Strategy Summit Ltd. v. Remington Development Corporation, 2011 ABQB 549

Court of Queen ’ s Bench of Alberta Citation: Strategy Summit Ltd. v. Remington Development Corporation, 2011 ABQB 549 Date: 20110916 Docket: 0601 01094 Registry: Calgary Between: Strategy Summit Ltd. Plaintiff - and - Remington Development Corporation Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Gerald A.

Verville _______________________________________________________ Introduction [ 1 ] Strategy Summit Ltd. ( “ Strategy ” ) entered into an Offer To Purchase (the “ Offer ” ) with Remington Development Corporation ( “ Remington ” ) to purchase a portion of unsubdivided lands. The Offer was contingent on Remington obtaining the subdivision approval and a Phase III environmental report. Remington failed to obtain either within the time lines set out in the Offer and refused to grant an extension. [ 2 ] Strategy asserts that Remington acted in bad faith and claims specific performance or damages in the alternative.

It registered

a caveat on the title to the unsubdivided lands. [ 3 ] Remington submits that it used reasonable commercial efforts to obtain the subdivision and Phase III environmental report and acted in good faith in considering Strategy ’ s request for an extension. It alleges that the caveat has prevented it from developing, selling, financing or otherwise dealing with the lands, and claims resulting damages by way of counterclaim. Facts [ 4 ] Randy Remington is the president of Remington which has its head office in Calgary. Randall MacFarlane is an in house lawyer for Remington in Calgary.

Jason Lammerts is a vice-president of Remington and resident in Edmonton. [ 5 ] Brad Ferguson is the president of Strategy which has its head office in Edmonton. [ 6 ] On January 7, 2005 Remington entered into an agreement with IPSCO Inc. (the “ IPSCO Agreement ” ) to purchase approximately 60 acres of land some of which abutted the east side of 75 th Street and south side of 68 th Avenue (the “ Site ” ) in the City of Edmonton for $6,400,000. It paid a deposit of $2,000,000 and took title to the Site on July 26, 2005, with the balance secured by a $4,400,000 vendor take-back mortgage.

Portions of the Site were contaminated as IPSCO, a pipe and steel company, had operated a pipe manufacturing facility on the Site for many years. The IPSCO Agreement provided that IPSCO was responsible for the remediation. IPSCO had retained Dillon Consulting Limited ( “ Dillon ” ) to conduct the remediation program on the Site. Upon completion of the remediation to the satisfaction of the parties or a certificate of completion, the balance of the purchase price was to be paid by Remington. [ 7 ] Remington retained Iridium Consulting Inc. ( “ Iridium ” ) to manage the environmental issues.

It also retained Cirrus Environmental Services ( “ Cirrus ” ) to do environmental sampling. Cirrus observed the work performed by Dillon and collected parallel delineation and confirmatory samples. Its work was reviewed by Iridium. [ 8 ] In early 2005, Strategy entered into negotiations with Remington to purchase the more westerly portion of the Site (the “ Western Block ” ), which consisted of approximately 28 acres, for $8,800,000.

They reached an understanding in February 2005, but Remington advised Strategy that it would not finalize a formal agreement until it had reached a better understanding of how long it would take to obtain a Phase III environmental report, and therefore subdivision. [ 9 ] Strategy executed the Offer on May 18, 2005. The Offer was accepted by Remington the following day. On acceptance of the Offer, Strategy paid the first deposit of $25,000.

The Offer contemplated a second deposit of $475,000 upon the waiver or satisfaction of certain conditions including a registered subdivision plan and a Phase III environmental report.

Portions of the Offer are attached to this decision as Appendix A. [ 10 ] Remington retained the IBI Group to obtain the subdivision and Iridium to obtain the Phase III environmental report. [ 11 ] Remington determined that it would keep the remaining portion of the Site consisting of about 32 acres (the “ Eastern Block ” ) for development. [ 12 ] Strategy envisaged developing approximately eight to ten acres abutting 75 th Street for commercial use (the “ Merchants Row ” ) and the back 20 or so acres for a multi sheet arena complex (the “ Arena Concept ” ). [ 13 ] Over the years, the City of Edmonton has continued to develop an inner ring road system of which 75 th Street forms a part.

The City has plans to widen the street and to construct underpasses or overpasses in certain places along it. There is in existence a dated Southeast Industrial Area Outline Plan (the “ Outline Plan ” ) and a more recent Transportation Master Plan (the “ Master Plan ” ). [ 14 ] At all material times Ian Reynolds, an Edmonton solicitor, acted on behalf of Strategy and Cheryl Gottselig Q.C., a Calgary solicitor, acted on behalf of Remington.

Neither solicitor testified at the trial but numerous pieces of correspondence generated both prior and subsequent to the Offer (letters, faxes and emails) were introduced and referred to during the course of the trial. [ 15 ] The Offer contemplated that Remington would become the registered owner of the Site on July 14, 2005, but it was modified as Remington did not become the registered owner until 12 days later and accordingly all dates in the Offer were extended by 12 days. [ 16 ] The Offer (as modified) provided that Remington would use reasonable commercial efforts to obtain both subdivision approval and a Phase III environmental report on or before October 27, 2005.

Further, in the event Remington was unable to produce either of these two documents, the Offer provided that the date for obtaining either of the documents would be extended to December 13, 2005. Strategy had thirty days in its sole absolute and unfettered discretion to review and accept the Phase III environmental report and plan of subdivision and the deal was to close fifteen days after waiver of these conditions. [ 17 ] The Offer also provided: 13.2 ...

In the event the Purchaser requests an extension or a variance to any of the time periods set out in this Agreement, the Vendor agrees to in good faith consider the request for such extension or variation and within two (2) days of receiving such request advise the Purchaser of whether the Vendor is in agreement with such a request ... [ 18 ] Brad Ferguson of Strategy sent a letter dated December 2, 2005 to Jason Lammerts of Remington in Edmonton which referred to Remington ’ s obligation to provide the subdivision approval and a Phase III environmental report pursuant to the revised time lines on or before December 13, 2005.

The letter went on to state in part: Based on my last conversation with you, it does not appear that you will be in a position to provide the subdivision approval or the Phase III environmental report to me on or before that date. Accordingly, I propose that we extend the dates set out in the offer to allow sufficient time for you to obtain the subdivision approval and provide to me the Phase III environmental report.

I would suggest that we provide sufficient time, giving you until March 31, 2006 to obtain the subdivision approval and the Phase III environmental report. [ 19 ] In response to Brad Ferguson ’ s letter, Ms. Gottselig sent Mr. Reynolds a letter dated December 5, 2005 which stated in part that following discussions with IPSCO, the best case expectation for the time lines from the date of the letter was submission of the Phase III report to the City of Edmonton in approximately four months and receipt of subdivision from the City of Edmonton in approximately seven to ten months.

The letter went on to state: When we negotiated this Offer both Remington and Strategy knew that we were dealing with a contaminated site. At the time of negotiation Remington was not completely apprised of the extent of the contamination as Remington had not completed all of its environmental investigation. As you are aware after the closing by Remington of the purchase from IPSCO, IPSCO was responsible for the remediation and removal of the ERW building and lands.

The extent of the contamination around and under the ERW building is not fully ascertained and in fact recent contamination has been discovered by IPSCO and has not been delineated. IPSCO has been pursuing the remediation in a diligent fashion. The incentive for completion of same is the payout by Remington of the Vendor Take-Back Mortgage. From Remington ’ s perspective it was prepared to enter into this Offer and close it based on a closing in 2005.

Because of the extent of the contamination these dates have been pushed quite significantly into 2006 and Remington is not prepared to grant any further extensions and at this time considers this transaction will end on December 13, 2005. [ 20 ] On December 7, 2005, Brad Ferguson met with Mr. Lammerts and Mr. Remington at Remington ’ s Edmonton office to attempt to negotiate a further extension, but was unsuccessful.

[ 21 ] Brad Ferguson sent a further letter to Mr. Remington dated December 13, 2005 which stated in part: This letter is notice pursuant to

section 13.2 that Strategy extends the time for the performance of the vendor ’ s obligations under sections 6.1(

b) and 6.1(

c) of the Offer until October 6, 2006. Accordingly, the dates provided by sections 6.1(d), 6.1(

e) and 6.1(

f) of the Offer will be extended to November 6, 2006 and the closing date as set out in the Offer will be extended accordingly. We require Remington will perform its obligations pursuant to the Offer in good faith. While we do not at this time have affirmative evidence indicating that Remington has attempered to perform its obligations pursuant to sections 6 and 8 in good faith, we are prepared to grant the extensions of time based on your counsel ’ s representations concerning the need for additional time. [ 22 ] In response, Ms. Gottselig sent a letter dated December 14, 2005 to Mr.

Reynolds reiterating the fact that Remington considered the Offer at an end. The letter stated in part: Remington advised Strategy of its view that the Offer would end by its terms on December 13, 2005, due to the inability of Remington to satisfy the conditions within the time frame provided. Strategy has attempted to unilaterally extend the time frame to complete the conditions, but the Offer (as amended) does not provide for that. Rather, it allows for one extension, by agreement of the parties, to December 13 th , 2005. ...

Strategy appears to be relying on Clause 13.2 for its unilateral extension of the deadline for the Purchaser ’ s Conditions. Clause 13.2 does not give the Purchaser the ability to unilaterally amend the terms of the contract. At best, it provides the deadline by which Strategy must respond to a request by Remington to amend the Offer to extend the deadline. Remington never requested an extension. Basic contract law prevents Strategy from unilaterally amending the terms of the Offer. [ 23 ] By separate letter of December 14, 2005, Ms.

Gottselig enclosed a trust cheque for $25,269.01, representing Strategy ’ s deposit together with interest. [ 24 ] In a letter dated December 21, 2005, Mr. Reynolds acknowledged receipt of both letters and the deposit. He advised that he did not agree with Ms. Gottselig ’ s

interpretation stating: “ .. The contract clearly contemplates that the Purchaser may extend the time for the performance of any obligation of the Vendor... ” The letter went on to advise that Strategy had affirmed the Offer and continued to rely on its right to specific performance and reserved the right to claim damages caused by Remington ’ s failure to perform its contractual obligations. The final paragraph of the letter stated in part: Strategy has learned that Remington has been actively marketing the lands over a period of several weeks.

This conduct is evidence of the fact that Remington has not been acting in good faith in relation to the performance of its contractual obligations to Strategy. ... [ 25 ] Strategy then filed a caveat. [ 26 ] On May 11, 2011, during the course of the trial, Mr. Reynolds sent a letter to Ms. Gottselig which stated in part: ... As you know Strategy has always been ready, willing and able to close this transaction.

For your information, we received on the 4 th day of May, 2011, the sum of $475,000.00 representing the Second Deposit as contemplated in and to be held and dealt with in accordance with the terms and conditions of the Offer. I further confirm that I still maintain in our trust account the sum of $25,000.00 representing the first deposit ...

Evidence of Witnesses Ordinary Witnesses Brad Ferguson [ 27 ] Brad Ferguson testified that he put a considerable amount of work into the Arena Concept. He had looked at a complex in Vancouver and interfaced with both the City of Edmonton and with the Edmonton Oilers. He stated that five older arenas operated by the City in the south-east quadrant needed to be closed. [ 28 ] Mr. Ferguson drew up detailed criteria which had to be met for the development of the Arena Concept.

These included size (approximately 20 acres), location, major thoroughfares, square flat land, drainage, storm sewer capacity, among other criteria. He retained Avison Young, a commercial real estate firm in Edmonton, to find suitable property. He stated that there were about thirteen criteria in total and that while all of the other properties shown by Avison Young lacked portions of the criteria, the Western Block met all of them. [ 29 ] An oral agreement was reached with Remington in mid-February of 2005 to purchase the Western Block for $8,800,000. Mr.

Ferguson knew at that time that Remington was not the owner of the Site, that it was contaminated, that IPSCO was responsible for remediation, and that subdivision was required. He did not have any personal experience with the remediation of contaminated lands. [ 30 ] Mr. Ferguson confirmed that he retained Mr. Reynolds to act on behalf of Strategy and acknowledged that Mr. Reynolds was in constant contact with Remington ’ s solicitor, Ms. Gottselig. He stated that Strategy was anxious to get firm dates from Remington but that initially Remington was not prepared to commit to time lines it did not control.

However, it held the agreed price until he signed the Offer on May 18, 2005. Mr. Ferguson stated that Strategy did not have a copy of the IPSCO Agreement and that all of the dates in the Offer were provided by Remington. He was aware that Remington took title to the Site in July of 2005. [ 31 ] Mr. Ferguson stated that Strategy continued to work on the Arena Concept and, in addition to interfacing with the City of Edmonton and the Edmonton Oilers, retained an architectural firm, a major construction company, an engineering firm, and others. A proposal was submitted to the City in September of 2005.

It recommended the decommissioning of four single pad arenas and the development of a 6plex on the Western Block. [ 32 ] The plan was to fix the costs for minor hockey at a lower cost than existed at the time and to run the multiplex arena complex as a non profit facility through the Kinsmen Club which had a working relationship with the City of Edmonton.

He stated that Strategy would take a development fee for the arena complex of 4% which would generate approximately $2,500,000 for Strategy and that it was anticipated that a more substantial profit would be obtained in developing the Merchants Row along 75 th Street. He stated that the Arena Concept was in the public domain in early September and that there were a number of newspaper articles discussing the concept. [ 33 ] Mr. Ferguson stated that he drove by the Site every day on his way to and from work and noticed a lack of activity. The only person from Remington with whom he interfaced was Mr.

Lammerts who told him in early September that everything was on plan and moving forward. Mr. Ferguson stated that there appeared to be lots of activity on the Eastern Block but none on the portion Strategy was purchasing. He stated that from September on he called or met with Mr. Lammerts every Friday to talk about what progress was being made. He did not keep notes of any of his discussions or meetings with Mr. Lammerts. [ 34 ] Mr.

Ferguson stated that he learned in late October that an extension was required, which pursuant to the Offer extended the time line for the registered subdivision and Phase III environmental report to December 13, 2005. He stated that he was provided with a document dated October 27, 2005 prepared by Iridium which provided a

summary of the progress under the remediation program up to that time. He met with Mr. Lammerts on about November 5, 2005 and asked for his assistance in interpreting the document. He stated that Mr. Lammerts responded: “ I am not the guy ” , and he was told to speak with Mr. MacFarlane in Calgary. [ 35 ] The Arena Concept met with mixed reviews in the press, and Mr. Lammerts advised Mr. Ferguson that from what he understood it appeared there was a lack of support for the project. He stated that Mr. Lammerts was of the view that Strategy would not

close if the City did not support the Arena Concept, but that he assured him that it would close regardless and develop the front 8 to 10 acres first if the City delayed in supporting Arena Concept on the back 20 acres. [ 36 ] Mr. Ferguson testified that he had initially enjoyed a good relationship with Mr. Lammerts but felt the relationship changed towards the end of November of 2005. He said Mr. Lammerts indicated that he felt that Strategy was a competitor and stated that Remington would not allow a competitor on the property. Mr.

Ferguson suggested a joint venture with Remington with respect to the lands abutting 75 th Street but never heard back from Mr. Lammerts. [ 37 ] Mr. Ferguson recalled receiving a diagram of the Site from Mr. Lammerts in November which indicated that the City would perhaps expropriate a portion of the property to enlarge 75 th Street. He stated that this was not a concern to him, as in his view the improvement of a major traffic artery enhanced the project. [ 38 ] Mr. Ferguson testified that the December 5, 2005 letter from Ms. Gottselig to Mr. Reynolds took him by surprise. He called Mr.

Lammerts to arrange a meeting with Mr. Remington in order to attempt to resolve things. A meeting was arranged for December 7, 2005 at the Remington office in Edmonton. He recalled that Mr. Remington, Mr. Lammerts and perhaps Mr. MacFarlane were present. He stated that he received a cold reception from Mr. Remington at the meeting and recalled him stating that Remington could not obtain a subdivision, that the deal was frustrated and that Remington was no longer selling the Western Block to Strategy. Mr. Ferguson told Mr. Remington that they had to sell and recalled Mr. Remington stating: “ I don ’ t have to.

I won ’ t. Go ahead and sue me ” , or words to that effect. He stated that Mr. Reynolds then helped draft his letter of December 13, 2005 to Remington. Mr. Ferguson stated that a caveat was filed against the Site following a meeting with the Strategy Board. [ 39 ] Mr.

Ferguson stated that the cost of the Arena Concept would have been in the vicinity of $78,000,000 and that the financing would have been obtained through the Royal Bank of Canada but that the purchase of the Western Block would have been 100% equity financed. [ 40 ] He confirmed that the City had not committed to a definitive position with respect to the Arena Concept but stated that a process was underway. He was encouraged and positive that with time the Concept would be approved. Mr. Ferguson acknowledged he had seen a report prepared for the City in February 2006 by Meyers Norris Penny LLP.

He stated that he disagreed with the financial analysis which concluded that upgrading four arenas and building a twin pad arena would be $45,000,000 less expensive than the Strategy proposal. [ 41 ] Mr. Ferguson acknowledged that the Western Block was listed with Avison Young on August 30, 2005 and that he negotiated the commission fees. The percentage fee increased with the increased value of each acre. He stated that the listing was to flush out potential partners, create a little buzz and to be sure that the $305,000 per acre was about right.

He confirmed that Strategy was always interested in dealing with the land if something was brought forward. [ 42 ] Mr. Ferguson was permitted to give rebuttal evidence with respect to the testimony of Keith Fraser, an appraiser with the Altus Group, who stated that he received a call from Mr. Ferguson in January of 2006 requesting an appraisal of the Western Block for mortgage purposes. He denied that he had such a telephone conversation with Mr. Fraser in January of 2006 or that he instructed him to do an appraisal for mortgaging financing purposes.

John Ferguson [ 43 ] John Ferguson, a prominent Edmonton businessman, testified that he is a director of Strategy and a shareholder through a family company. He is also the director of a major chartered bank.

He stated that he and several other Edmonton businessmen, whom he described as money partners, would provide funding for various Strategy projects, but that the day to day operations of the company were conducted by his son and president, Brad Ferguson. [ 44 ] John Ferguson became aware from his son of the opportunity for Strategy to purchase the Western Block and stated that the $8,800,000 could be funded by each of the money partners putting in their share. He felt that the Western Block was a good location for

the Arena Concept and other development and stated that he and the other money partners gave his son their approval to enter into a purchase agreement with Remington. He knew there was an initial deposit of $25,000 and that a second deposit of $425,000 was required.

He stated that he was aware that there were environmental issues and that it was necessary for the site to be cleaned before putting up the second deposit and ultimately taking title. [ 45 ] John Ferguson testified, however, that he was not involved in any of the discussions or documentation between Strategy and Remington and never read the Offer, but he felt Remington was acting in an unfair manner when he learned from his son in December of 2005 that it had refused to grant an extension.

He insisted that a caveat be filed and acknowledged that he knew that it would tie up the land. [ 46 ] He was aware that the Western Block had been listed with Avison Young and acknowledged that it was always an option to sell the property for more than Strategy was to pay for it. John Holmlund [ 47 ] John Holmlund testified that he is a director of Strategy and was aware that Brad Ferguson had been in discussions with the City of Edmonton, in approximately 2005, with respect to the development of a multi sheet arena complex for south-east Edmonton.

He stated that he and the other money partners were advised by Brad Ferguson that the Western Block met the criteria, and they approved the potential purchase of that property. [ 48 ] Mr. Holmlund stated that he was not involved in Strategy ’ s day to day operations but was aware of the $25,000 down payment, the value of the land and other details. He knew that there were environmental issues and that the land had to be cleaned up, but could not recall whether he was aware of any specific dates in the Offer.

He stated that the Edmonton Oilers were looking for a practice facility for the team reasonably close to Rexall Place and that he was involved in meetings with team management, and had looked at the current Oiler facilities to better understand their needs. He was also aware that the Western Block had been listed with Avison Young. Randy Remington [ 49 ] Randy Remington testified that his company is involved in the development of major commercial and industrial projects in both Edmonton and Calgary.

The company is experienced in obtaining subdivision and appropriate zoning, and had dealt with contaminated sites prior to entering into the IPSCO Agreement. The company has its own construction force. Mr Remington described his role in the company as that of an orchestra leader, as he is not a lawyer, engineer or planner. [ 50 ] He stated that the company relies on consultants for subdivisions in Edmonton. The nature of the project and the consultants ’ availability determine who is retained. For environmental work, the company uses Cirrus which does the testing and reports to Iridium.

Jim Sevigny, the principal officer of Iridium, works with the company ’ s general counsel, Randall MacFarlane. [ 51 ] Mr. Remington stated that the company looked at the IPSCO Site on previous occasions and that after a sale to another party fell through, he learned that the Site was again available for purchase. He was involved in negotiating the purchase price. Time lines were left to Randall MacFarlane to determine. [ 52 ] Mr. Remington stated that Mr. MacFarlane and Mr. Sevigny went to IPSCO ’ s head office in Regina to examine the records regarding the activities which had taken place on the Site.

He was aware there were environmental issues and left it to them to do the due diligence. He knew that IPSCO, which was responsible for the remediation, had retained a large environmental company, Dillon, to do this work. [ 53 ] He made a decision in April of 2005 to go firm with the purchase. He stated that Remington paid $2,000,000 in July of 2005 and the balance of $4,400,000 towards the end of March of 2006 when all the contaminants were removed and off the Site.

[ 54 ] Mr. Remington did not meet with Mr. Ferguson but rather left it to Mr. Lammerts to negotiate the transaction. Ms. Gottselig did the legal work and Mr. Sevigny advised on the anticipated time lines with respect to the environmental cleanup. He said that the sale to Strategy made sense as he was able to minimize the risk for his company by selling approximately half of the Site for $8,800,000. [ 55 ] Mr. Remington stated that he wanted an end date for the Offer, as Remington does not sell land under deals which extend for a year or more. He wanted a contract with one end date and one extension built in.

He stated that he knew there were environmental problems, as earlier prospective purchasers of the IPSCO Site had walked away. He felt that IPSCO would sooner or later clean up the Site in order to be paid the remaining $4,400,000. He said the minimal deposit of $25,000 was accepted from Strategy as it did not want to tie up significant money if the deal did not proceed. [ 56 ] Mr. Remington asserted that Remington retains the best consultants it can and that it had used both the IBI Group and Iridium in the past.

He stated that Remington did nothing to slow down the remediation, explaining that time is money in his business. He denied that preference was given to remediating the Eastern Block. He stated that he was shocked to learn that the City was putting a hold on the subdivision until it got a Phase III environmental report. [ 57 ] Mr. Remington stated that in October of 2005 he became aware there was contamination under a building on the Site known as the ERW building. There were about eighteen sumps in the ERW building, which was a very large building, and contaminants had leaked from them into the ground.

By approximately the end of October the delineation of this contamination was still incomplete. [ 58 ] He recalled attending a meeting in November of 2005 with the City of Edmonton Transportation Department which had been arranged by the IBI Group, the planners retained for the purpose of obtaining the subdivision. Mr. Lammerts and an employee of the IBI Group were also present, and he recalled a draft plan with some red markings on it being presented by one of the representatives for the City.

It was a draft concept plan which showed access to the Site from Wagner Road, which at the time came to a T intersection with 75 th Street. The draft plan showed a new road continuing on the west side of 75 th Street running through what he described as the National Oilwell property (which was on the west side of 75 th Street immediately to the south of the Site) and then proceeding in roughly a north-easterly direction and connecting with 68 th Avenue.

He understood that the City planned at some time in the future to close 68 th Avenue where it connects with 75 th Street, turn it into a cul-de-sac and build an underpass on 75 th Street which was to commence to the south of 68 th Avenue and continue for some distance under railway tracks to the north of the Avenue. [ 59 ] The proposed roadway ran through the front of the National Oilwell building. Mr. Remington stated that he and Mr. Lammerts were concerned as they knew that National Oilwell was a busy company and that an expropriation of its lands by the City would seriously delay the subdivision.

Further, he learned that the City did not have a budget in place to expropriate National Oilwell. [ 60 ] Mr. Remington stated that while construction of the underpass was not in the City ’ s immediate plans, he understood its rationale for the concept plan. Further, he understood why for safety reasons it contemplated moving the traffic lights back further south to Wagner Road, in order to allow a safe distance for a vehicle to stop after coming out of the underpass.

He stated that he understood that Remington would have to give up some land and that there might be some cost sharing, but that the discussions during the meeting did not get that far. He then instructed Mr. Lammerts to come up with a plan that would move the intersection further north to avoid delays caused by the expropriation of the National Oilwell property. Ultimately, approval in principle was obtained approximately a year later from the City for a plan developed by the IBI Group which addressed the safety issues and moved the intersection further north. [ 61 ] He learned from Mr.

Lammerts around November of 2005 that Strategy was trying to sell the Western Block. He stated that Mr. Lammerts spoke regularly with Avison Young and other commercial real estate agents to find out what was happening in the market. He stated that he did not know until several years later that Strategy had actually listed the Western Block for sale with Avison Young and learned of this during the litigation. [ 62 ] Mr.

Remington asserted that he was not concerned about Strategy being a competitor or selling the Western Block to a competitor as this happens all the time in his industry where a party sells off a portion of its property. He acknowledged that the better real estate was the land in the Western Block abutting 75 th Street, but stated that the Eastern Block was substantially less expensive for development. [ 63 ] Sometime in the fall of 2005, he and Mr. Lammerts met with mayor Mandel with respect to another project Remington was

[ 63 ] Sometime in the fall of 2005, he and Mr. Lammerts met with mayor Mandel with respect to another project Remington was developing in Edmonton. As an aside, he asked the mayor what he thought about the Arena Concept. He was told that if it went ahead it would take time as the City would have to deal with the various communities on closure of the old hockey rinks. Mr.

Remington admitted that he had concluded around November that the Arena Concept would not go ahead as in his view it was inconsistent for Strategy to be trying to sell the lands while at the same time trying to develop a multi-rink project. [ 64 ] Mr. Remington stated that after receiving the letter from Mr. Ferguson requesting an extension of the Offer to March 31, 2006, he consulted with Mr. MacFarlane and Ms. Gottselig. He knew at this time that resolution of the environmental and transportation problems were not going to be resolved in a three month period.

He felt that on a best case scenario it would take seven to ten months to obtain a Phase III environmental report and subdivision. Accordingly, he was of the view that a three month extension was not going to accomplish anything, and decided that he was not going to give Strategy a rolling option on a piece of land on which it had made a $25,000 deposit. [ 65 ] Mr. Remington stated that at the meeting with Mr. Ferguson on December 7, 2005, he explained that he could not give him a date when the Site would be clean, and further that subdivision could not be obtained until the transportation issue was resolved.

He recalled that Mr. Ferguson suggested a ten month extension, and he responded that he would not extend the Offer for that period of time. He stated that the discussion then returned to an extension to the end of March 2006. He stated that prior to the meeting he had learned from his counsel that Strategy ’ s lawyer had threatened to sue. His recollection was that he asked whether if he gave a three month extension to the end of March but no further extension Strategy would still be threatening to sue. He recalled that there was a long, long pause by Mr.

Ferguson and that he interjected by saying: “ I thought so - so you might as well sue me now ” . He stated that Remington does lots of land deals where extensions are granted but that it could not in this case, as it made no sense. [ 66 ] Mr. Remington stated that in order to reach an accord with the City, it was necessary to give up about two acres of the Western Block for road, leaving a parcel of about 26 acres. He stated that initially the City took an unreasonable position with respect to who was to pay for the road. He and Mr.

Lammerts consequently met with mayor Mandel and an agreement was reached with the mayor ’ s assistance whereby Remington would give up the two and a half acres for free and pay for 15% of the cost of the road with the City paying the balance. He felt this was a fair resolution. His recollection was that the subdivision was registered in February or March of 2007 and that the Phase III environmental report was obtained at the same time. [ 67 ] Mr.

Remington testified that his company developed the Eastern Block and sold the development to a pension fund for a profit of $22,000,000. [ 68 ] He stated that if Strategy had not filed a caveat, Remington would have cancelled the subdivision application and developed the entire site. He stated that without a subdivision there would not have been any road dedication or reserve and that this would have saved Remington about $2,000,000. [ 69 ] Mr. Remington testified that his company has never tried to sell the Western Block to anyone else at any time.

John Byrne [ 70 ] John Byrne is a professional land surveyor with the IBI Group, a firm experienced and knowledgeable about subdivision matters. The IBI Group was retained by Remington to obtain the subdivision of the Western Block. He testified that he was not given any time line to obtain subdivision other than being informed that Remington was in a hurry. He stated that when first retained, he did not know that the Site was contaminated. [ 71 ] He referred to the Western block as the “ rink lands ” .

The application for subdivision was submitted on April 22, 2005, approximately one month before execution of the Offer. He stated that he felt that keeping the Western Block in one parcel would allow it to advance more quickly. The East Block had nine lots in the subdivision. He recalled that the City requested an appraisal and a Phase I environmental site assessment ( “ ESA ” ). He told the City it did not need an ESA to start circulation, however the City said that it did. The Phase I was submitted on May 24, 2005.

He stated that an appraisal was required so that a dollar figure could be set for the reserve, but it is not required until the end of the process. The subdivision application for the East Block was kept separate. [ 72 ] On August 22, 2005, the Phase II was submitted to the City but by this time Mr. Byrne knew remediation was already

underway. He stated that he did not know how long the remediation would take but in November he knew it was ongoing. He stated that he was advised by the City that subdivision would not be approved until the environmental issues were resolved. [ 73 ] On November 22, 2005, Mr. Byrne, along with Mr. Remington and Mr. Lammerts, attended a meeting with the City Transportation Department, at which time he learned that the City required a road dedication plan before approving the subdivision. He described this as an “ Oh No ” moment because at this point he realized that it would take some time to get subdivision.

A drawing containing a rough concept plan was produced by the City. [ 74 ] He stated that IBI was retained by Remington to survey 75 th Street where the proposed underpass was to be constructed under the railway tracks for the purpose of checking elevations and coming up with an alternate plan that would meet everyone ’ s needs. [ 75 ] Mr. Byrne stated that during his dealings with the City to obtain subdivision he dealt with four different planners and had to bring them up to speed in each case. This caused significant delay with different planners raising different issues.

He stated that many calls were never returned and that he never knew from time to time the City ’ s position or requirements. He stated that the City “ holds all the marbles ” and if City employees are adamant on a point you have to give them what they want. [ 76 ] He stated that the Transportation Department seemed to be ignoring the issues. With respect to the critique of the expert, Ms. Gourley, to the effect that zoning slowed down the subdivision process, he stated that none of the earlier planners he dealt with at the City had raised the issue.

However, the fourth planner did raise it in October of 2006 and in frustration Mr. Byrne indicated he would pull the zoning but never did. Finally, conditional approval of the subdivision was obtained on March 1, 2007, requiring a final servicing agreement and road dedication. The plan of subdivision was ultimately registered on June 20, 2007. Jason Lammerts [ 77 ] Jason Lammerts described himself as Remington ’ s “ eyes and ears ” in Edmonton. He stated that he gets his direction on major projects from Randy Remington, with whom he speaks two to three times a day.

He stated that he had looked at the IPSCO Site several times prior to Remington ultimately concluding an agreement to purchase it. He did not have much involvement with the purchase from IPSCO. Randall MacFarlane dealt with the legal aspects and Randy Remington put the business deal together. [ 78 ] Mr. Lammerts recalled receiving a call from Terry Kilburn and Thomas Ashcroft of Avison Young, advising that Strategy was interested in discussing the possible purchase of a portion of the Site. He recalled a coffee meeting with them and Mr.

Ferguson where he learned of the Arena Concept. [ 79 ] He stated that after some negotiating he spoke with Randy Remington, who gave him authority to sell the Western Block to Strategy for $8,800,000. He stated he felt this was a good deal as it effectively reduced Remington ’ s cost of purchasing the Site from IPSCO to zero. He stated that the deposit of $25,000 from Strategy was very low. Normally, they would require a deposit of about $500,000 for this magnitude of purchase, but he understood that the low deposit was due to the required cleanup. [ 80 ] Mr.

Lammerts knew that the Site was contaminated and that IPSCO was responsible for the cleanup. However he had little personal involvement with the environmental issues as they were attended to by Mr. MacFarlane in Calgary. Further, he was not privy to emails and correspondence between Mr. Reynolds and Ms. Gottselig. He stated that he simply had general knowledge with respect to how things were progressing.

He recalled that Brad Ferguson would pop in from time to time to discuss matters, at which times he told him what he knew. [ 81 ] He recalled attending, along with Randy Remington and an employee of the IBI Group, a meeting in November of 2005 with the City of Edmonton Transportation Department and being presented, by one of the representatives for the City, with a draft concept plan which showed a proposed roadway running through the front of the National Oilwell building and on into the Western Block. He confirmed that he and Mr.

Remington were concerned as they knew that National Oilwell was a busy company and that an expropriation of its lands by the City would seriously delay the subdivision. [ 82 ] Mr. Lammerts stated that he met with Mr. Ferguson and presented the draft concept plan to him. He explained to Mr.

Ferguson that it would take considerable time to get the issue resolved. He stated that he was frustrated by Mr. Ferguson ’ s response of simply accepting the City ’ s proposed plan. [ 83 ] Mr. Lammerts received a copy of the December 5, 2005 letter from Ms. Gottselig to Mr. Reynolds and arranged a meeting between Mr. Ferguson and Mr. Remington for December 7, 2005 as Mr. Remington was coming to Edmonton for the company ’ s annual Christmas party. Mr. Lammerts did not speak at the meeting but was there for its duration, which he estimated to be approximately ten to fifteen minutes. He recalled Mr.

Remington explaining that major remediation and transportation problems were not yet resolved and it could take a long time to get them resolved. Mr. Ferguson requested an extension and Mr. Lammerts recalled three months and then seven or eight months being mentioned. He recalled Mr. Ferguson stating that Remington should transfer the land whenever the Site was cleaned up, and that Mr. Remington responded that he did not think that was fair. [ 84 ] Mr. Lammerts further recalled the discussion of a three month extension to the end of March 2006, and in particular Mr.

Remington asking: “ Will you still sue me ” , or words to that effect , if at the end of March Remington did not grant a further extension. Mr. Lammerts recalled a long pause by Mr. Ferguson and Mr. Remington then saying: “That’s what I thought. If you are going to sue me then you might as well sue me now”. [ 85 ] Mr.

Lammerts stated that IBI Group was retained to find an alternative solution which did not involve the National Oilwell property in order to speed up the subdivision application and that eventually the City agreed to same. [ 86 ] In the latter part of October or early November of 2005, he learned that Strategy was trying to sell the Western Block. He spoke with Mr. Ferguson who admitted that they were looking at other options. He stated that he was frustrated that Mr. Ferguson would work on something in competition with the development Remington was contemplating on the portion of the Site it was keeping.

He recalled that Mr. Ferguson mentioned the possibility of a joint venture and believed that when he mentioned it to Mr. Remington, he told Mr. Lammerts that he was not really interested. He stated further that Mr. Remington was not concerned with Strategy selling to a competitor and said it was something they could live with, that they had a contract with Strategy and that Strategy could do what it liked. James Sevigny [ 87 ] James Sevigny testified that he has provided environmental expertise to Remington since 2003 through his company Iridium.

Prior to working as a consultant, he was involved in writing the provincial environmental guidelines that applied to the Site. He stated that his contact person at Remington is Randall MacFarlane. In providing environmental expertise, he reviews other consultants ’ environmental work, selects consultants for other engineering work, develops remediation plans and prepares the necessary documentation in order to obtain regulatory approval.

He prepared and produced a detailed diagram which described the activities he was involved in concerning the Site between January 27, 2005 and February 14, 2007, the latter being the date when all regulatory agencies signed off on environmental concerns. The regulatory agencies at the time included Alberta Environment, Capital Health, and the City of Edmonton. [ 88 ] He gave a brief

summary of the process which begins with a Phase I ESA. It involves an historical title search, obtaining photographs, getting a history of any polluting events such as oil spills, conducting a site visit, looking at adjacent properties to see if they might have affected the site, and interviewing people who might have worked on the site in situations, for example, where there was a factory on it. [ 89 ] He stated that a Phase II assessment involves drilling holes and obtaining soil samples and groundwater samples.

If the results are above the guidelines it may be concluded that the site is contaminated and further delineation and remediation may be required. Remediation means cleaning up the land to meet the guidelines. If remediation is required, a detailed plan sets out what will be done, where the contamination will go, where material to fill any hole will come from, and whether it is clean. He described the remediation plan for the IPSCO as dig and dump which meant removing truckloads of contaminated soil and replacing it with clean material. [ 90 ] Mr.

Sevigny stated that when the remediation is complete it takes approximately two months to prepare the necessary documentation to be submitted to the regulatory agencies for review. The documentation contains a massive amount of material including test results, a description of what was done and why, where material went, and so on. The ending event is when approval

letters have been received from all three regulatory agencies confirming that they have no further concerns. [ 91 ] Mr. Sevigny stated that he was contacted by Mr. MacFarlane in mid January of 2005 and asked to go to the IPSCO office in Regina to conduct a file review. He spent two days in the latter part of January at the IPSCO offices. He learned that there had been about fifty years of activity on the Site by IPSCO, and what types of activities had been undertaken. He learned that the soil was clay, which in his view was a positive feature as clay does not transmit a lot of water and is amenable to excavation.

He learned where old storage tanks had been situated and the location of rail spur lines. There was one mammoth building on the Site known as the ERW building which contained a number of sumps, and a one hundred foot deep mine shaft referred to as a “ Looper Pit ” . [ 92 ] Mr. Sevigny stated that his greatest concern was the Looper Pit, which had been open for over forty years, because it went down to the ground water.

His concern was that if materials such as solvents had been indiscriminately put down the Pit, the ground water might have been affected and contaminants could have gone off the Site towards the river. He stated that if contaminants had spread off the property they could not be cleaned up and the situation would have to be managed. He stated it could cost a million dollars for a risk management plan and take a half year or more to put it in place. Mr. Sevigny ’ s second concern was with respect to contamination in what he referred to as “ Outside Areas ” , and whether these areas had been cleaned up properly.

He knew Dillon had done clean up work for IPSCO over the years. [ 93 ] Mr. Sevigny stated that normally a Phase I is prepared to determine whether a Phase II assessment is required, but because Remington was aware that the Site was contaminated they proceeded to conduct the Phase II work at the same time. Cirrus did both the Phase I and Phase II under his direction. He stated that while Dillon had been retained by IPSCO to do the work, the end game is to get regulatory approval.

Cirrus did parallel sampling in order for Remington to have its own data set for the purpose of deciding initially whether or not to purchase the Site, and later to assure itself that the Site was being properly remediated in order to obtain final environmental approval. [ 94 ] Mr. Sevigny was not concerned about the sumps in the ERW building because Dillon had drilled a number of bore holes. One of those holes was four to eight metres from the sump and was clean. Dillon had done considerable work on the Site for IPSCO over the years and was confident there was no contamination below the sumps.

Accordingly, this was neither a high priority nor a concern, as it was not believed that the ground below the sumps was contaminated. [ 95 ] After reviewing the IPSCO files in Regina, Mr. Sevigny instructed Cirrus to commence the Phase I and II work at the same time beginning with the Looper Pit. Three one hundred feet deep wells were drilled to catch the ground water whichever way it moved. The water was tested and it was determined there were no serious ground water considerations. However, remediation of the Looper Pit was a bit of a challenge. A professional miner was retained to do the remediation.

Some contamination was found in the walls and there was some sludge at the bottom that had to come out before it was backfilled some months later. [ 96 ] Mr. Sevigny stated that the remediation and testing continued. In May of 2005, he felt the time lines set out in the Offer were reasonable. He stated that he never received instructions to work on the Eastern Block first, and that work progressed on all areas simultaneously. [ 97 ] In May of 2005, the ERW building and the sumps were still “ off the radar screen ” as it was believed from bore holes previously drilled that it was not a source of contamination.

It was anticipated that any issues concerning the ERW building would be cleaned up by the end of August, and overall the remediation was proceeding as planned. [ 98 ] Mr. Sevigny testified that if there was contamination from the sumps, he did not expect to see it any deeper than six inches. The sumps had two foot concrete floors and many were lined with steel. However when the drilling of the sumps took place in September, a staining of the soils was noted and there was a strong odour.

He stated that they knew at this point that there was contamination. [ 99 ] Dillon kept drilling and sampling and found a core of oozing oil which Mr. Sevigny stated surprised everyone. They now knew that they were dealing with a lot of contamination. Dillon had to keep drilling in order to obtain horizontal and vertical delineation. Cirrus did parallel sampling under Mr. Sevigny ’ s direction. In about the third week of October, Dillon began breaking the concrete and excavating in order to remove the contamination and delineate the extent of same.

He stated this created structural issues as the ERW building had large support pillars which were potentially compromised when the excavation reached a depth of three and a half metres. The work continued in November and December with the delineation being substantially completed by the end of January 2006. The plan was to backfill the excavation in the Spring of 2006. This was a necessary step in the remediation.

[ 100 ] Mr. Sevigny testified that normally it takes ten days for samples to be tested, but Remington paid double the normal costs in order to expedite the delineation and get the results back in two days. [ 101 ] The Looper Pit backfilling was completed by October 15, 2005 and Dillon completed the Outside Areas delineation and remediation program by November 30, 2005. [ 102 ] In March of 2006, there was a certificate of completion between IPSCO and Remington, pursuant to the terms of the IPSCO Agreement. Mr.

Sevigny stated this meant nothing officially in Alberta and that a considerable amount of paperwork remained to be done in order to satisfy the regulators. He stated that the reports initially prepared by Dillon contained errors and were missing tables. The reports were not finalized and acceptable for distribution until mid-June of 2006. The Cirrus reports consisting of two volumes were then submitted to the regulators in the third week of June 2006. [ 103 ] Mr. Sevigny stated that he then waited for responses and questions from all of the regulators.

He explained that often more than one regulator asks the same question and for this reason he waits until he hears from everyone before responding. The final sign-off was received from Alberta Environment on February 12, 2007 and on February 14, 2007 the City issued final approval of the environmental work in order to allow the subdivision application to proceed. [ 104 ] Mr.

Sevigny testified that most of the remediation in the Outside Areas was no more or less difficult than usual and that while the Looper Pit remediation was challenging, the ERW building and the work required to delineate the contamination was the most challenging situation he had ever encountered. He denied that Remington ever instructed him to slow the process down. It was his understanding that Remington wanted things to happen faster which is why samples taken by Cirrus were sent to the lab on a rush basis at double the cost to Remington.

Keith Fraser [ 105 ] Keith Fraser is an experienced appraiser with the Altus Group in Edmonton. He testified that he has done work for Remington. He had done work in the past for Princeton Developments, a company headed by John Ferguson. Mr. Fraser testified that he keeps a log of all telephone calls he receives at the office during the course of a day and produced the relevant logs at trial. He stated that he knows Brad Ferguson and that he was contacted by him to do an appraisal for mortgage financing on the Western Block in January of 2006. [ 106 ] Mr.

Fraser testified that he was aware of a dispute between Strategy and Remington and phoned Jason Lammerts to determine if performing the requested appraisal would present a conflict. He said that Mr. Lammerts informed him that this would not present a problem. An appraisal conducted on February 3, 2006 showed a value of $9,000,000. [ 107 ] Mr. Fraser stated that he knew there was a lis pendens on the title but understood that the purpose of the appraisal was for mortgage financing.

He stated that it is required that appraisers identify the purpose of an appraisal, and that there would have been a conflict if he had been told that it was for the purpose of litigation. He stated that the purpose of the appraisal was to show market value. It was an independent appraisal that did not favour anyone. He stated that the work was done in about 22 days, Altus was paid by Strategy, and there was no complaint about the work. [ 108 ] Mr. Fraser stated that Altus sometimes gets backlogged but usually completes an appraisal within about three weeks.

When it was suggested that Brad Ferguson had requested an appraisal in May of 2005, he said this was highly unlikely as he has never told anybody he would get back to them in six months. Expert Witnesses

Constance Gourley [ 109 ] Constance Gourley prepared a report and gave expert opinion evidence on behalf of Strategy with respect to the date by which a registerable subdivision plan could have been obtained. [ 110 ] Ms. Gourley graduated in 1979 from the University of Waterloo with a BES (Honours) in Environmental Studies, Urban and Regional Planning. Her qualifications were admitted. She worked from 1982 to 1984 for the City of Edmonton in the Planning Department as a Project Planner and in the Environmental Assessments Division of Alberta Environment as a Planning Officer II from 1984 to 1987.

She is a certified planner in Alberta and currently employed by ISL Engineering and Land Services. [ 111 ] Ms. Gourley reviewed the work done by IBI Group, Remington ’ s consultant, in order to obtain subdivision of the Western Block. She was critical of the work performed by the IBI group for the subdivision and rezoning applications. Ms.

Gourley also reviewed the environmental submissions that were made to the Planning and Development Department ( “ P& DD ” ) of the City. [ 112 ] In her view, Remington could have entered into a site remediation agreement with the City in order to expedite the obtaining of the subdivision, rather than waiting for a Phase III environmental report. She stated that her review of the documentation revealed no evidence that Remington was interested in pursuing this option.

In response to the question as to at what point in time it could have been reasonably expected that a registerable plan of subdivision could be achieved, she stated in her report: The earliest likely “ reasonable ” date that a registerable plan of subdivisions could have been achieved to create the western parcel, where a Site Remediation Agreement would have been in place between Remington Development Corporation and the P&DD to phase environmental clean-up within specified timelines so that the first stage subdivision approval and endorsement could proceed, is between March 9, 2006 and April 10, 2006.

A range is provided to reflect the three to four month timeframe to negotiate the Site Remediation Agreement between Remington and the P&DD. [ 113 ] Ms. Gouley agreed that in addition to obtaining a site remediation agreement, the issue of road dedication across the Western Block would have had to be resolved before subdivision would be granted. However, she believed the road dedication would have been overlooked by the Transportation Department, but for the rezoning applications.

Mark Lawrence [ 114 ] Mark Lawrence gave expert opinion evidence on behalf of Strategy with respect to when a registerable subdivision plan could have been obtained. He prepared a rebuttal report to the report of Ms. Gourley. [ 115 ] Mr. Lawrence has 33 years experience as a planner. His qualifications were admitted. He obtained a Bachelor of Arts from McMaster University and a Bachelor of Applied Arts in Urban and Regional Planning from Ryerson University. He worked from 1990 to 2007 for the City in the P& DD as a senior subdivision officer.

He stated he had both a decision making role and an application making role while working in this capacity. He designed and developed city policies and procedures related to subdivision procedures and emerging planning issues. He has been an employee of Stantec Inc. since 2007. He confirmed that Stantec does work for Remington, but was not aware of the extent of the relationship. [ 116 ] Mr. Lawrence described in detail how the subdivision process works.

In his view, the IBI Group ’ s rezoning applications did not delay the subdivision application, as rezoning and subdivision do not affect each other and follow parallel independent paths. He disagreed with Ms. Gourley ’ s assertion that but for the rezoning application, the P& DD would have ignored the road dedication issue. He stated that the City is broken up into quadrants and that transportation plays a vital role in the process. There are four levels of review to ensure nothing is missed.

He said that for the P & DD and the Transportation Department to ignore the Master Plan and Outline Plan would mean that neither department was doing its job. [ 117 ] Mr. Lawrence described in detail the Master Plan which encompasses an inner ring loop for transportation in the City. He stated that 75 th Street is eventually to have six lanes which will entail significant property acquisition. Road dedication or acquisition is available during the subdivision process without compensation whereas expropriation requires compensation. He stated the practice at

the City is to take it when you can get it. The City did not have enough land at the time to widen 75 th Street or to build the underpass. [ 118 ] Mr. Lawrence also described in detail the practice followed by the City where a subdivision is requested for contaminated lands which have to be remediated. He was familiar with the concept of a site remediation agreement as discussed by Ms. Gourley. He stated that based on his experience as a City planner, he could not identify any extenuating circumstances which would merit such an agreement and that a pending land deal was definitely not an extenuating circumstance.

He stated further that even if the City had agreed to a site remediation agreement, negotiations would not have started until the end of March of 2006 as the City would have required Remington to submit a cleanup plan and detailed cost estimates before negotiations could begin. He opined that in these circumstances, using Ms. Gourley ’ s own assumptions and analysis, the earliest date for a registerable plan of subdivision would have been from about November 30, 2006 to December 30, 2006. [ 119 ] Mr.

Lawrence ’ s opinion, based on his review of the matter, was that there was nothing to suggest that the application for subdivision would have been approved significantly faster if Remington ’ s consultant had done anything differently in the application process. Brad Daviss [ 120 ] Brad Daviss gave expert opinion evidence on behalf of Strategy with respect to the per acre value of the Western Block as at December 13, 2005 and March 1, 2007. His qualifications as an appraiser were admitted. He is employed by Frost & Associates Realty Services Inc. [ 121 ] Mr.

Daviss stated that he researched the market for similar property but that it was difficult to find comparables as land was scarce. He noted that the Western Block in December of 2005 comprised 28.85 acres whereas after subdivision (allowing for road dedication) it was 22.46 acres. [ 122 ] Mr. Daviss determined that there was a rising market and estimated the value per acre on December 13, 2005 to be $370,000 and $490,000 on March 1, 2007. Ryan Zacharuk [ 123 ] Ryan Zacharuk gave expert opinion evidence on behalf of Remington with respect to the per acre value of the Western Block.

His qualifications as an appraiser were admitted. He is employed by Altus Group and confirmed that Altus does work for Remington. [ 124 ] He estimated the value per acre in December of 2005 at $325,000 with the corresponding overall value being $9,376,250. He stated that he knew that Strategy was seeking damages and admitted that Strategy would want a higher value, while Remington would want a lower one. [ 125 ] Mr.

Zacharuk also provided his opinion with respect to per acre values and corresponding overall values at various points in time namely: May 2006 ($350,000 - $10,097,500), May 2007 ($450,000 - $12,982,500), May 2008 ($550,000 - $15,867,500), May 2009 ($500,000 - $14,425,000) and November 2010 ($500,000 - $14,425,000). Shawn Hemens [ 126 ] Shawn Hemens is a chartered accountant and chartered business valuator and was qualified to give expert opinion evidence with respect to the damages suffered by Remington arising from Strategy ’ s registration and maintenance of a caveat and certificate of lis pendens on the Site.

He is a partner in Clark Valuation Group Ltd., a firm specializing in business valuations and financial litigation support.

[127] Mr. Hemens was asked to assume that Remington would have developed the Western Block and the Eastern Block at thesame time in 2007 if it had not been precluded from doing so by the caveat. He reviewed documentation which indicated that in 2007Remington earned a profit of approximately $22,200,000 in developing and selling the Eastern Block to a pension fund. In arriving at hisestimate of damages, Mr. Hemens relied on valuations and assumptions made by Mr. Zacharuk with respect to the undeveloped WesternBlock and theoretical values if developed. Mr.

Zacharuk estimated a value of $80,000,000 in July of 2007 and $53,000,000 in Novemberof 2010 for a developed Western Block. [128] Mr. Hemens considered two alternative scenarios if Remington had developed the lands. He concluded that if Remington haddeveloped the Western Block in July of 2007, it would have earned a profit of $16,475,000 after taking into consideration the profit fromthe development less the profit on raw land and adding back in judgment interest.

He concluded further that the loss would be$24,217,000 including judgment interest if the difference between the profit made by developing the land in 2007 and in 2010 weretaken into consideration. This assumed that because of different market conditions, Remington would only have earned a profit of$335,000 if it had developed the lands in November of 2010. [129] The second scenario assumed that Remington won at trial.

If so, it would have suffered a loss of $1,790,000, taking intoconsideration judgment interest if it could have sold the lands for $15,867,500 in May of 2008 which was the height of the market asdetermined by Mr. Zacharuk. Samuel Durante [130] Samuel Durante is a commercial real estate lawyer with over twenty years experience practising with the McLeod Dixon firmin Calgary. He gave expert opinion evidence with respect to commercial real estate transactions in the context of a purchase agreementthat deals with contaminated lands and subdivision. He prepared a report which answered five specific questions.

His testimony related,in part, to the difference between agreements to purchase and options to purchase, true conditions precedent, waivers of conditions, andterms which render the contract null and void. Mr. Durante stated that while he counsels his clients to proceed with transactions intowhich they have entered, vendors sometimes look for ways to get out of deals when prices are going up, and purchasers on occasion tryto avoid closing in a falling market. Preliminary Issues Admissibility and Relevance of Expert Testimony [131] The evidence of Mr. Durante was heard in the context of a voir dire. Mr.

Durante was not qualified to give expert opinions asa lawyer but rather as to commercial real estate practice. The plaintiff submitted that his evidence was not relevant and should be ruledinadmissible in that it was not necessary for the purpose of deciding any of the issues in the litigation. The plaintiff cites R. v. Mohan, (SCC), [1994] 2 S.C.R. 9. [132] The defendant submits that Mr.

Durante’s evidence which dealt with the difference between an offer to purchase and option topurchase, true conditions precedent, and waiver of conditions, where the contract contains an environmental clean-up condition andsubdivision condition, is relevant and should be admitted. [133] The defendant cites MacDonald v. Taubner, 2010 ABQB 60, 485 A.R. 98 where Graesser J. at paras. 327-338 considered theadmissibility of the expert opinion testimony of a lawyer with respect to a certain type of corporate commercial transaction.

Graesser J.noted that expert opinion evidence is generally overused and that more experts are called at trials than are usually necessary, let alonehelpful. I agree with this observation. [134] However, if the proposed expert indeed has certain unique qualifications, and can provide evidence that may be of assistance,in other words information which is likely to be outside the experience and knowledge of the judge, the evidence should be admitted.Mr. Durante has significant experience and expertise with respect to type of contract entered into between the parties.

Certain aspects ofhis evidence, such as principles of contract law and the desire of parties to a real estate deal to gain the benefit of a rising or fallingmarket, are not the proper subject of expert testimony. However, to the extent that his evidence was outside the experience and

knowledge of the Court, it was of assistance and accordingly was both relevant and admissible. In the end, however, little turns on it. Admissions [135] The plaintiff seeks to resile from an admission. It was served with a Notice to Admit Facts dated March 31, 2006 which inpart stated: 9. That the City of Edmonton will not approve a Plan of Subdivision for the lands without a Phase III Environmental Report. In its Reply, dated April 28, 2006, the plaintiff admitted this fact. [136] Despite this admission, Ms.

Gourley prepared an expert report on behalf of the plaintiff dated November 15, 2010 which inpart stated that the defendant could and should have entered into a site remediation agreement in order to speed up the timing forobtaining subdivision. [137] The plaintiff did not seek to formally withdraw its admission prior to the trial. However, the defendant was aware long beforethe trial of the fact that the plaintiff was seeking to withdraw this admission, as its expert Mr. Lawrence dealt in detail with this aspect ofMs.

Gourley’s report in his expert rebuttal report of March 16, 2011. [138] The Court should not consider lightly a request to withdraw an admission. The defendant cited Best v. Hoskins, 2006 ABQB58, 390 A.R. 1where at paras. 8-33 I considered the issue of withdrawal in detail and refused the application in the circumstances of thatcase. [139] It appears that the plaintiff and perhaps the defendant as well overlooked this admission. In a perfect world, the issue ofwithdrawal would have been dealt with prior to the issuance of Ms.

Gourley’s report or at the latest prior to the defendant having Mr.Lawrence prepare his rebuttal report. However, he did deal with the issue and clearly the defendant was not caught by surprise at trial. Inthe circumstances, I find that the defendant has not suffered any substantial prejudice and that it is just to grant the plaintiff’s application. Adverse Inferences [140] The plaintiff submits that an adverse inference should be drawn against the defendant for failing to call two witnesses,Randall MacFarlane and Thomas Ashcroft.

The defendant had indicated at the commencement of the trial that it would call these twowitnesses, but determined after the plaintiff closed its case that it would call neither of them. The plaintiff says no notice under Rule 8.15was given and cites Howard v. Sandau, 2008 ABQB 34, 439 A.R. 379 where Wittmann A.C.J., as he then was, stated: 43 ... whether such an inference is drawn and the extent of the inference are in the discretion of the trial judge. This will depend on thespecific circumstances. This is noted in Dabrowski v. Robertson, 2007 ABQB 522 , [2007] A.J.

No. 949 (Q.B.), where JusticeVeit stated at para. 64: Adverse inferences should not always be drawn when an expected material witness does not testify: all pertinent circumstances must beexamined to determine if an inference should be drawn. 44 In their book Witnesses, Toronto: Thompson Carswell, 2007, Mewett and Sankoff identify at page 2-23 the following circumstancesas particularly significant:

- whether there is a legitimate explanation for the failure to call the witness - whether the witness has material evidence to provide - whether the witness is the only person or the best person who can provide the evidence - whether the witness is within the “exclusive control” of the party, and is not “equally available to both parties”. [141] The plaintiff says that some of the adverse inferences which ought to be drawn are: (

a) Remington decided in October that it would not grant any extensions to Strategy and was positioning itself to avoid the Offer; (

b) Remington deliberately withheld information from Strategy in the September to December 2005 time frame; (

c) In early December 2005, Remington believed it would have remediation completed within a month; (

d) Strategy listed the Land with Avison Young in August 2005 for the reasons given by Brad Ferguson at trial - that it wanted tounderstand the value of the Land and wanted to find a partner to joint venture or develop the retail component of the project on the front10 acres; and (

e) Remington decided by October that it would not complete the sale to Strategy because it regretted selling the more valuable westparcel, and did not want to run the risk of a competing industrial/commercial development that was more attractive than its 35 acreparcel. [142] The defendant says that Mr. Ashcroft was not within its exclusive control. He is a principal with Avison Young in Edmontonand had dealings with both parties at various points in time. For example, the Offer provides that notices for Strategy were to go to Mr.Reynolds with a copy to the attention of Mr. Ashcroft at Avison Young.

Further, when Strategy listed the Western Block for sale, Mr.Ashcroft was again involved and if he was in a position to give evidence to assist the plaintiff with respect to any of the issues set outabove, particularly items (

d) and (e), he could have been called by the plaintiff. [143] The plaintiff knew during the course of the defendant’s case that Mr. Ashcroft likely would not be called, yet it neverrequested leave to call him in rebuttal, as it did with Brad Ferguson after hearing Mr. Fraser’s evidence. Further, Brad Ferguson’sevidence with respect to item (

d) was in

part contradicted by the testimony of John Ferguson who was aware of the listing agreement andstated that selling the Western Block for a higher price was always an option. For the above reasons, I decline to draw an adverseinference with respect to the defendant’s failure to call Mr. Ashcroft. [144] The defendant cites Kusick v. Wildeboer (1987), (AB KB), 81 A.R. 131, [1987] A.J. No. 715 (Q.B.) andAnderson v. Canada Safeway Ltd., 2004 ABCA 239, 357 A.R. 6.

In Kusick, Cooke J. stated at paras. 37-38: It was suggested by counsel for Wildeboer and Ridsdale that the failure of English to testify should give rise to an adverse inferenceagainst him. That principle, as expressed in the case of Mudrazia v. Holjevic, O.R. 1970, Vol. 1275, only arises against a defendant whena case has been made out against him. In this case I take that to mean a prima facie case of gross negligence, as opposed to primary negligence. The case of Gibb & Gibb v.

Ellis & Ellis, (BC SC), 17 D.L.R. (2d) 262 and the case of Cooperative Fisheries Ltd. v. Canadian Imperial Bank ofCommerce, (SK KB), 7 D.L.R. (3d) 610 establish that the inference does not arise where the Defendant has appearedfor Examinations for Discovery. [145] The Court in Anderson considered whether the failure to call a store manager to testify should result in an adverse inference: 9 The trial judge appeared to accept the position urged by the respondent, that the failure to call the then store manager should result inan adverse inference that the policy was not being followed.

As noted above, it was not appropriate to draw an adverse inference in thecircumstances. Here, the store manager had been produced for examination for discovery as the officer of the appellant. His evidencewas known to both parties and was not read in or put to any other witness by the respondent. That, coupled with the speculation that thefloor might not actually have been cleaned the night before, seems to have motivated the trial judge to conclude that on a balance ofprobabilities the policy was not being implemented.

In our view, such a conclusion cannot be supported on the evidence. [146] Randall MacFarlane was under the exclusive control of Remington. However, he was examined for discovery and theplaintiff’s read-ins included a portion (thirty-four separate segments in total) of his testimony. In my view, the plaintiff knew hisevidence. Further, Mr. Remington, Mr. Lammerts and Mr. Sevigny were examined extensively. With respect to the issues where anadverse inference is sought, with the exception of (d), Mr. Remington was the best witness. Further, Mr.

Lammerts was examinedextensively with respect to his communications with Brad Ferguson, and Mr. Sevigny gave detailed evidence with respect to the progressof the remediation and problems encountered at all pertinent points in time. In these circumstances and for the above reasons, I decline todraw an adverse inference with respect to the defendant’s failure to call Mr. MacFarlane. Positions of the Parties [147] Strategy submits that Remington acted in bad faith.

It says that the evidence demonstrates that Remington had decided longbefore December 2005 that it was not going to proceed with the agreement and did not act in good faith when it was asked to considerStrategy’s request for an extension, pursuant to the Offer, of the time lines for a Phase III environmental report and a plan of subdivision. [148] Remington submits that Strategy is seeking rights that it never bargained for and which are not found in the Offer.

It deniesthat it acted in bad faith and says that it used reasonable commercial efforts to meet the deadlines set out in the Offer with respect toobtaining subdivision and a Phase III report. It says that in the circumstances of this case it acted in good faith in considering a requestfor an extension, and that Strategy was not entitled pursuant to the terms of the Offer to an extension for a period which at the time wasindeterminate. Issues [149] The issues are as follows: 1.

Did Remington fail to act in good faith, use reasonable commercial efforts or breach the terms of the Offer by failing to considerin good faith requests for extension of the timelines? 2. If so, is Strategy entitled to specific performance or in the alternative damages? 3. If not, is Remington entitled to damages because of the wrongful filing of a caveat?

Analysis Credibility of Witnesses [ 150 ] The issues and events relating to this lawsuit occurred over five years ago. While different witnesses had sightly different recollections of various events, or in some cases could not remember events, I found their testimony in a general sense to be credible, keeping in mind that memories are not perfect. [ 151 ] However, I accept the testimony of Mr.

Fraser in preference to that of Brad Ferguson that he received telephone calls from Brad Ferguson with respect to obtaining an appraisal on January 20, and January 25, 2005 as evidenced by his log sheets which are in his handwriting. I find that this is not a reflection on Mr. Ferguson ’ s credibility but rather an indication that memory is not perfect. Further, I accept the evidence of Mr.

Sevigny that the remediation efforts were proceeding at the same time on both the Eastern Block and Western Block, in preference to Brad Ferguson ’ s assertion that when he drove by the Site it appeared the work was focused on the Eastern Block. [ 152 ] Brad Ferguson signed a listing agreement with Avison Young on behalf of Strategy three months after signing the Offer.

It authorized Avison Young as its exclusive agent in part to: ... list for sale and to procure offers for the purchase, transfer or trade of the Property on the basis of a Joint Venture Partnership, Development Partnership, Independent Separate Sale or any other matter involving the transfer of any portion or all of the interest in the Property ... The agreement further provided: The agent shall solicit offers to purchase the Property at $380,000.00 per acre or at the highest possible price above the purchase price paid by Strategy ... Mr.

Ferguson ’ s explanation for the listing was that he wanted to know the value of the land and to find a partner to joint venture or develop the “ Merchants Row ” on the front 10 acres. I have difficulty accepting his explanation as to why the Western Block was listed and note that his

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