Boychuk Transport 007 Inc. v. Noralta Real Estate Inc. (Royal LePage Noralta Real Estate), 2011 ABQB 680

Court of Queen ’ s Bench of Alberta Citation: Boychuk Transport 007 Inc. v. Noralta Real Estate Inc. (Royal LePage Noralta Real Estate), 2011 ABQB 680 Date: 20111104 Docket: 1103 03370 Registry: Edmonton Between: Boychuk Transport 007 Inc. Applicant - and - Noralta Real Estate Inc., operating as Royal LePage Noralta Real Estate, and Klaus Hoffmeier Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.

Paul Belzil _______________________________________________________ The Application [ 1 ] The Applicant seeks an order directing that monies held in trust respecting a disputed real estate commission be returned to it. The application engages the issue of whether parol evidence may be adduced in the context of a written agreement. Facts [ 2 ] At all times material the Applicant owned two pieces of property which for the sake of convenience will be referred to as

Lots 3 & 4. The principal of the Applicant is Timothy Boychuk. [ 3 ] On September 18, 2009 the Applicant entered into a commercial real estate listing contract expiring on March 31, 2010 with the Respondent, Noralta. Klaus Hoffmeier was the listing agent. A commission of 4% was stipulated. [ 4 ] Pursuant to an appendix to the listing contract, it was stipulated that if the properties were sold to any of the four corporations listed in the appendix, referred to as the seller ’ s customers, the commission payable would be 1.75%. [ 5 ] One of the corporations listed was RPM Equipment Transport Ltd.

At that time, the principal of RPM was Rene P. McKale. [ 6 ] A second commercial listing agreement, expiring December 31, 2010, was entered into on June 29, 2010. [ 7 ] Appendix A to this agreement reads as follows: THIS IS APPENDIX A TO THE COMMERCIAL REAL ESTATE LISTING CONTRACT RPM Equipment Transport Ltd and the Government of Alberta are the seller ’ s customers, and thereby excluded from item 6 of this listing contract.

The seller will pay the listing brokerage a fee of 1% of the selling price (plus applicable GST) in the event either or both of the aforementioned complete a purchase. [ 8 ] Boychuk knew McKale personally and referred to him as “ RPM ” .

Boychuk knew that McKale was the principal of RPM Equipment. [ 9 ] The Applicant, on his own, negotiated and completed the sale of Lot 3 to the Province of Alberta on October 22, 2010. [ 10 ] In the summer and fall of 2010, McKale continued to express interest in purchasing Lot 4 and the Applicant requested Hoffmeier to assist with the negotiation and paperwork to complete this transaction. In October of 2010 McKale made an offer to purchase Lot 4 through his corporation Patren Enterprises Ltd. Hoffmeier had no

part in the negotiation or preparation of documentation pertaining to the sale of Lot 4. [ 11 ] On November 16, 2010 the Respondents filed a caveat on title to Lot 4 claiming a 4% commission on the sale price. The Respondents take the position that as Patren Enterprises Ltd. did not appear on the sellers-customer list, the full commission is payable. [ 12 ] In order to complete the sale of Lot 4 the sum of $71,400 was paid into trust with the Respondents ’ solicitor pending determination of this application.

Position of the Parties [ 13 ] The Applicant, while acknowledging the existence of an unambiguous written contract, argues that it does not constitute the entire agreement between the parties.

It argues that there was a verbal agreement between them to the effect that a reduced commission would be payable if Lot 4 were sold to any corporate entity associated with McKale, which would include Patren. [ 14 ] The Applicant, while acknowledging the existence of the parol evidence rule, argues that this factual situation falls within one of the exceptions to the rule, that is, that the document was not intended by the parties to constitute the whole agreement.

[15] The Respondents argue that the contract is clear and unambiguous and that the parol evidence rule bars the Plaintiff fromadducing evidence of an alleged verbal agreement. The Respondents argue that, in any event, the evidence pertaining to the allegedverbal agreement is itself ambiguous and thus the Applicant cannot meet the burden of establishing that it should be allowed to adduceparol evidence. The Parol Evidence Rule [16] In Gallen v. Allstate Grain Co. (BC CA), [1984] B.C.J.

No. 1621 the British Columbia Court of Appealdescribed the parol evidence rule at para. 34: [34] The rule of evidence may be stated in this way: Subject to certain exceptions, when the parties to an agreement have apparentlyset down all its terms in a document, extrinsic evidence is not admissible to add to, subtract from, vary or contradict those terms. [17] In Gainers Inc. v. Pocklington Financial Corp. 2000 ABCA 151, the Alberta Court of Appeal emphasized that the rule isrigorously applied.

The following passages are instructive: 15 When the deal is complete in the written contracts, and not subject to an escrow, other evidence (parol evidence) is inadmissibleto vary or contradict a clear written contract. . . . . . 18 The power to imply terms is to be used cautiously, and no implied term can be inconsistent with or with or contrary to the expressterms of the contract: Sullivan v. Newsome (1987) 1987 ABCA 102 , 78 A.R. 297, 303-04 (C.A.); Catre Ind. Alta. v.

R. (1989)1989 ABCA 243 , 99 A.R. 321, 63 D.L.R. (4th) 74, 85 (C.A.). 19 Nor can the court find a collateral parol contract inconsistent with the express written contract: Catre Ind. v. R., supra; Hawrishv. Bank of Mtl. (SCC), [1969] S.C.R. 515, 66 W.W.R. 673. Collateral contracts are viewed suspiciously and must beproved strictly, along with clear intent to contract: Hawrish case, supra, at 678 (W.W.R.). 20 The intent of the parties is to be determined from the words which they put in their written contract; their subjective intent isirrelevant: Eli Lily & Co. v.

Novopharm (SCC), [1998] 2 S.C.R. 129, 166, 161 D.L.R. (4th) 1, 27. Subjective intentcannot even be used to interpret the written words, if they are clear: id. at pp. 27-29 (D.L.R.). 21 The trial judge thought (para. 68, p. 118 A.R.) that he could bypass all those rules by using the so-called “armchair rule”.

Thatrule lets the court see what the authors of the contract knew when they wrote it, in order indirectly to assist in resolving any difficulties inwhat certain words of the contract refer to. . . . . . 23 However, the “armchair rule” does not allow the court to receive direct evidence of intent, still less allow such evidence tocontradict the contract, or evade a “whole contract” or “no oral amendment” clause. To use it to create ambiguities is backwards. . . [18] The rule is not absolute. In Gallen a non-exhaustive list of exceptions was described as follows:

(

a) to show that the contract was invalid because of fraud, misrepresentation, mistake, incapacity, lack of consideration, or lack of contracting intention; (

b) to dispel ambiguities, to establish a term implied by custom, or to demonstrate the factual matrix of the agreement; (

c) in support of a claim for rectification; (

d) to establish a condition precedent to the agreement; (

e) to establish a collateral agreement; (

f) in support of an allegation that the document itself was not intended by the parties to constitute the whole agreement; (

g) in support of a claim for an equitable remedy, such as specific performance or rescission, on any ground that supports such a claim in equity, including misrepresentation of any kind, innocent, negligent or fraudulent; (

h) in support of a claim in tort that the oral statement was in breach of a duty of care. Discussion [ 19 ] Counsel for the Applicant acknowledges that the original listing agreement is clear and unambiguous. He further acknowledges that the only exception to the parol evidence rule which could apply, is the allegation that the entire contract between the parties comprises the original agreement coupled with a verbal agreement. [ 20 ] The whole agreement exception to the parol evidence rule was discussed in AGP, Inc. v. Chinook Grain Co.

Ltd. , 1999 ABQB 857 at paras. 75 & 76 which in turn referenced the Gallen decision: [75] The final Gallen v. Allstate Grain Co., supra , exception is item (f). Extrinsic evidence may be used to interpret a written agreement “ in support of an allegation that the document itself was not intended by the parties to constitute the whole agreement. ” In the “ whole agreement ” exception, there is one contract which is made up of both the written document as well as the extrinsic (often oral) statements. The parol evidence rule is therefore avoided as the extrinsic statements are, in fact, not extrinsic.

They are terms of the contract. [76] Before this “ exception ” to the parol evidence rule may be invoked, a court must first overcome the presumption that the written contract is a complete expression of the parties ’ contractual intentions. In Gallen v. Allstate Grain Co. , supra , at 512, the court quoted from K. W. Wedderburn in his

article "Collateral Contracts", [1959] Camb.L.J. 58 at 62: What the parol evidence rule has bequeathed to the modern law is a presumption - namely that a document which looks like a contract is to be treated as the whole contract.

This presumption is very strong but it is a presumption only, and it is open to either of the parties to allege that there was, in addition to what appears in the written agreement, an antecedent express stipulation not intended by the parties to be excluded, but intended to continue in force with the express written agreement. [ 21 ] The issue is then reduced to whether the Applicant can rebut the strong presumption that the original agreement constitutes the entire agreement between the parties?

[ 22 ] A key issue in determining whether a verbal agreement was ever entered into is when Boychuk became aware that McKale left RPM? [ 23 ] Boychuk was questioned on his Affidavit and was asked when he met with McKale on behalf of Patren to negotiate the sale of Lot 4. [ 24 ] The following passages are instructive: page 18, lines 9-27 and page 19, line 1 Q When did you meet with Mr. McKale on behalf of Patren Enterprises to negotiate the purchase of the property? A Patren to me – first of all, Rene McKale, his initials are RPM. We ’ ve always called him that; I ’ ve always called him that. Mr.

McKale had phoned me. It would have been in June or July; I don ’ t know the exact date. He called me because he saw that my place was listed for sale, and he asked me why I didn ’ t contact him. And I said I didn ’ t know that he wanted to buy the place because I thought that he had sold his business . (emphasis added) And then he said he ’ s still trucking and he wanted to still buy the place. So I talked with Klaus about it and said RPM – I ’ ve always called Rene RPM – that RPM wanted to buy it. And then when the deal finally came through, I called Mr.

Hoffmeier, and I asked him if he would go close the deal and he said you ’ ve done it this far, you can do the rest yourself. page 19, lines 18-27 and page 20, lines 1-16 Q So it was in June or July that you were contacted by Rene McKale because he ’ d seen the property listed for sale. He said he still wanted to buy it? A Mm-hm. Q Okay. When did you first advise Mr. Hoffmeier of this? A That I talked to Rene? Q That in this – well, let me ask it this way: when did you and Mr. McKale who had been discussing for years – A Yes.

Q - - come to the point where you were actually going to negotiate a price and have a listing agreement? A Right after he called me. Q So in June or July sometime? A Yeah. Q And when did you call Mr. Hoffmeier? A Right after I talked to Rene. Q So was this before or after the second contract was entered into? A Before the second contract. After the first one, before the second one. Q So before the second contract was entered into, you - - A Started dealing with Mr.

McKale. [ 25 ] Given Boychuk ’ s statement “ I thought he had sold his business ” , he cannot credibly assert that he was relying on Hoffmeier to advise him that McKale was no longer associated with RPM as he clearly knew this.

[ 26 ] Moreover, Boychuk admits to calling Hoffmeier immediately after speaking to McKale and before the second contract was entered into. Although he was not asked this question, it is unfathomable that he did not tell Hoffmeier what McKale had just told him. [ 27 ] Boychuk admits to reading the second agreement before signing it, which agreement clearly references RPM but not Patren.

Boychuk raised no objection to the wording of Appendix A, indeed he drafted it. [ 28 ] Moreover, Hoffmeier testified in the questioning on his Affidavit, that he continued to market the property to RPM after being told that McKale was no longer associated with the company. [ 29 ] He also testified that he considered McKale to be only a contact person and did not accept that he had verbally agreed that a reduced commission would be payable in the event Lot 4 was sold to a corporate entity associated with McKale. [ 30 ] The evidence pertaining to an alleged verbal agreement is conflicting, at best ambiguous and leaves many significant questions unanswered.

This is hardly the type of evidence suggestive of a meeting of the minds. [ 31 ] In the result, I do not accept that this evidence is sufficient to displace the strong presumption that the written listing agreement constitutes the entire agreement between the parties. Conclusion [ 32 ] The application is dismissed.

The Respondents are entitled to payment of the amount of $71,400 together with accrued interest, which funds are presently being held in trust. [ 33 ] The Respondents are entitled to costs including the preparation of a Brief, Supplementary Brief, conducting the questioning on the Affidavit of Boychuk and attending at the questioning on the Affidavit of Hoffmeier. Heard on the 6 th day of October, 2011. Dated at the City of Edmonton, Alberta this 4 th day of November, 2011. R. Paul Belzil J.C.Q.B.A. Appearances: David Stults

Court & Company for the Applicant Francine M. Ouellette Fraser Milner Casgrain for the Respondents