Court of Queen ’ s Bench of Alberta Citation: Heart 2 Heart Homes Inc. v Eaglemont Corporation, 2012 ABQB 393 Date: 20120622 Docket: 0703 14680 Registry: Edmonton Between: Heart 2 Heart Homes Inc. Plaintiff - and - Eaglemont Corporation Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ [ 1 ] Heart 2 Heart Homes Inc. ( “ Heart 2 Heart ” ) is a body corporate incorporated under the Business Corporations Act , R.S.A. 2000, c. B-9 of the Province of Alberta.

Eaglemont Corporation ( “ Eaglemont ” ) is a body corporate incorporated under the Business Corporations Act of the Province of Alberta. Heart 2 Heart is a home builder of new residential houses. Eaglemont is a developer of land, developing raw land into residential building lots. [ 2 ] In April of 2007, Eaglemont was marketing lots in a subdivision they proposed to develop in the Town of Beaumont called “ Eaglemont Heights Phase III ” . Vicki Kujundzic was at all times an authorized representative of Heart 2 Heart with authority to enter into contracts on behalf of Heart 2 Heart.

Vicki Kujundzic approached Eaglemont and had communication with Gary Rohr, an employee

of Eaglemont, concerning lots in the proposed subdivision in April of 2007. [ 3 ] Gary Rohr sent Vicki Kujundzic an email dated April 10th, 2007. which reads in part as follows: – Hi Vicky; Thanks for your interest in Eaglemont Phase 3. I ’ m sending you my latest drawings of the subdivision. There are minor changes to lots 94, 95, 96 in block 4 that will appear in drawings yet to come. We have 45 lots already on hold after ten days of making them available. I am not authorized to email you the entire price list.

I am authorized to talk with you over the phone (or email) and provide prices on lots you specifically are interested in. Terms: $1000.00 refundable hold deposit; 20% down within a week; remaining balance interest-free until October 1, 2007.

The subdivision, we are told by our contractor, Sureway Construction, should be ready before the end of October, weather-permitting . [Underlining Added] [ 4 ] Vicki Kujundzic gave Eaglemont a cheque for $5,000.00 on May 9th, 2007 asking Eaglemont to hold lots 69, 26, 103, 104, 83. [ 5 ] On May 22nd, 2007, Vicki Kujundzic on behalf of Heart 2 Heart and Gary Rohr on behalf of Eaglemont signed forms of agreements prepared and provided by Eaglemont. Eaglemont had filled in the blanks on these forms of agreement. [ 6 ] The form of agreement Production 000009 describes the lot being sold as Lot 103, Block 4, Plan TBD.

The purchase price $225,000.00. The possession date was May 22nd, 2007. The total deposit required by May 22nd, 2007 was $45,000.00. This Agreement of Purchase and Sale reads as follows in it ’ s entirety: – AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT is made effective this 22 nd day of May, 2007 BETWEEN: EAGLEMONT CORPORATION (the “ Vendor ” ) OF THE FIRST

PART 000009 - And- Heart 2 Heart Homes Inc. (the ‘ Purchaser ” ) OF THE SECOND PART WHERE AS: 1. The vendor is the Owner of lands within the proposed subdivision known as EAGLEMONT HEIGHTS within the corporate boundaries of the TOWN OF BEAUMONT, (the “ Plan ” ). 2. The purchaser desires to purchase from the vendor and the vendor agrees to sell the property, subject to the reservations and exceptions appearing in the existing certificate of title, legally described as Lot(s), 103 Block 4 Plan TBD (the “ Lands ” ). 3.

The Vendor ’ s Standard Terms and Conditions of Purchase and Sale for EAGLEMONT HEIGHTS PHASE 3 will form part of this Agreement of Purchase and Sale and the Vendor and Purchaser agree to be bound by same; NOW THEREFORE the Vendor agrees to sell and the Purchaser agrees to purchase the Lands on the terms and conditions hereinafter set forth: 1.

Definitions: - The

Definitions as contained in the Vendor ’ s Standard Terms and Conditions of Agreement of Purchase and Sale for EAGLEMONT HEIGHTS PHASE 3 apply unless otherwise specified herein.

2. Terms of Payment (

a) Purchase Price: $ 225,000.00 (b) 6% GST $ (

c) TOTAL PRICE $ 225,000.00 (

d) Down Payment 15% $ 45,000.00 (

e) Initial Deposit: $ 2,000.00 paid May 09, 2007 (

f) Balance of 15% $ 43,000.00 due May 22, 2007 (

g) Balance of Purchase Price: $ 180,000.00 due October 1, 2007 (

h) Possession Date: May 22, 2007 (

i) Interest Rate: 2% Plus Prime Interest Rate at CIBC from *October 1, 2007 until May 21, 2008

(

j) Default Rate: 3% Plus Prime Interest Rate at CIBC compounded every 182 days from *May 22, 2008 until May 21, 2009 *Date will be extended in the event the Municipality determines building permits are not issuable by October 1, 2007. This interest-free extension will expire on the date the Municipality determines building permits are issuable. (

k) Interest Free Period: May 22, 2007 to *September 30, 2007 (

l) Architectural Deposit: $ 2,000.00 due *October 1, 2007 (

m) Adjustment Date: May 22, 2007 (

n) Purchaser ’ s GST Registration number: 844836791BT0001 3. Conditions Precedent (

a) Condition Date: Date of plan registration (

b) The Conditions Precedent to this Agreement are as follows: I. The Plan shall be registered in the Land Titles Office for the North Alberta Land Registration District; II. The Lands shall have been re-classified pursuant to the Municipal Land Use By-Law for residential purposes. (

c) Aforesaid Conditions Precedent shall be deemed satisfied if prior to the Condition Date (or any extension agreed to by the parties), the Vendor provides the Purchaser with written notice of the full and proper legal description of the Lands.

In the event that the Conditions have not been satisfied by the Condition Date, unless such date has been extended in writing by the Vendor and Purchaser, (and if the Conditions shall not have been satisfied by such later date) this Agreement shall be conclusively deemed to be of no further force and effect and upon the Purchaser discharging or causing to be discharged any encumbrances, liens or interests registered against the Lands, the source of which is attributable to the Purchaser or in respect of its interest in the Lands and has restored the Lands to its former condition as at the date of this Agreement, the Vendor shall return to the Purchaser without interest all monies paid by the Purchaser to the Vendor pursuant to this Agreement subject to the registration of the lot. 4.

Notices The Address for notices pursuant to this Agreement are as follows: Vendor: Purchaser: Eaglemont Corporation Heart 2 Heart Homes Inc. 9531 - 42 Avenue 953 Burrows Cresc. Edmonton, Alberta Edmonton, AB T6R 2L2 T6E 5R2 ph: 984-6666 fax: 454-4558

Vendor ’ s Solicitor: Purchaser ’ s Solicitor: Bosecke & Song LLP 306 Capilano Centre 9945 - 50 Street Edmonton, AB T6A 0L4 Attn: Charles Bosecke Phone: 469-0494 5. Acknowledgement of Vendor ’ s Standard Terms and Conditions The Vendor and Purchaser agree and acknowledge that the Vendor ’ s Standard Terms and Conditions of Purchase and Sale and all Schedules attached thereto, which the Purchaser hereby acknowledges having received, are incorporated herein by reference and the Vendor and Purchaser agree to be bound by same.

In the event there are any inconsistencies between the Standard Terms and Conditions of Agreement of Purchase and Sale and this Agreement, the terms and conditions of this Agreement shall govern. 6.

Complete Agreement The terms and conditions hereof and the Vendor ’ s Standard Terms and Conditions of Purchase and Sale are the full and complete terms of this Agreement and no alterations, modifications, or amendments of such terms and conditions may be made without first obtaining written consent of the parties hereto and there are no collateral warranties, representations or conditions other than those contained herein. 7.

Assignment This Agreement shall not be assigned in whole or in part by the Purchasers without the prior written approval of the Vendor first had and obtained, which consent may be unreasonably or arbitrarily withheld, provided that the Purchaser, upon the assignment hereof shall extract from the assignee the same covenants as are set forth herein to be observed or performed by the Purchaser. No such assignment shall relieve the Purchasers of its obligations hereunder. 8.

Inurement The covenants, provisos, powers and licenses herein expressed or implied shall be binding upon and inure to the benefit of and may be exercised or enjoyed by the heirs, executors, administrators or approved assigns of the Purchaser. 9. Additional Terms and Conditions The Vendor and Purchaser acknowledge that they are aware of the provisions of

Section 94 of the Land Titles Act of Alberta , R.S.A. 2000, and the Vendor and Purchaser hereby waive any and all rights each may have pursuant to the Land Titles Act as against the other with respect to the sale and purchase of the Lands and agree that neither shall take any proceedings with respect to the provisions of this Agreement pursuant to the Land Titles Act.

Signage Notwithstanding anything to the contrary contained in the Lot Purchase and Sale Agreement and in addition to the terms thereof, the Purchaser agrees that there shall be no signage whatsoever placed on any part of the Lands (whether advertising the sale of the Lands or otherwise) excepting only that the Purchaser shall be permitted to place a sign of reasonable dimensions in the window of the dwelling constructed on the Lands for the purpose of advertising the Lands for sale. ” IN WITNESS WHEREOF each of the Vendor and the Purchaser has executed this Agreement by the hand of its proper officer or officers in that behalf this 22nd day of May, 2007 Lot 103 Block 4 Construction Clause and Standard Terms and Conditions (

A) You agree with us to do the following: (

i) to grade, and if necessary after settlement, re-grade the Property in compliance with the Grade Plan approved by the municipal engineer. If the Property purchased is constructed on engineered till, a geotechnical engineer must be consulted and recommended modifications carried out at your expense, prior to foundation construction. You further agree to construct any retaining wall necessary to conform with such plan in a competent and professional manner; (ii) to be responsible for all damages to the Property and adjacent lands in the subdivision as a result of your construction.

In particular, you agree to pay for all damages to the sewer systems, concrete, pavement, water systems, water valves, curb stop components, streetlights, shallow utility systems, survey stakes, fences and other such items. If any damages exist at the time of this Offer, such damages must be documented by letter and delivered to our office.

You further agree to remove all dirt and debris from adjacent roads or lanes on a regular basis and to keep the Property and the adjacent lands in an orderly and tidy appearance to our satisfaction; (iii) to complete construction of your home as approved by us as it applies to the roof and exterior walls including finishing materials and colors for your house and to complete the grading of the Property, all as approved by us, by the earlier of: (

A) twenty-tour (24) months from the time of the Property registration date: and (

B) fourteen (14) months from the date that we have approved your plans. (iv) to not erect a house on the Property unless: (

A) such house complies with all Municipal building bylaws and regulations; and (

B) such house is constructed in compliance with

Schedule “ C ” and the plans of elevation, sitting, exterior finish and colors, and grades, all as approved by us at our absolute and sole discretion;

(

v) to comply with the Occupational Health and Safety Act, R.S.A.,

Chapter 0-2 as amended and regulations thereunder (the ‘ Act ” ) and to ensure, as far as it is reasonably practicable for you to do so, that every contractor and employer performing work in respect of the Property complies with the Act. You shall: (

A) indemnify and save harmless us from all claims, demands, damages, costs and expenses which may be brought against us or which we may sustain or incur either directly or indirectly arising from the failure to comply with your obligations under the Act; (

B) at your expense during the currency of this agreement maintain liability insurance as will protect you and us against claims referred to in this paragraph; (

C) furnish us upon request with evidence of insurance coverage in accordance with this paragraph. (vi) to be responsible to apply for and pay for any or all municipal requirements such as building permits, taxes, fees and levies as imposed or applicable to the property, as may be amended by the municipality from time to time. (

B) It in our sole opinion you fail to perform all of your obligations in subclause we may take actions or remedies to correct any non-compliance at our sole discretion and you agree to pay us any costs or expenses which we might incur in so doing, including any legal fees which we may incur on a solicitor/client basis; Lot 103 Block 4 (

C) In order to provide security for your strict compliance with subclauses (

a) and (b), you shall, upon transfer of title, deposit with us the sum of $2,000.00 ($2,000.00 for each lot)(the “ Architectural Deposit ” ) The Architectural Deposit will be returned to you, less damages to utilities as noted in Clause 11(a)(ii), without interest, if all requirements of sub clause (

a) and (

b) along with required approvals outlined in

Schedule C (Clause 10) are fully met which we may determine in out sole discretion. IF YOU HAVE NOT REQUESTED THE REFUND OF THE ARCHITECTURAL DEPOSIT WITHIN THREE YEARS FROM THE CONSTRUCTION COMPLETION DATE, THE ARCHITECTURAL DEPOSIT WILL BE FOREFEITED. If you do not perform all of your obligations, we may keep the Architectural Deposit and apply it towards any resulting damages which may suffer.

You agree that the Architectural Deposit will not be considered a penalty and that we shall have all our other rights and remedies if our damages are greater that the Architectural Deposit, we shall have a lien against your title to the Property and we shall be entitled to register a caveat against your title to the Property. (

D) If you have not completed construction of a house on any of the lots comprising the Property as required by subclause (

a) or you attempt to re-sell the Property without our written approval within two (2) years from the date hereof, then we may at our sole option: (

i) if title to the Property is in the name, demand that you provide us with transfer of land which will reconvey the title to the Property back to us; or

(ii) if you do not have title to the Property, we may declare that you have no further right or interest in the Property, you shall have no further interest in the Property and you agree to sign any document confirming this; (

E) If you have paid the Purchase Price plus interest in full and we act upon either of the options listed in subclause(d), then we will pay to you the lesser of the amount that you paid for the lot and it ’ s forced sale value, less the amount necessary to pay out all liens and encumbrances registered on title, less our costs of enforcing our rights under subclause(d) (including legal costs on a solicitor/client basis), less the sum of Five Thousand ($5000.00) Dollars representing a genuine pre-estimate of our liquidated damages and which you agree is not a penalty. You also agree that we may place a caveat against your title to the Property to protect these rights; and (

F) You agree not to construct a home for display purposes on the Property unless you first obtain our written approval. [ 7 ] The second agreement Production 0000010 describes the property being purchased as Lot 104, Block 4, Plan TBD. The purchase price is $225,000.00. The total deposit is $45,000.00 due May 22nd, 2007. The possession date is May 22nd, 2007. [ 8 ] The third agreement Production 0000011 describes the property being purchased as Lot 32, Block 6, Plan TBD. The purchase price is $216,000.00. The total deposit required by May 22nd, 2007 is $43,200.00.

The possession date is May 22nd, 2007. [ 9 ] Vicki Kujundzic gave Eaglemont on or about May 22nd, 2007, two BMO drafts for $45,000.00 each and a personal cheque for $38,200.00. These drafts and cheque represented the balance of the deposits on the three forms of agreement referred to above. The total deposits are $133,200.00 paid on behalf of Heart 2 Heart to Eaglemont.

Eaglemont has not made any refunds of any of the deposits to Heart 2 Heart. [ 10 ] Eaglemont caused a Plan of Subdivision of the lands known as “ Eaglemont Heights Phase III ” to be registered at the North Alberta Land Titles Registration District office on or about February 4th, 2008 as Plan 0820891. [ 11 ] On February 6th, 2008, Eaglemont wrote to Heart 2 Heart, a copy of which is Plaintiffs document 23 advising the Plan of Subdivision was registered as Plan 0820891, and the legal description of the lots they believed Heart 2 Heart was purchasing were as follows (the "Lots"): (

a) Plan 0820811, Block 4, Lot 103; (

b) Plan 0820811, Block 4, Lot 104; (

c) Plan 0820811, Block 6, Lot 32. [ 12 ] On or about December 16th, 2008, Eaglemont received notification from the Town of Beaumont that the Town was satisfied that essential servicing of the lands had been completed in Eaglemont Heights Phase III, Stage 2 (the area in which Plan 0820811, Block 4, Lot 103, Lot 104 and Block 6, Lot 32 were located) and as such the Town would now accept applications for building permits on those lots.

December 16th, 2008 is the date the municipality decided building permits were issuable. [ 13 ] On December 17th, 2008, Eaglemont advised the Plaintiff (through counsel) that it had received this notice from the Town of Beaumont, and as such the Lots were now Building Permit Ready.

[ 14 ] On June 22nd, 2011, Lots 103 and 104, Block 4, Plan 0820811 were sold by Eaglemont to Powar Homes Ltd., an arms length third-party purchaser, for the sum of $171,750.00 each (plus GST). [ 15 ] On June 28th, 2011, Lot 32, Block 6, Plan 0820811 was sold by Eaglemont to Powar Homes Ltd., an arms length third-party purchaser, for the sum of $165,000.00 (plus GST). [ 16 ] Phase 3 of Eaglemont Heights, in which the Lots were situated was reclassified pursuant to the Municipal Land Use By-Law (or re-zoned) from farmland to residential, pursuant to Bylaw No. 682-06, on November 28th, 2006. [ 17 ] Eaglemont used reasonable efforts to re-market the Lots from in or about December of 2010 to April of 2011. [ 18 ] From the agreed Statement of Facts, and the Agreed Exhibits, the following points are clear: – (

a) The parties entered into three (3) agreements on May 22, 2007, for the purchase of three (3) residential house lots (the "Lots"), in the “ Eaglemont Heights, Phase III ” subdivision, in Beaumont, Alberta. (

b) The total price of the three Lots was $666,000. Deposits of $133,200 were paid (20%), thus leaving a balance outstanding of $532,800 (80%). (

c) The land was subdivided on or about February 4, 2008, and the Defendant advised the Plaintiff of this on February 6. (

d) The lots were fully serviced and the Town of Beaumont advised it would accept building permits for the Lots (thus the Lots were “ Building Permit Ready ” ) on December 15, 2008. The Plaintiff was notified of this through counsel on December 17, 2008. [ 19 ] The issues raised in this trial are: – (

a) Whether the contracts are void for breaching s.94 of the Land Titles Act of Alberta. The Defendant says that the law is clear and that there is no breach of

Section 94 in this matter. (

b) Whether the subdivision and servicing of the Lots was completed within a “ reasonable time ” . The Parties disagree as to the amount of time that constitutes “ reasonable time ” herein. (

c) Whether there was a misrepresentation giving rise to a right for the Plaintiff to rescind the contracts and require the deposits to be returned. The Plaintiff ’ s position is that the Defendant made representations to the Plaintiff that the lots would be ready for building by the fall of 2007, and it is submitted that the evidence clearly shows that this representation was false, therefore the representation be it innocent or negligent gave the Plaintiff a right to rescind the contracts based on that misrepresentation. (

d) Whether there was a collateral agreement which it is submitted means that the representations as to the time by which the lots would be available for construction go from a mere representation to an actual term of a collateral agreement. The Defendant argues that there were no collateral agreements herein, and that it has complied with the actual agreements. Analysis

[ 20 ] There were valid and binding agreements between the parties for the purchase of these Lots, and the parties had a meeting of the minds on the key points that: – i. The Defendant would provide, and the Purchaser wished to purchase lots that were Building Permit Ready; and ii. The sale of the Lots would close when they were Building Permit Ready; [ 21 ] There was no set completion date, thus this must be done within a reasonable time. According to the Defendant the outer boundary of a reasonable time for such a project, was at least three years, and possibly up to eight years.

Thus the Defendant was finished within a reasonable time, and met its obligation under the agreements. [ 22 ] With respect to the three agreements: – (

a) The wording of all three agreements is identical, except for the lot descriptions, and prices. (

b) There is no “ Time is of the essence ” clause in the agreements. (

c) There is a clause purporting to extend a number of the dates, indicated with an asterisk (the “ Date Extension Clause ” ), appearing just under s.2(

j) on p.2 of the agreement, which reads: – “ * Date will be extended in the event the Municipality determines building permits are not issuable by October I, 2007. This interest-free extension will expire on the date the Municipality determines building permits are issuable . ” [emphasis added] (

d) There are a number of other dates in the agreements marked with an asterisk. [ 23 ] It is submitted that the Date Extension Clause is clearly intended to apply to all of those dates, with a pro rata extension of each as applicable because: – i. Mr Rohr gave evidence of this, and indicated that he advised Ms. Kujundzic of such. ii. This is the plain and clear

interpretation of this clause. [ 24 ] Both sentences of the Date Extension Clause refer to building permits. Mr. Rohr gave evidence that he understood that to mean that the sale of the Lots would close when the servicing was completed to the point that the Town of Beaumont advised that it would accept building permit applications for the Lots, or thus when the Lots were “ Building Permit Ready ” . [ 25 ] Ms. Kujundzic gave similar and consistent evidence at trial that she wanted lots that were Building Permit Ready, and that was what she intended to buy.

It appeared from her evidence that her primary concern was simply respecting the timing of such. On her examination for discovery, Ms. Kujundzic acknowledged that the agreement was to pay the remaining 80% of the purchase price, when the Lots were Building Permit Ready. [ 26 ] The Defendant submits that there was a contract in which both parties fully understood and agreed on the following key

terms: – (

a) Eaglemont had an obligation to construct, and the Plaintiff had an obligation to buy, residential lots that were Building Permit Ready; (

b) The Plaintiff would buy the three (3) lots in question; and (

c) The sale had no fixed closing date, but would close after: – i. Subdivision of the land; and ii. The Lots were Building Permit Ready. [ 27 ] Accordingly it is submitted that there are agreements with no set completion date, in which case it is well settled law that the Defendant's obligation is to complete its work within a “ reasonable lime ” . [ 28 ] Ms. Kujundzic also gave evidence that in May 2007 she was aware that the dates may be extended past October 2007, that the project may not be completed until the spring of 2008, and nevertheless she signed the agreements.

It would appear that this was an acceptable risk to her at the time of signing. Further the Plaintiff testified that in May 2007 she was aware that the subdivision plan had not yet been registered, the Lots were not yet completed, and in fact construction had not yet been started. [ 29 ] Due to the existence of winter, and the need for dry ground to continue summer work (in particular paving), “ spring 2008 ” must necessarily have meant at least June, 2008, or approximately thirteen months after signing of the agreements as Mr. Boss testified generally on.

The Lots were completed in December 2008, approximately nineteen months after signing of the agreements. [ 30 ] At the outset of the events in question, Mr. Rohr's initial email to the Plaintiff of April 10, 2007, states ( inter alia ): – The subdivision, we are told by our contractor, Sureway Construction, should be ready before the end of October, weather-permitting. [ 31 ] By this statement it is submitted that Mr.

Rohr quite truthfully indicated what he was hoping would occur, and accurately reflected what he had been told by Eaglemont's President, who impliedly had received this information from Sureway Construction. Further: – (

a) The statement itself carries a clear implication that it may not in fact be ready by then, and that there is a risk involved. (

b) Ms. Kujundzic acknowledged that she was aware of that risk, and she had been informed of the risk that the project may not be ready until sometime in 2008. (

c) The statement itself carries a further implication that there may not be a fixed closing date in the agreements. (

d) The fact that the email mentioned that the advice had come from Sureway Construction, carries with it the strong implication that: – i. There is at least one other party (contractor) involved; and

ii. That there are some factors involved beyond Eaglemont's control. [32] It is submitted that this phrase “should be ready” refers to a desire, hopefulness, or even a probability in the future, but doesnot imply a promise of certainty. This

interpretation is supported by Justice Dickson C.J.C. of the Supreme Court of Canada in R. v. S.(S.) (SCC), [1990]2 S.C.R. 254 [at p. 274], where he states:– [T]he use of the term ' should' in s. 3(1)(d) [of the Young Offenders Act, R.S.C. 1985, c. Y-I] does not provide evidence of a mandatoryduty .... In the context of s.3(1)(d), I find that the word ‘should’ denotes simply a ‘desire or request’ ... and not a legal obligation. [33] Coincidentally in this same time frame, it is submitted that there was a very good (for sellers) or “Hot” housing market in thespring of 2007, which appeared to change that summer:– (

a) Ms. Kujundzic gave evidence that it was a hot housing market in spring 2007 at trial, and at her Examination for Discovery (p.9,L.20 - p.ll , L.6); (

b) Mr. Rohr gave similar evidence at trial. [34] The Market then cooled in the summer of 2007:– (

a) Mr. Rohr gave evidence of this at trial; and (

b) Ms. Kujundzic conceded that it cooled a little. [35] Mr. Rohr further gave evidence indicating that Eaglemont's sale of lots dropped suddenly around July of 2007, and wasstagnant through 2008. [36] This is consistent with their Expert Report which values the Lots in question on January 16, 2009, at $427,000, or 64% of the2007 prices. [37] It is submitted that this cooling of the market, with the corresponding drop in housing prices, would give the Plaintiff a verystrong motive for wanting out of her agreements in the fall of 2007:– (

a) Ms. Kujundzic conceded that she knew in May 2007, that the Lots may not be done until the spring of 2008. That was anacceptable risk in May 2007. (

b) However by November 2007 she was no longer willing to wait until the spring of 2008, and she filed this Action on November14, 2007, less than six months after signing the agreements. It would seem from her actions, that something other than the alleged timingconcern, was driving her desire for recision of the agreements. (

c) Further her statements that she ‘would never have agreed to let the money sit that long’ are lacking credibility as had the marketcontinued going up, this action would never have been filed, and certainly not in November of 2007. [38] Another factor is the significant degree of effort put in by the Defendant to try to complete the subdivision as soon as

[ 38 ] Another factor is the significant degree of effort put in by the Defendant to try to complete the subdivision as soon as possible. It is submitted that the Defendant Eaglemont at all times had a coincidence of interest with the Plaintiff to get the subdivision done as soon as possible as well: – (

a) The Defendant similarly got caught in the economic & housing downturn, but it had made a large commitment, and was bound to follow through with it. (

b) Evidence was received from both Mr. Rohr and Mr. Boss of the specifics of many of the delays, which were beyond Eaglemont's control, including: i. The sanitary sewer storage facility, and lift station; ii A change by the Town in the road layout of the plan; iii. Weather delays, which could cause significantly longer delays; iv. Contractor and utility company scheduling; v. Water main tie-ins with the Capital region water commission; and vi. The LeBlanc canal issue with the County of Leduc; (

c) This included an extra approximately $1.7M additional cost of the larger sewer line and lift station, which was unanticipated at the outset; (

d) The Defendant had also put up the substantial security deposits to the Town, and had all necessary insurance in place; (

e) Mr. Boss gave considerable evidence about the specifics of these delays, and that Eaglemont was trying hard to move the matter forward as quickly as possible however unfortunately it was also caught with a number of unforseen issues that not only caused some delay, but also considerable increased expense. (

f) Further there is no evidence that Eaglemont ever did anything to slow things down, and both Mr. Boss and Mr. Rohr testified they were never asked to slow things down. Both Mr. Rohr and Mr. Boss testified that the Defendant, in particular the President of the company, was pressuring each of them a lot to move the matter along very quickly. (

g) Not only did they have several millions of dollars at stake but on a per lot basis in a sense they had four times the money at stake: – i. On any given sold lot, Eaglemont had been paid only 1/5 (20%); ii. Thus 4/5 (80%) of the money on the sold lots was still outstanding, (and of course 100% on the unsold lots), and Eaglemont was taking the brunt of the financing charges for the delay; iii. Thus in this sense the extra year or so of delay hurt Eaglemont at least four times as much, as it did the buyers. [ 39 ] It is submitted that there is no evidence whatsoever of any alleged collateral agreement, and this allegation was not advanced by the Plaintiff at trial.

Conclusion

Section 94 of the Land Titles Act, R.S.A. 2000, c. L-4 [40] The formation and existence of these agreements to sell lots in advance of the requisite subdivision does not offend s.94,especially since the agreement refers to the need for subdivision approval. The need for subdivision may affect the timing of completionof the agreement, but it does not have any effect on the validity of the agreement in the interim. [41] In Carruthers v. Tioga Holdings Ltd., 1997 CarswellAlta 783 the Court dealt with a very similar situation. At paragraph 3 theCourt recites the relevant contract terms and in particular clause 8(

b) of the contract which refers to the requirement in that agreement forthe parties to obtain a subdivision. Justice Deyell states in paragraph 35 that:– Section 95(1) of the Land Titles Act provides that no Lots should be sold according to a subdivision plan until that plan has beenregistered. In this case the option to purchase does not effect a sale until after the applicant obtains subdivision approval. ...

The optiontherefore complies with s. 95 as did a similar option that was contingent upon subdivision approval in Thiessen, supra. [42] In upholding this decision, the Alberta Court of Appeal in Carruthers v. Tioga Holdings Ltd., 1999 CarswellAlta 143 statesin paragraph 4:– The law applying to a contract to sell part of a parcel of land is clear. Government subdivision approval is a condition precedent toconveying part of the parcel.

But it is not a condition precedent to the existence or validity of the contract to sell part. [emphasis added] “Reasonable Time” [43] The definition of a “reasonable time” varies with the matter in question, and in a business context, with the industry norm. [44] The Defendant submits that if the statistics were available, the Court may consider not only the average time, but also thestandard deviation or variance of the distribution, of all the historical samples or data.

The outer limit of reasonable could perhaps be thetime in which say 95% of the cases were completed, for a given industry. [45] From a common sense or general perspective, it is submitted that something which usually took one day, may have an outer“reasonable time” limit of a week; something that usually took a month, may have an outside “reasonable time” limit of a year etc. [46] Another significant factor was that this was a “boom time construction” situation where everything took longer, becauseeveryone was busy and backed up. [47] Dynamic Transport Ltd. v O.K. Detailing Ltd., (SCC), 6 Alta.

L.R. (2d) 156, [1978] 2 S.C.R. 1072, 1978Carswell Alta 298, is an example of a situation where the parties reached a similar agreement to sell a portion of a parcel of land (inEdmonton), which had not yet been subdivided. Further the agreement between the parties was silent with respect to:– (

a) The requirement to obtain subdivision of the land;

(

b) Who would have to obtain the subdivision; and (

c) The time in which the subdivision would be completed. [ 48 ] Notwithstanding these concerns, the Supreme Court of Canada found that these terms were necessarily implied in the agreement, and it upheld the validity of the agreement.

The Court simply determined that there were implied terms that the subdivision would be performed by the Vendor, and completed in a reasonable time. [ 49 ] In Great Georgian Realty Group v Genesis Marketing Organization Ltd. , 1977 CarswellOnt 406 (O.S.C.) , the parties similarly entered into an agreement for the sale of subdivided house lots, prior to the plan being subdivided, or the lots being serviced. The purchaser was a house builder who wanted lots which were available for construction and ready for building permits.

The vendor was a land developer, who was obliged to complete the following prior to the completion of the contract: – (

a) Approval of a plan of subdivision; (

b) Agreement of subdivision with the municipality; (

c) Registration of the plan of subdivision; and (

d) The installation of municipal services, completed to the extent that building permits would be available. [ 50 ] In Great Georgian , the agreement was made with a firm deadline that was exactly one year from the making of the agreement.

Unfortunately, although the vendor completed the first three of the above items, it was unable to complete the fourth, that is to have the lots serviced and Building Permit Ready in time. [ 51 ] Of particular interest in this case is the point that the prior draft of the agreement had had a closing date which was two years away from the contract date, however the vendor/developer (Genesis) changed it to be only one year out (see paragraph 29).

The purchaser/ builder Great Georgian ) questioned him on that, and suggested it would be better to be two years out to allow the developer enough time to fulfill its part of the bargain, however the developer refused to change it. It would appear that it was the opinion of the builder, that attempting to do a project of this nature in only one year was not reasonable. [ 52 ] In paragraph 60, the Court opines on the timing of the project, and indicates that there was no doubt that the project easily could have been completed in the two year time frame initially drafted, however one year was too short.

In paragraph 61, Justice Reid indicates: – Had Genesis made reasonable inquires before signing the contract its principals might well have concluded that it would be imprudent to allow only a year from the installation of services. . . . [emphasis added] [ 53 ] Justice Reid continues in paragraph 62, and says: – . . . Had they been so informed it is not credible that they would have insisted on 19 th April 1974 as the due date. To do so would have been deliberately reckless.

Further, to have insisted on that date without such elementary inquiries is, to me, equally reckless. [ 54 ] In paragraph 65 the Court further indicates: –

It is obvious that the basis on which Genesis set the due date was insubstantial and speculative. That in itself could be recklessness.. . . [ 55 ] In O'Brien v. McNabb , 2000 CarswellOnt 2881 (C.A.) , the Ontario Court of Appeal overturns a decision of the motions judge, respecting the

interpretation of a reasonable period of time for a subdivision. In that case, fourteen (14) years had expired since the agreement was made, and the subdivision was not yet completed. At that time the purchasers brought an action to maintain the contract, and the vendors were successful in having the action dismissed on the basis that the contract (specifically the condition precedent that the land be subdivided), had not been completed within a reasonable time. [ 56 ] In Murray v.

Boyle , 1991 Carswel1Sask 223 (C.A.), there was an agreement for a sale of land with some rather complex terms that it would not be re-sold without being subdivided unless this could not be done within a reasonable time. The purchasers were making payments since the purchase agreement, and after eight years stopped doing so. At trial the issue was the

interpretation of a “ reasonable time ” for this development. The purchasers wished to call evidence in that regard, however the trial judge denied it, deciding that in these circumstances the reasonable time frame could even be as long as approximately twenty-five years.

On appeal, the Saskatchewan Court of Appeal overturned this decision and sent the matter back for a new trial. [ 57 ] Based upon these cases, the Defendant argues that the minimum (or shortest) boundary of a “ reasonable time ” for completion of a subdivision is at least two years, and thus the outer (or longest) limit or boundary therefore could be as long as eight years. [ 58 ] However I conclude that the Defendant ’ s analysis of what constitutes a reasonable outside time for completion of at least three years to as long as eight years is not appropriate in these particular circumstances with respect to the agreement between these parties, and that those outside time limits may not be appropriate generally as being too lengthy a period of “ reasonable time ” . [ 59 ] With respect to the issue of what would be a “ reasonable time ” to complete the subdivision and servicing of the lots, that determination should be based on the circumstances at the time the parties contracted in May 2007.

Neither party provided any expert evidence as to what a “ reasonable time ” would have been for the completion of the subdivision and the servicing of the lots. [ 60 ] The Defendant however did represent in the initial April 10, 2007 email that the actual time for completion of the subdivision and the servicing of the lots would be before the end of October 2007, weather permitting. The Defendant ’ s representative further represented that if weather was a problem then the completion of the subdivision and servicing of the lots would be moved to the Spring of 2008.

There was no mention of the other factors which might and would probably delay the process including the ultimate negotiations with the Town of Beaumont, the County of Leduc, and the other various non-weather related issues that were raised in great detail by Mr. Boss in his evidence. [ 61 ] Accordingly if a “ reasonable time ” was something more then the Spring of 2008, then I conclude the Defendant was guilty of misrepresentation giving rise to the right of recision of the Agreements.

The evidence is clear that the Plaintiff was not a person knowledgeable in real estate development in Beaumont, as the subdividing of lots and servicing of lots outside of Edmonton was something she had never been involved in. She had limited experience in this regard generally, and was a school teacher by profession in May 2007. The Defendant expressly or implicitly represented that they were knowledgeable in these matters. The Defendant could have simply said that the lots would be ready whenever they were ready and/or that they would use their best efforts.

Instead in their drafted agreements they chose not to do so, but rather assured the Plaintiff in writing and verbally that the lots would be building permit ready subject to only weather delays by the Fall 2007, and in any event by the Spring 2008. [ 62 ] Counsel for the Defendant dealt with what the word “ should ” in the initial email from Mr. Rohr means in the context of when the subdivision would be completed. I conclude that the case(

s) cited by counsel deal with statutory

interpretation, and not the email in question. Accordingly those cases are not as relevant as the common sense dictionary definition of the meaning of word “ should ” . I conclude that the meaning that ought to be ascribed to the use of the word “ should ” in the initial April 10, 2007 email is that it is used to indicate what is “ probable ” or “ expected ” . [ 63 ] Further or in the alternative the Defendant ’ s representations as to the time by which the lots would be ready for construction raised these representations from mere representations to actual terms of a collateral agreement which has been breached.

[ 64 ] As for the Defendant ’ s argument that the Plaintiff was just trying to get out of these deals because of the sharp market drop, the evidence before me is unchallenged that the Plaintiff felt that the Defendant holding her $133,200 deposits beyond November 14, 2007 (the anticipatory breach date, her Statement of Claim date) was unfair to her.

As for the equities argued by the Defendant, it had the clear ultimate advantage in this case of insisting pursuant to their drafted agreements that the price was firm if the market fell as it did; but if the market price of the lots rose after the agreement, the Plaintiff could not assign the agreement to take advantage of the rising markets.

In this regard the agreements are somewhat one sided, and an inequitable bargain when induced by the Defendant ’ s representations/misrepresentations as to the timing of the completion of the subdivision. [ 65 ] Accordingly the Plaintiff ’ s claim is allowed, the agreements are deemed void and unenforceable, and Judgment will issue in favour of the Plaintiff for $133,200. Heard on the 22 nd to 26 th days of May, 2012. Dated at the City of Edmonton, Alberta this 21 st day of June, 2012. Donald Lee J.C.Q.B.A. Appearances: Brian Doherty Doherty Schuldhaus LLP for the Plaintiff Duncan Wood for the Defendant