Dove Homes, 2012 ABQB 1

Court of Queen ’ s Bench of Alberta Citation: Dove Homes

(1999) Ltd. v. Fountain Creek Estates Ltd., 2012 ABQB 1 Date: 20120104 Docket: 0603 13746 Registry: Edmonton Between: Dove Homes

(1999) Ltd., Joanne Guinan and Dwayne Gough Plaintiffs - and - Fountain Creek Estates Ltd., Umer Choudhry and Riaz Choudhry Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.L. Shelley _______________________________________________________ Background [ 1 ] This action arises from the alleged breach of an alleged real estate contract between the corporate plaintiff, Dove Homes

(1999) Ltd. ("Dove Homes"), and the corporate defendant, Fountain Creek Estates Ltd. ("Fountain Creek") in relation to Lot 1, Block 8, Plan 0325709 (Lot 1). [ 2 ] Dove Homes is an Alberta corporation which has engaged in the building of ‘spec’ homes. The individual plaintiffs, Joanne Guinan and Dwayne Gough, hold 51% and 49% respectively of its shares and are its directors. They are married to each other.

[ 3 ] Fountain Creek is an Alberta corporation established to develop and sell the Fountain Creek Estates Subdivision (the “Subdivision”) located in Strathcona County (the "County"). The individual defendant, Riaz Choudhry (Mr. Choudhry) is a director of Fountain Creek. 415734 Alberta Ltd., the shares of which are held equally by Mr. Choudhry and his wife, holds 55% of the shares of Fountain Creek. [ 4 ] The other individual defendant, Umer Choudhry (who will be referred to as "Umer" to distinguish him from Riaz Choudhry) is the son of Mr. Choudhry. The action against Umer was discontinued prior to trial.

As of September 2005, Umer was 22 years old and had held his realtor's license for over a year. Umer was a full-time student who worked part-time with both RE/MAX and at the Fountain Creek trailer. Umer provided the plaintiffs with his business card on September 14, 2005. [ 5 ] Mr. Choudhry testified that Umer had attended the realtor's course because he was shy and it would give him an opportunity to talk. Mr. Choudhry said Umer was employed by him personally (and not by the corporate defendant) to sit in the Fountain Creek trailer for an hourly wage.

Umer was also paid a $500 referral fee per lot from any closing proceeds. [ 6 ] VIP Development Group of Companies Inc. ("VIP") is a corporation that administers and manages several companies, including Fountain Creek. In 2005, VIP employed Mr. Choudhry, Ms. Monica Shymko, and a receptionist. [ 7 ] According to the evidence of both Ms. Guinan and Mr. Gough, they telephoned Mr. Choudhry and arranged an appointment for September 13, 2005 at the on-site sales trailer operated by Fountain Creek. They testified that they contacted Mr.

Choudhry again on the 13 th because there was no one present at the sales trailer when they arrived. They stated that the meeting was then re-scheduled for the following day. On September 14, they again attended the sales trailer to find no one present. After phoning Mr. Choudhry, they were assured that Umer was running late and was on his way to the sales trailer. Mr. Choudhry testified that he has no recollection of these phone conversations and denied arranging the appointments as it was not his customary practice to do so.

However, he also testified, "I respect people and if somebody called, then we would try to help them as much as we can." [ 8 ] It is agreed that on September 14, 2005, Ms. Guinan and Mr. Gough met Umer at the sales trailer. After Umer provided them with a layout of the Subdivision (which showed prices for each lot), they inspected some of the available lots before returning to the sales trailer to discuss the purchase of a lot with Umer. It is at this meeting that the disputed document was prepared by Umer. [ 9 ] Ms. Guinan testified that she and Mr.

Gough were primarily interested in Lots 1 and 3, as each of these lots were within their budget of $145,000. The evidence established that price was an essential, if not determinative, factor in their selection of Lot 1. They also asserted, however, that they had a particular "vision" for this lot that was driven by its location next to wetlands and the fact that the neighbouring lot was already developed.

Although Lot 1 was originally purchased for commercial purposes, the individual plaintiffs maintained that this intention changed upon the sale of their former residence, when they decided to build their new personal residence on the lot. [ 10 ] After the plaintiffs returned to the trailer and expressed an interest in Lot 1, Umer began filling in the handwritten portions of a standard form Residential Real Estate Purchase Contract. After the plaintiffs requested a price lower than the listed price, Umer made a telephone call to Mr. Choudhry.

According to Umer, this telephone conversation was the first of two between him and his father during the preparation of the disputed document. Umer confirmed that Mr. Choudhry informed him that a discount of 3-4% could be given. Consequently, Umer reduced the list price by $3,000 to $126,000 and wrote, "a discount of $3000 has been given" in

Article 7.6. Mr. Choudhry had no recollection of this conversation, but confirmed that it was generally Fountain Creek's practice to give discounts but that the use of the past tense in

Article 7.6. was simply "bad English", maintaining that there was no agreement at that point. [ 11 ] The plaintiffs had also informed Umer that they wished Dove Homes to be the designated purchaser. Therefore, Umer made a second phone call to his father to discuss the GST implications of a corporate purchaser. According to the evidence of both Ms. Guinan and Mr. Gough, it appeared that the person on the phone with Umer dictated to him the terms which he wrote in the margin of the disputed contract near the purchase price (the GST Clause). Mr.

Choudhry testified, however, that he did not dictate the terms to Umer, but did admit that the words "reasonably reflect" what he said to Umer. [ 12 ] The handwritten additions to the standard form contract included the legal description for Lot 1, the purchase price (including the deposit amount), the GST Clause, the $3,000 discount, reference to the sale being for land only on an “as is” basis, that

Schedule “A”

was part of the contract, and that an easement was to be placed. [ 13 ] The plaintiffs offered to pay the entire purchase price on September 14, 2005. According to them, they wanted to pay the full price to move the process along quickly, but Umer assured them that this would not make a difference as they had a valid contract and the lawyers would handle it from there.

Umer, to the contrary, testified that he informed the plaintiffs that he could not accept the full purchase price because he did not have the authority to sell the land and that they would instead need to attend at the downtown offices of Fountain Creek to have the offer accepted. Ms. Guinan denied ever being told that she needed to attend at the Fountain Creek office to have the offer accepted. A cheque for a $1,000 deposit was given and the plaintiffs were given one of the copies of the multi-copy standard form document which had been completed and signed. [ 14 ] There is some confusion as to the contents of

Schedule “A”, and whether the plaintiffs received a copy of it. Ms. Guinan testified that she believed

Schedule “A” referred to the “Architectural Guidelines”, while Mr. Gough testified that he did not know what

Schedule “A” referred to. Umer said that he believed he provided them with

Schedule “A”, but denied that

Schedule “A” was the “Architectural Guidelines”. According to Mr. Choudhry,

Schedule “A” is a combination of the “Architectural Guidelines” and the landscaping deposit information. He also stated that the

Schedule would normally be kept in the trailer and could be photocopied for attachment to an offer. [ 15 ] As of September 14, 2005, there was an unresolved issue pertaining to an easement to be placed on Lot 1 by the County to accommodate signage for the Subdivision. Umer testified that he was not initially aware of the easement issue and only learned of it during the telephone conversations with Mr. Choudhry on that date. Mr. Choudhry testified that he has no recollection of discussing the easement with Umer over the phone. Ms. Guinan and Mr.

Gough testified that they were aware of the easement issue but were not concerned with it because, according to Mr. Gough, they had dealt with many easements before and commented at the time that it would save them some landscaping. However, Umer gave evidence that he believed the plaintiffs were concerned with the size of the easement and did not recall Mr. Gough stating that they did not care because it would mean less landscaping. Ultimately, the County required Fountain Creek to transfer a portion of Lot 1 to it.

The approximately 0.004 hectare portion was excepted out under Plan 0623923. [ 16 ] The acceptance portion of the disputed document is dated September 14, 2005. The alleged signature of Umer is above the seller line. Both Umer and Mr. Choudhry gave evidence that the notation that appears in the acceptance portion is Umer's initials and not his signature. To the contrary, the plaintiffs and, more significantly, Ms. Shymko testified that it was Umer's signature.

The plaintiffs submit that there are differences between the notation that appears in the acceptance portion and the notation that appears in the "seller's initials" portion on the first page of the disputed document. According to Umer, he wrote what is alleged to be his signature in the acceptance portion only because he wanted to appease the plaintiffs, as they seemed anxious to purchase the Lot. [ 17 ] Mr. Choudhry gave evidence that Umer was involved in the writing of one other offer for Fountain Creek that eventually closed.

However, he was unsure if Umer had signed the acceptance portion of that contract. [ 18 ] Umer gave evidence that he delivered the disputed document and deposit cheque to Ms. Shymko the day after the September 14 meeting. Ms. Shymko's position with VIP for the period surrounding the disputed document was that of Senior Manager, Administration and Operations. She testified that she saw the contract shortly after September 14, 2005 and, upon reviewing it, noted to herself that it would not be able to close on the original closing date of September 21, 2005 due to the easement issue.

She also gave evidence that she did not send the deposit cheque along to Fountain Creek's lawyer at that time because the contract was not yet finalized. She also testified that she noticed Umer's signature in the seller's portion and that this did not raise any red flags for her. [ 19 ] Ms. Guinan testified that she did not hear anything from Fountain Creek in the days following the September 14, 2005 meeting, so she took the initiative of contacting Ms. Shymko. According to Ms. Guinan, they discussed the delay as it related to the easement and Ms.

Guinan advised that she was not concerned with the delay because the plaintiffs were not in a rush at that time. [ 20 ] On January 10, 2006, Ms. Shymko sent an "amendment/condition removal" fax to Ms. Guinan that purported to amend the completion date of the sale to February 28, 2006. Ms. Shymko testified that she did not speak to anyone at Fountain Creek regarding the preparation and sending of this amendment correspondence. Ms. Guinan signed the amendment on behalf of Dove Homes and returned the signed copy to Ms. Shymko, who was to have it signed by a representative of Fountain Creek.

[ 21 ] According to Mr. Choudhry, it was at this time, in January 2006, that he first saw the disputed document. He explained the nearly four month gap between when Fountain Creek had it in its possession and when he personally viewed it as a result of a busy workload. [ 22 ] Mr. Choudhry refused to sign the amendment document when it was presented to him. Ms. Shymko testified that, in her recollection, the only reason that he gave at the time for not signing the amendment was because of the easement issue. Mr.

Choudhry, on the other hand, maintained that the easement was only an auxiliary issue and that the main reason he did not sign the amendment was because the disputed document was not a valid contract as the relevant date for acceptance had passed and he had not signed the original document. According to him, only he and his Fountain Creek business partner, Mr. Alex Andreit, could accept the offer and, therefore, he "did not pay any attention" to the notation above the seller line in

Article 14. However, according to the read-ins of his Examination for Discovery of August 4, 2010, he had stated that the easement was the major impediment with selling the lot and that he was "upset because legally [Fountain Creek] had no right to sell this lot because it was -- the lot size and the dimensions were in limbo, and so we couldn't sell it because we are negotiating with County because they want to take away a portion of the lot." [ 23 ] Ms. Shymko testified that she transferred the deposit cheque to Fountain Creek's lawyer in January.

The cheque was deposited into the lawyer's trust account on January 17, 2006. In 2008, Fountain Creek sent Ms. Guinan a $1,000 cheque in refund of the deposit but she did not cash it. [ 24 ] According to Ms. Guinan, she had asked repeatedly for the transfer documents and was in contact with Fountain Creek’s lawyer's conveyance clerk, Ms. Minelli. Ms. Guinan testified that Ms. Minelli had advised her that all the documents were prepared and later that Mr. Choudhry had been in the office but did not sign the documents. The answer to an undertaking that arose during the Examination for Discovery of Mr.

Choudhry on August 4, 2010, indicated that the lawyer’s file contained an unsigned Transfer of Land and a Statement of Adjustments for the sale of Lot 1. [ 25 ] Ms. Shymko testified that she never instructed counsel to prepare transfer documents and stated that she would be surprised if the transfer documents and statement of adjustments had been prepared. According to her, she simply delivered the contract and the cheque to Mr. Shymko's office. Mr.

Choudhry testified that he did not instruct his counsel to deliver transfer documents for Lot 1 to the plaintiffs’ counsel and was not aware that counsel had prepared transfer documents. [ 26 ] Ms. Guinan testified that the plaintiffs could have paid the full purchase price at any time but did not do so because they never received the transfer documents from Fountain Creek. She also testified to the steps she took to develop the Lot, since she was under the impression that the sale was going forward.

It was her impression that her design plan had been approved by Windward Landtec Inc. as of her third revision in April 2006. Windward Landtec Inc. is paid by Fountain Creek for architectural guideline controls for the subdivision and in relation to discussions about such things as building plans or reservation of colours. Ms. Guinan had applied for and received building and development permits from the County in May 2006. The County refunded these permit fees in June 2006 after the application was cancelled. [ 27 ] Ms. Guinan testified that she called Mr. Choudhry in about February 2006.

He told her to purchase another lot and offered to pay for her plans. Mr. Choudhry testified that, to his knowledge, he never discussed this matter with anyone from Dove Homes, except for a phone conversation in June. [ 28 ] Ultimately, the disputed transaction was not completed. A caveat was filed on behalf of Dove Homes against the title to Lot 1 on January 18, 2006. Issues 1. Was a valid and enforceable contract for the purchase and sale of Lot 1 entered into between Dove Homes and Fountain Creek? a. Was the offer accepted by Fountain Creek?

b. If so, was there certainty of terms sufficient to create a valid and enforceable contract? 2. If there is a valid and enforceable contract, did Dove Homes and Fountain Creek agree to extend the closing date, or alternatively waive that time was of the essence? 3. If the closing date was extended or there was a waiver of time being of the essence, is Dove Homes entitled to specific performance? 4. If specific performance is not appropriate, is Dove Homes entitled to damages and, if so, in what amount? 5. Is Riaz Choudhry personally liable? Analysis 1.

Was a valid and enforceable contract for the purchase and sale of Lot 1 entered into between Dove Homes and Fountain Creek? a. Was the offer accepted by Fountain Creek? [ 29 ] The plaintiffs submit that Umer accepted the offer on September 14, 2005, by placing his signature in the seller’s acceptance portion of the disputed document. They primarily rely on Ms. Shymko's evidence that the notation in

Article 14 was, in fact, Umer's signature. They also maintain there are clear differences between the disputed notation and that which appears earlier in the form as Umer's initials. [ 30 ] The defendants maintain, however, that Umer simply placed his initials in the acceptance portion to appease the plaintiffs' strong desire to purchase Lot 1. They submit that Umer's evidence on this point is the most pertinent because that of the other witnesses is opinion evidence only. The defendants further point to the fact that

Article 13.2 makes it clear that the offer was open for acceptance until September 21, 2005, that

Article 15 of the disputed contract was not completed, and Umer's testimony that if he intended to accept the offer then he would have agreed to take the cheque for the full purchase price.

The defendants cite the case of Austie v Aksnowicz , 1999 ABCA 56 , 232 AR 118, as support for the proposition that a vendor may affix a signature merely to admit receipt of an offer. [ 31 ] The plaintiffs submit, and the defendants concede, that a defence based on the Statute of Frauds , 1677 (29 Car II) c 3, cannot be made out based on the signature issue because the case law establishes that affixing initials may be sufficient to constitute execution of an agreement required to be in writing. [ 32 ] The plaintiffs submit that Umer had actual authority to act on behalf of Fountain Creek in entering into a contract for the sale of Lot 1.

In the plaintiffs' view, all essential terms of the disputed contract were discussed with and approved by Mr. Choudhry during the course of the two telephone conversations that coincided with Umer's completion of the document. These terms included the particular lot, the easement issue, the purchase price, and the GST indemnification clause. The plaintiffs submit that this situation is analogous to the other contract that Umer had prepared for Fountain Creek, where Mr. Choudhry had negotiated the terms and then Umer wrote up the agreement. The plaintiffs submit that Umer was acting as an authorized agent for Mr.

Choudhry in the writing of the disputed contract while discussions and negotiations proceeded with Mr. Choudhry’s participation over the phone.

[ 33 ] The defendants submit that Umer did not have the authority to sign a contract on behalf of Fountain Creek. They rely on Umer's testimony that he informed the plaintiffs that he did not have such authority. [ 34 ] In the alternative, the plaintiffs submit that Umer had ostensible authority to act on behalf of Fountain Creek in the preparation of the disputed contract.

The plaintiffs rely on the test for ostensible authority found in Doiron v Manulife Financial , 2003 ABCA 336 AR 371, which held that such a relationship will be found in circumstances where the "principal has created a situation such that it is reasonable to infer and rely upon the apparent authority of the person." The plaintiffs make this submission on the basis that Umer was identified by Mr.

Choudhry on the phone conversations that led up to the meeting on September 14, 2005, that Umer had access to the Fountain Creek sales facility and relevant forms used by Fountain Creek to write real estate contracts, and that the two telephone discussions in which Mr. Choudhry and Umer discussed the terms of the disputed contract took place in the presence of the plaintiffs. [ 35 ] The defendants submit that the plaintiffs knew that Umer was a student and was inexperienced, as evidenced by his need to phone Mr.

Choudhry twice during the preparation of the disputed document. [ 36 ] At the outset, I confirm that I have considerable difficulty accepting much of Mr. Choudhry’s evidence. While the passage of time will commonly affect the reliability of people’s memory, I do not accept that the inconsistencies, obvious contradictions and failures to recall key aspects of the events recollected by other witnesses at the trial are merely the result of the passage of time or the busyness of his

schedule in the fall of 2005. I found much of his evidence to be not credible; not only because it conflicted with the evidence of other witnesses (including, in some respects, Umer and Ms. Shymko) but also because in other respects it did not make sense when viewed in the context of the actions taken by various individuals during the relevant time period. [ 37 ] For example, at trial Mr. Choudhry maintained that there could not have been a contract because Fountain Creek was not in a position to sell Lot 1 “legally or morally”.

This is clearly at odds with the fact that: Lot 1 was listed on the sheet given to prospective purchasers; a purchase price had been shown for it on such information material; Mr. Choudhry had two fairly lengthy discussions with Umer about the sale of this lot to the plaintiffs; Ms.

Shymko (the person charged with responsibility for administering sale contracts) was unaware that the lot could not be sold and was in fact working on its sale through her discussions and actions related to it; the consultants hired to oversee the architectural guidelines were clearly not aware that it was not for sale, since they had extensive discussions with Ms. Guinan concerning it and ultimately approved her design plan for that lot; and both a building and development permit were issued by the County for that lot. Similarly, Mr.

Choudhry’s contention that he respects people so that if someone calls him he will try to help them out, and that they do not try to push their product on people because they want “happy people” (ie, happy purchasers), is completely at odds with his dealings with the plaintiffs. [ 38 ] In addition, Mr. Choudhry’s evidence on key points conflicts with that of Ms. Shymko and with Umer and his stated reasons for his actions changed between Examinations for Discovery and Trial.

His contention that Umer’s job was only to give out information and refer people to him and that he did not give Umer instructions to prepare offers conflicts with what occurred on September 14, when he clearly provided detailed instructions to Umer about the sale of Lot 1 to the plaintiffs and the completion of portions of a contract for that purpose, as well as his evidence that Umer had been involved in preparing a different offer on a different occasion. Mr.

Choudhry’s contention that Umer took the realtor’s course because he was shy and it gave him an opportunity to talk to people is at odds with the fact that Umer had been working as a licensed realtor for approximately one year at the time the plaintiffs met with him. Taking a realtor’s course and working as a licensed realtor is consistent with Umer’s advice to Mr. Gough that he wanted to join his father’s business, something which he did after the events in question, rather than being a means to overcome shyness. There are many other similar examples of where Mr.

Choudhry’s evidence conflicts with either the more plausible evidence of others or the actions taken by him and others. Further examples will be specified in connection with specific issues. In general, however, where Mr. Choudhry’s evidence conflicts with the evidence of the plaintiffs, Ms. Shymko or Umer, or where it is at odds with the actions taken by him and others, I do not accept Mr. Choudhry’s evidence. [ 39 ] While Umer’s evidence aligns with that of the plaintiffs in many respects, his evidence in relation to his signature and to his authority are problematic.

I have concluded that, for reasons that can only be inferred from the circumstances, Umer’s testimony in relation to these issues is less credible than that of Ms. Guinan and Mr. Gough. For example, he provides no explanation as to why the notation in the seller’s acceptance portion differs from the notation in those sections of the Agreement which indicate that it is the “seller’s initials”. His explanation for putting anything in the acceptance portion if he knew that he had no authority to accept on behalf of Fountain Creek is at odds with his designation and experience as a licensed real estate agent.

Similarly, if he had advised the plaintiffs that he could not accept on behalf of Fountain Creek and that they had to attend at the downtown offices in order to have the Agreement accepted, his actions in signing anything in that

section and in providing them with the buyer’s copy of the standard form real estate contract makes no sense. Furthermore, Ms. Guinnan’s actions thereafter are completely at odds with having been advised that the offer could only be accepted by attending at Fountain Creek’s downtown offices and with Ms. Shymko’s actions in treating the document as if there was a transaction pending (as evidenced by several actions she took following receipt of the document). Therefore, wherever Umer’s evidence is in conflict with that of Ms. Shymko or the plaintiffs, I do not accept his evidence.

[ 40 ] Relying primarily on the evidence of Ms. Shymko, but also on that of the plaintiffs, I conclude that the offer was accepted when Umer affixed his signature in the acceptance portion of the standard form real estate purchase contract. I am satisfied that he had actual authority as a result of his discussions with Mr. Choudhry and the fact that Ms. Shymko had no concern when she saw what she described as his signature in the acceptance portion. Ms.

Shymko’s treatment of this document as a contract and her actions following its receipt by her satisfy me that Umer had authority. [ 41 ] If I am wrong in that regard, I am satisfied that Umer had ostensible authority. Umer was a licensed real estate agent who was sent by Mr. Choudhry to deal with the plaintiffs at the on-site trailer. The circumstances and both his actions and those of Mr. Choudhry on September 13 and 14, 2005 would have clothed him with that authority. He entered into detailed negotiations with the plaintiffs, involving considerable input from Mr.

Choudhry by telephone, on essential terms of the contract, including a price reduction and matters related to the payment of GST by a corporate purchaser/builder. He initialled the document in several places where the vendor’s initials were required and he then affixed his signature in the vendor’s acceptance portion. He accepted a deposit cheque and he referred the plaintiffs to Ms. Shymko for completion of what I am satisfied he referred to as a “valid contract”.

I am equally satisfied that at no time did he indicate that the plaintiffs had to attend at the offices of Fountain Creek in order to conclude the offer. To the contrary, I am satisfied that he advised the plaintiffs that the rest would be handled by the lawyers in the normal course and that that was the reason why he advised them that they did not have to tender the full amount of the purchase price as they had offered to do. [ 42 ] I conclude that on September 14, 2005, the plaintiffs made an offer to purchase Lot 1 and it was accepted by Umer on behalf of Fountain Creek. b.

If so, was there certainty of terms sufficient to create a valid and enforceable contract? [ 43 ] The plaintiffs submit that the terms of the contract are sufficiently certain to allow its enforcement. In their view, the contract stipulates the price, identity of the parties, and a reasonably complete description of the property. [ 44 ] The defendants submit that there is no certainty of terms and that this is fatal to it having binding effect. [ 45 ] Although the easement issue was still outstanding as of September 14, 2005, the plaintiffs submit that they were not concerned about this minor matter.

They note that the lot size was ultimately reduced by approximately 3%, which did not impact materially on their planned used of the land. Further, the plaintiffs submit that reference to the easement is only a term of the contract, not a condition as alleged by the defendants. [ 46 ] The defendants submit that the ultimate dimensions of the easement and the related obligations in respect of it were unknown at the time the disputed document was prepared. In support, the defendants point out that an easement was never concluded. Rather, a portion of Lot 1 was excepted out of the title.

The defendants further submit that, since the easement issue was not resolved until after the original closing date, or even the disputed extended closing date, the condition of the offer had never been met or waived prior to the closing date. The defendants refer to the Alberta Court of Appeal decision in Castledowns Law Office Management Ltd v FastTrack Technologies Inc , 2009 ABCA 148 , 454 AR 328, for the proposition that "if the conditions fail, the contract is at an end." [ 47 ] According to the plaintiffs, it is unclear whether a copy of

Schedule “A” was provided to them. However, the plaintiffs submit that the reverse of the subdivision map that was provided to them contains a

summary of the principal terms that would have been contained in

Schedule “A”. [ 48 ] The defendants take the position, however, that there is no controversy in the evidence with respect to the fact that

Schedule “A” was not attached to the disputed document. Further, the defendants submit that there is no clear statement in evidence as to what the contents of

Schedule “A” were or what the parties intended. Therefore, the defendants submit that the conflicting evidence with regards to

Schedule “A” confirms that the terms of the disputed contract were uncertain. [ 49 ] A date certain for closing was specified in the disputed document but, in the plaintiffs' submission, neither party relied upon

this date to resile from the contract until Fountain Creek went looking for an excuse to avoid closing. The plaintiffs submit that Fountain Creek failed to comply with its obligation to deliver closing documentation, as required by

Article 4.3. As such, the plaintiffs submit that Dove Homes had no obligation to tender the closing funds, although it was ready, willing, and able to do so. [ 50 ] The defendants raise

Article 7.1, which states: "All time periods, deadlines and dates in this Contract shall be strictly followed and enforced." The defendants submit that, if there ever was a binding and enforceable agreement between the parties, it came to an end on the closing date of September 21, 2005. The defendants further submit that Ms.

Guinan did not recall contacting anyone from Fountain Creek prior to September 21, 2005. [ 51 ] The defendants also raise the fact that there was no evidence provided to demonstrate that the plaintiffs met the condition regarding the handwritten GST clause (requiring them to provide Fountain Creek with a letter attesting to their GST exemption status). As such, the defendants submit that the purchase price was also uncertain, because the GST issue was not fully resolved. [ 52 ] I reject the argument that the contract fails for uncertainty of material terms.

I accept the plaintiffs’ evidence that they understood that a portion of the corner would be required by the County and that during their discussions they were made aware by Umer (who I am satisfied was advised by telephone by Mr. Choudhry, although the latter did not recall the conversation) that an easement had to be finalized for that purpose. It is clear that the plaintiffs, who were in the business of purchasing lots for the development of ‘spec’ housing, were familiar with these requirements and were not concerned that the exact dimensions were not known.

Finalization of the easement in these circumstances was not a condition precedent but, rather, a detail that had to be worked out before closing. As it turned out, it was worked out in a different manner, but I am satisfied that it makes no difference on the facts of this case. Ms. Shymko’s actions and those of the plaintiffs are entirely consistent with that

interpretation. Following receipt of the document, Ms. Shymko and Ms. Guinan acted in a manner consistent with the existence of a contract and the finalization of outstanding details necessary to permit closing. Ms. Shymko’s actions in preparing the amendment, and Ms. Guinan’s in signing it, also support that

interpretation. [ 53 ] Similarly, if

Schedule “A” was not affixed as such (and I recognize that it is unclear whether it was), I am satisfied that the plaintiffs were provided with the information that would have been contained on

Schedule “A” and that both parties were in substantial agreement as to the contents of

Schedule “A”. The plaintiffs acted upon those requirements by commencing their discussions with both the County and Fountain Creek’s consultants, knowing that the architectural guidelines that formed part of the contract would have to be satisfied in order to obtain the necessary approvals and permits. [ 54 ] I also reject the defendants’ argument in relation to the GST clause. GST is payable on the closing of a sale transaction. There is an obligation on a seller to collect GST unless the buyer provides confirmation of its own GST registration status by that date.

Although such confirmation was not forthcoming from Dove Homes, it could have done so at any time up to closing, failing which Fountain Creek would have been required to collect the GST directly. This issue did not render the purchase price uncertain (as both the purchase price and statutory GST obligations are clear). Fountain Creek’s refusal to close rendered academic the manner of the GST collection. [ 55 ] The parties’ argument in relation to the closing date is more appropriately dealt with under the next

section of this Judgment. There was a clear closing date specified in the contract and the real issue is whether or not it was extended or waived. 2. If there is a valid and enforceable contract, did Dove Homes and Fountain Creek agree to extend the closing date, or alternatively waive that time was of the essence? [ 56 ] The plaintiffs take the position that neither party relied upon the expiry of the closing date and, further, that Fountain Creek failed to comply with its obligations under

Article 4.3 to deliver closing documents to the plaintiffs. [ 57 ] The plaintiffs also submit that the relationship between Fountain Creek and VIP is such that any actions that were taken through VIP or its employees, specifically Ms. Shymko, were authorized activities carried out for the purpose of administering the affairs of Fountain Creek pursuant to arrangements developed and instructed by Mr. Choudhry. The plaintiffs point to the use of VIP letterhead by Ms. Shymko to communicate with the plaintiffs as further evidence confirming that the actions of VIP should be viewed as binding on Fountain Creek.

As such, the plaintiffs suggest that Ms. Shymko's discussions with Ms. Guinan, as well as the amending document sent in January 2006, ought to be interpreted as binding on Fountain Creek.

[ 58 ] The defendants submit that, if there was a contract, it came to an end on September 21, 2005. In particular, the defendants take the position that the actions of Ms. Shymko are not binding on Fountain Creek as she testified that she did not seek Mr. Choudhry's approval for the preparation or the sending of the amending document in January 2006. With regards to the possible ostensible authority of Ms. Shymko, the defendants submit that any basis for such authority must be grounded in a representation made by the principal ( Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd , [1964] 2 QB 480 ).

The defendants submit that this is clearly not the case here because Mr. Choudhry, as the authorized representative for Fountain Creek, made no representation to hold out Ms. Shymko as an authorized party to deal with the extension. In fact, according to the defendants there is no evidence that Mr. Choudhry was aware that Ms. Shymko and Ms. Guinan were in communication until the amending document came to his attention. [ 59 ] The defendants also point to Mr. Choudhry's refusal to sign the amendment as an indication that Fountain Creek never intended to waive the time is of the essence clause in

Article 7 of the disputed document. [ 60 ] The plaintiffs submit that the ostensible or actual authority of Ms. Shymko, as it relates to the fax in January 2006, does not need to be decided by the Court given the terms of the contract. In the plaintiffs' view, until there was communication to the plaintiffs of a clear and unequivocal refusal to close by the defendants, there was a continuing breach of the disputed contract by Fountain Creek. However, this breach was waived by Ms.

Guinan by her efforts to obtain closing documents. [ 61 ] I have concluded that, although the contract indicated a closing date of September 21, 2005, the actions of the parties effectively waived the time of the essence provision, effectively extending the closing date until Mr. Choudhry refused to sign the amendment document and refused to close the transaction. [ 62 ] Ms. Guinan was referred to Ms. Shymko from the outset for the purposes of pre-closing matters. This is understandable given that she was in charge of contract administration for the subdivisions that were being administered by VIP.

Umer’s actions in referring the plaintiffs to Ms. Shymko, Ms. Shymko’s position with VIP, VIP’s relationship to Fountain Creek, and Ms. Shymko’s actions following her receipt of the contract are consistent with the position taken by the plaintiffs. Ms. Shymko testified that she knew that closing could not occur on the date specified in the contract because of the outstanding easement issue. However, this did not concern her, nor did it concern Ms. Guinan. They continued to take steps toward closing, including Ms. Shymko referring Ms.

Guinan to the consultants to ensure approval under the architectural guidelines and the preparation of a formal amending document when there was a delay in finalizing the easement. Ms. Shymko’s actions are consistent with a waiver of the time of the essence provision. [ 63 ] For her part, Ms. Guinan’s actions were also entirely consistent with the plaintiffs’ waiver of the time of the essence provision and an effective extension of the closing date. [ 64 ] Specifically, I reject any notion that Ms. Shymko’s actions were not binding on Fountain Creek.

Corporations act through their employees and agents and, just as I concluded that Umer had actual or ostensible authority, I conclude that Ms. Shymko also had actual authority. If I am incorrect in that conclusion and that, by virtue of her position and the activities she engaged in on behalf of Fountain Creek, she did not have actual authority, then Mr. Choudhry’s problem is with Ms. Shymko exceeding whatever authority he conferred on her.

I say this because, at the very least, she had been clothed with ostensible authority (for example, by receiving and processing contracts on behalf of Fountain Creek, by referring purchasers to Fountain Creek’s consultants, by preparing contractual amendments on behalf of Fountain Creek, by dealing with Fountain Creek’s lawyers, and by having extensive discussions with the parties related to the purchase of lots in Fountain Creek and other subdivisions whose contracts were administered by VIP). If Mr.

Choudhry and his business partner did not want anyone to engage in these activities on behalf of Fountain Creek, they ought to have advised the persons involved, including Ms. Shymko and the consultants, that they ought not to perform these duties and that they should refer all potential purchasers to Mr. Choudhry for the performance of these activities. Having said that, I am persuaded that Ms. Shymko did have authority and that, in her dealings with Ms.

Guinan, she was performing her duties in the ordinary course, acting as she normally would in extending a closing date to attend to matters that resulted in a delay. Clearly both she and Ms. Guinan treated their actions as such and continued to waive strict compliance of certain terms of the contract by mutual agreement, right up until the time that Mr. Choudhry (probably to the surprise of both Ms. Shymko and Ms. Guinan) refused to complete the transaction. 3.

If the closing date was extended or there was a waiver of time being of the essence, is Dove Homes entitled to specific performance? [ 65 ] The plaintiffs submit that, in accordance with Articles 4.3 and 4.4, payment of the purchase price is postponed until the closing documents are received and a reasonable period of time for registering them has expired. The plaintiffs therefore argue that they

remain entitled to make payment of the purchase price until the present because the closing documents have yet to be tendered byFountain Creek. [66] The defendants take the position, however, that failure to tender the purchase price is fatal to a claim for specific performance(Centurian Ridge Farms Ltd v McCallum Estate (1978), (AB KB), 14 AR 391, 90 DLR (3d) 649 (SC(TD)) asrecently recognized by Sanderman J in Singh v 862500 Alberta Ltd, 2009 ABQB 293.

In the defendants' view, these cases stand for theproposition that there is no obligation on a vendor to provide closing documentation before the purchaser is required to tender the closingfunds. [67] Further, in the defendants' submission, the purchaser is required to tender the purchase price to the vendor or the vendor'scounsel in order for the purchaser to establish that it is ready, willing, and able to complete the purchase. [68] In contrast, the plaintiffs contend that the Singh decision is distinguishable as, in their view, the case explicitly acknowledgesthat the common law duties can be altered by an agreement between the parties.

The plaintiffs submit that

Article 4 alters the commonlaw, such that the plaintiffs were not obligated to tender the closing funds until the closing documents were received from the defendants. [69] The defendants are relying on cases which do not apply to the facts of this case. While they are correct in asserting thathistorically, pursuant to case law in Alberta, there was an obligation on a purchaser to tender the purchase price before there was anobligation on a vendor to provide closing documents, this case is governed by the terms of the contract that I have found to exist betweenthe parties.

The contract clearly provides that it is the seller who must provide closing documents to the buyer on reasonable trustconditions, providing the buyer with a reasonable period of time before the completion date to confirm registration and, whereapplicable, to obtain any mortgage advance. The contract further provides for what is to happen if the seller fails to do so. [70] Even if that were not the case, the line of authority relied upon by the defendants would not require the plaintiffs to tender thepurchase price on the facts of this case.

The plaintiffs had indicated, as far back as the date the contract was signed, that Fountain Creekwas willing to tender the full amount of the purchase price. It continued to press for closing documents and to make it clear to thedefendants that it wished to complete the purchase and had the funds to do so. The defendants’ advice that it would not close thetransaction (and inferentially that it would not accept closing funds) made tendering unnecessary. [71] It is conceded by the plaintiffs that the remedy of specific performance is no longer an automatic entitlement when dealingwith a contract for real estate.

The plaintiffs acknowledge that they must establish that Lot 1 is sufficiently unique to justify specificperformance. As support, the plaintiffs rely on their position that damages would be an insufficient remedy based upon Mr. Gough's"vision" for the land. The plaintiffs submit that the following factors are relevant with regards to the uniqueness of Lot 1: (

a) Although the plaintiffs initially intended to build a home for resale on Lot 1, they ultimately determined that they would buildtheir personal residence in this location; (

b) The residence designed by Ms. Guinan for construction on Lot 1 was specific to the lot building envelope; (

c) There were and are only a limited number of 1/3 acre lots available for purchase with municipal services in the County; (

d) The proximity of the Subdivision to the municipal and commercial services within the Sherwood Park urban envelope; (

e) The proximity to the wetlands area at the entrance to Fountain Creek Estates and across the street from Lot 1; (

f) The location of Lot 1 at the entrance to a cul-de-sac, resulting in reduced traffic in front of the property and any residenceultimately constructed on it;

(

g) The relatively small size of Lot 1 in relation to other lots in the Subdivision, particularly after the 3% reduction for the Road Widening Agreement negotiated with the County to accommodate the entrance sign to the Subdivision; (

h) The location of Lot 1 at the entrance to the Subdivision to allow for ease of access; (

i) The price for Lot 1 compared to lots in other similar developments in the vicinity of Fountain Creek Estates; (

j) The east/west orientation of the building envelope; (

k) Access to future walking trails at the rear of Lot 1 as noted on the subdivision map; and (

l) The completion of the improvements on the only directly contiguous lot (Lot 2, Block 8) in a fashion that was acceptable to the plaintiffs. [ 72 ] The plaintiffs and defendants agree that the factors affecting whether specific performance should be granted are to be assessed as at the date of the breach. [ 73 ] The defendants submit that the date of the breach is September 21, 2005, on the conclusion of the original closing date, or in February 2006 when, according to the evidence of Ms.

Guinan, the plaintiffs were informed that Fountain Creek would not be proceeding with the transaction. [ 74 ] The plaintiffs submit that the existence of lots in other locations or with different orientations does not counter the various factors asserted by them to establish the uniqueness of Lot 1.

They also submit that the fact that price was a significant consideration in the selection of the lot ought not to limit the Court's consideration of the factors listed above. [ 75 ] The defendants submit that, in these circumstances, since Dove Homes was the intended buyer of Lot 1, it is the intention of the corporation and not that of Ms. Guinan and Mr. Gough that is relevant with regards to a claim for specific performance. [ 76 ] The defendants also submit that the plaintiffs' original selection of a lot different than Lot 1 undermines their claim to a particular "vision".

In addition, the defendants submit that Lot 1 was selected based on price and that the evidence at trial clearly illustrated that numerous other properties were available at that time that would have fit within the plaintiffs' budget of $145,000. The defendants submit that the preponderance of evidence adduced at trial confirms that Lot 1 is not unique and, therefore, that the plaintiffs' claim for specific performance must fail. [ 77 ] I cannot accept the plaintiffs’ argument that Lot 1 was unique at the relevant time.

The lot was originally intended to be purchased by a corporate builder for the purposes of a ‘spec’ home and there is nothing in the evidence that satisfies me that that did not remain the intention for at least the time period up to Mr. Choudhry’s communication that Fountain Creek would not close. The evidence is clear that price was the most important factor and that at the relevant time there were other lots in a similar price range in a similar location. While Mr. Gough may have developed a “vision” for the lot, I am satisfied that any such vision did not exist until after the relevant time period.

I conclude that Lot 1 was not then, and probably is not now, unique within the meaning of the applicable case law. [ 78 ] The plaintiffs argue that the result of this conclusion creates an unfairness to them and a windfall to the defendants. That may be. This is likely the reason that the Alberta Law Reform Institute (ALRI) recommended a change to the law in this area. In its Report for Discussion #21, published March 2009, ALRI made the following observations, amongst others, in relation to the law as it currently exists:

“The stringency of the “uniqueness” test may militate against fairness.” ... “we have no doubt that conferring ownership on a purchaser will usually come closer than a damages award to putting them in the same position as if the vendor had performed their obligations under the contract”. “The uniqueness test as laid down in Semelhago and other cases is likely to require an assessment of complex circumstances that can effectively be made only by a court, leaving a vendor and purchaser in a state of uncertainty about the availability of specific performance. ...

The uncertainty caused by the uniqueness test will lead to an efficiency in disposing of litigation between vendors and purchasers. [ 79 ] However, having concluded that the result may be unfair to the plaintiffs and may bring a windfall to the defendants, I must also observe that this result is not entirely due to the actions of the defendants. I will comment further on this below. 4.

If specific performance is not appropriate, is Dove Homes entitled to damages and, if so, in what amount? [ 80 ] The plaintiffs admit that no effort was made to mitigate their loss but maintain that their conduct to maintain their right of specific performance in this case was reasonable in light of the defendants refusal to complete the transaction without any justification or explanation.

The plaintiffs submit that the purchase of another lot would have required them to forego their action for specific performance and that to require such an election is unreasonable in the circumstances. [ 81 ] The defendants submit that they have met the burden on them to establish that the plaintiffs failed to mitigate by virtue of the plaintiffs' own admission that no effort was made to mitigate their loss.

As such, the defendants submit that according to Southcott Estates Inc v Toronto Catholic District School Board , 2010 ONCA 310 , 319 DLR (4th) 349, the onus then falls to the plaintiffs to establish that, even if they had made attempts to mitigate, they could not have done so. The defendants submit that the plaintiffs failed to proffer any evidence to this end and further submit that, in fact, the evidence shows that, if the plaintiffs had made any realistic effort to mitigate in 2005 and 2006, another lot would have been readily available to them for a similar price. [ 82 ] Mr.

Noble, a realtor familiar with the area, testified as to available lots and their prices. Using Mr. Noble's evidence, the plaintiffs submit that the sale of the lot marked "D" in Exhibit 4 is the most appropriate indication of the damages suffered by the plaintiffs as a result of the defendants' unwillingness to complete the disputed contract.

By subtracting the purchase price of Lot 1 ($126,000) from the sale price of the comparative lot in the spring of 2011 ($294,000) the plaintiffs submit that the relevant damages can be calculated at $168,000. [ 83 ] The plaintiffs add special damages to the above amount in the sum of $909.50 for the preparation of their home design and $1,284 for interior design fees.

Therefore, the total damages claimed by the plaintiffs in their written submissions are $170,193.50. [ 84 ] However, the plaintiffs acknowledge that, if the Court finds against specific performance and finds further that the plaintiffs were required to mitigate but failed to do so, then the amount of damages would be, at best, only $22,193.50.

This amount is derived at as being the difference between the negotiated price for Lot 1 and the price of comparable lots of $146,000 at the relevant time, as acknowledged in the defendants' submissions, plus the special damages referred to above. [ 85 ] In the plaintiffs' view, presuming that the lot Mr. Noble referred to as lot "D" would sell at present for $300,000 then the above award of damages would result in a windfall to Mr. Choudhry of $151,806.50 after deducting the original purchase price and the award of damages to the plaintiffs.

The plaintiffs submit that such an outcome would be strange, completely unfair, and unjust. [ 86 ] The defendants submit that, according to Southcott , where a plaintiff fails to make out a case for either specific performance or damages but establishes a breach of contract, the appropriate judgment is for nominal damages. In the alternative, the defendants submit that, if damages are found by the Court to be a suitable remedy, the calculation of $22,193.50 noted above is the upper limit of those damages.

[ 87 ] It should be noted that the defendants oppose the claim to special damages on the basis that, in the defendants' view, the plaintiffs proffered no evidence that the designs cannot be utilized if and when Dove Homes builds another home. [ 88 ] The unfairness that can result from the difficulties in meeting the uniqueness requirement to obtain specific performance, as observed by ALRI, has already been dealt with above, as has the uncertainty that arises when purchasers do not know what the outcome will be in a particular case.

Unfortunately, in this case the plaintiffs took a chance in pursuing a claim for specific performance rather than seeking an alternate lot when it became abundantly clear that Fountain Creek had no intention of concluding the transaction. They did so at their own peril and, being aware of the circumstances as detailed above, they ought to have realized that it would be difficult to successfully argue that Lot 1 was unique.

There clearly were other lots in the desired price range, of similar size and with similar location amenities. [ 89 ] Fountain Creek clearly breached the contract and is liable for the damages that flow from that breach. I accept the plaintiffs’ calculation of damages - that being the difference between the price they negotiated for Lot 1 and the price of comparable lots at the relevant time. The plaintiffs are also entitled to the cost of the home design and interior design expenses, as these were incurred directly in connection with the contract.

There is no evidence that the plaintiffs have used, or will be able to use, them. The mere possibility that they may be of some use in the future does not negate the fact that the plaintiffs have incurred them in connection with a contract that has been breached by the defendants. [ 90 ] To the extent that Fountain Creek receives a windfall or that the outcome seems strange, unfair or unjust as suggested by the plaintiffs, it arises out of the combination of the requirements of the existing case law and the plaintiffs’ actions in not buying an alternate lot at the time of the breach by Fountain Creek.

Had they done so, that property would have enjoyed the same market increases that presumably account for much of the increased value to Lot 1. Their failure to mitigate accounts for much of the perceived unfairness. 5. Is Riaz Choudhry personally liable? [ 91 ] The plaintiffs originally maintained that Mr. Choudhry might be personally liable on the basis of inducing Fountain Creek to breach the disputed contract. It appears that they conceded to the defendants' submissions that this cause of action was not properly pled before the Court and that the personal claim against Mr. Choudhry has been abandoned.

Conclusion [ 92 ] In the result, Dove Homes will have judgment in the amount of $22,193.50, together with pre-judgment interest on that amount. [ 93 ] If the parties are unable to agree on costs, they are to contact my Assistant within 30 days of the issuance of this Judgment to arrange a time in which that issue, or any other issues arising from this Judgment, can be spoken to. Heard between June 2 and 27, 2011. Dated at the City of Edmonton, Alberta this 4 th day of January, 2012.

D.L. Shelley J.C.Q.B.A. Appearances: B.M. King Barry M. King Professional Corporation for the Plaintiffs R.J. Cotter, Q.C. Fraser Milner Casgrain LLP for the Defendants