find Mr. Wert was entitled legally and financially to move to salvage his capital investment:Sanko at para 28.

Also, in view of my finding of fact that Mr. Wert gave Ms. Sabourin an ample opportunity to continue participationand she refused to do so, I decline to grant her claim on the bases of any of the claims including those most recently in the AmendedStatement of Claim. (iv) Was there a breach of fiduciary duties in this case? [106] The question whether a particular relationship is subject to a fiduciary obligation has been approached by referring tocategories of relationships in which a fiduciary obligation has already been held to be present.

Some recognized examples of thesecategories are relationships between directors and corporations, solicitors and clients, trustees and beneficiaries, agents and principals, life tenants and remaindermen, and partners: Frame v. Smith, (SCC), [1987] 2 SCR 99 at para 57, 42 DLR. (4th) 81.Clearly fiduciary duties applied to both parties in this venture. [107] In this respect, I will specifically refer to the evidence I accepted which is that New Home rejected the application of RealLife for the reasons outlined in its letter. That the major reasons for the rejection were due to concerns with Ms.

Sabourin’s credit andcredibility in the industry. She was aware of the rejection and the reasons for it but kept this information from Mr. Wert in preference tohaving monies paid by him to Masada. Keeping this information from Mr. Wert was a breach of her fiduciary duty. (

v) Is a claim of resulting trust available in the circumstances of this case?

[108] This is not a case where a resulting trust can be found. Rather the parties formed a contract and their rights depend on thecontractual terms and their remedies depend on breaches. Further and in any event I would not find unjust enrichment on Mr. Wert’s partwith a corresponding deprivation of entitlement on Ms. Sabourin’s given the agreement acknowledged his right to hold the lots in hisname until repayment of his capital investment. It was only after Ms. Sabourin breached the contract in a number of major instances thathe moved to secure his position. [109] Ms.

Sabourin cannot succeed on the quantum meruit claim in the face of the contract findings I have made: Peter Kiewit SonsCo v. Eakins Construction Ltd, (SCC), [1960] SCR 361; Urbanplan Consultants Ltd v. Wicha (1977), (NS CA), 23 NSR (2d) 9 (CA); Babcock & Wilcox Canada Ltd v. Sydney Steel Corp (1985), (NS SC), 69 NSR(2d) 34 (TD). [110] In the end result, it is appropriate that the corporation be dissolved with funds to the credit of Real Life including those fromthe sale of lots and in Mr. Vaage’s trust account be paid back to the two shareholders in accordance with their capital input: Kemeridis v.

Solomon, 2009 ABQB 16 at paras 72-74, 54 B.L.R. (4th) 78; Business Corporations Act, RSA 2000, c B-9, s.215(1(b)(ii); PartnershipAct, RSA 2000 c P-3, s. 39(1); Cameron v. Peters (1906), 8 OWR 359, 1906 CarswellOnt 481 (Ont Master). By any reckoning hisclaims outweigh hers and exceeds by far any funds available to Real Life. This is why I have not found it necessary to detail the otherdamage claims. Dissolution also bars continuing claims for future sales: Starrs v. Cosgrave Brewing & Malting Co of Toronto (1886),1886 CanLII 8 (SCC), 12 SCR 571 at para 4.

XIII Disposition [111] The Plaintiff Sabourin’s claims are dismissed, subject to the dissolution order. I do not find that Mr. Wert ought to besuccessful on the claims made in his Counterclaim given that the proper dissolution of the company involves his return of capital.

Theseparties ought not to have personal remedies against each other on the facts here. [112] The remedy of dissolution and return of capital in my view satisfactorily covers the opposing claims, particularly in the faceof the known lack of funds in the previously jointly held corporation. [113] The parties can approach me with respect to the issue of costs within 60 days of this judgment. Heard on the 13th day of September, 2010 Dated at the City of Edmonton, Alberta this 8th day of July, 2011. D.A. Sulyma J.C.Q.B.A. Appearances: Viki Sabourin

on her own behalf James R. Vaage Emery Jamieson LLP for the Defendants Grant Wert and Wert Homes & Investments Ltd.