Newel Post Developments Ltd. v., 2012 ABQB 422

Court of Queen ’ s Bench of Alberta Citation: Newel Post Developments Ltd. v. 1402801 Alberta Ltd., 2012 ABQB 422 Date: 20120628 Docket: 0901 07374 Registry: Calgary Between: Newel Post Developments Ltd. Plaintiff - and - 1402801 Alberta Ltd. Defendant _______________________________________________________ Reasons for Decision on Costs of Chief Justice Neil Wittmann _______________________________________________________ Introduction [ 1 ] The Plaintiff, Newel Post Developments Ltd. (“Newel Post”), has applied for an Order, pursuant to Rule 4.36(2) (

b) of the Alberta Rules of Court (“ ARC ”) authorizing it to discontinue its action against the Defendant, 1402801 Alberta Ltd. (“140”). Further, Newel Post asks for an Order that 140 is not entitled to costs of the action. [ 2 ] The action was entered for trial and scheduled to proceed commencing Monday, May 14 th , 2012 for 3 days. The application was heard Wednesday, May 9 th , 2012. At the hearing of the application, the Court adjourned the trial sine die pending the decision on the application and requested written briefs from the parties.

Background Facts [ 3 ] The dispute centers around a planned development in the City of Calgary, located at 610 - 8 th Avenue S.W., known as “The Barron Building” (the “Land”) in which the Uptown Theatre is located. Newel Post sold the Land in 2007 to Platinum Equities Inc. (“Platinum”) for a purchase price of $22,000,000.00, other payments on closing and a 30% share of future profits generated by the development of the Land pursuant to a Development Profit Agreement. Platinum assigned its interest to another entity, also in 2007, prior to closing.

At closing, Platinum and the subsequent entity amended the Sale Agreement and Newel Post agreed to accept $21,000,000.00, subject to closing adjustments and an additional $1,000,000.00 after closing, secured by a promissory note. Newel Post registered an Unpaid Vendor’s Lien against the Land, because of the unfulfilled obligations of the purchaser.

The post closing outstanding principal balance of the unpaid purchase price is $800,000.00. [ 4 ] In 2008, 140 acquired the Land from the subsequent entity and became registered owner. 140 took action against Newel Post to remove the Unpaid Vendor’s Lien from the title to the land: (Action 0801 07057). [ 5 ] 140 and Newel Post purported to settle that action by way of a Settlement Agreement made September 22 nd , 2008, whereby 140 would pay $2,727,000.00 to Newel Post which would result in the removal of the Unpaid Vendor’s Lien, the termination of the Development Profit Agreement, removal of the Development Profit Agreement encumbrance and the cancellation of the promissory note.

The Settlement Agreement was never performed. This action was brought for specific performance of the Settlement Agreement and a declaration that a Revised Form of Lease addressing the Settlement Agreement was to be executed by 140. [ 6 ] This action progressed to an application for

Summary Judgment by Newel Post against 140 which was granted by Master Waller but appealed to this Court, resulting in a decision of Madam Justice Bensler delivered October 20 th , 2010: Newel Post Developments Ltd. v. 1402801 Alberta Ltd. , 2010 ABQB 660 . At the time of that decision, Bensler J. also heard a cross-application by 140 to amend its Statement of Defence, in essence alleging that it was an implied term or condition of the Settlement Agreement that settlement would be effected promptly and that a reasonable time implied would be 30 days.

In addition, 140 sought to amend their defence by alleging that the “Amended and Restated Lease” and Priority Registration of the that document was not part of the Settlement Agreement and constituted a repudiation of the agreement. [ 7 ] After analysing the claim for

summary judgment and the cross-application by 140 to amend its Statement of Defence, Bensler J. allowed the application of 140 to amend its Statement of Defence and held that “Due to the amendments, awarding

Summary Judgment would be inappropriate at this time. My analysis on the matter is meant to be informative to the parties, hopefully guiding them to the timely resolution of their dispute”: paragraph 52. [ 8 ] In coming to her conclusion, Bensler J. scrutinized the conduct of the parties and this analysis will be referred to later in these reasons. Thereafter, the matter progressed until it was entered for trial on or about January 27 th , 2012. The Request to

Schedule Trial date, signed by both counsel, indicates it will be a 3 day trial with only 2 lay witnesses, Blake O’Brien and Riaz Mamdani. [ 9 ] An application was made by Strategic Financial Corp. (“Strategic”) for an Order in respect of 140 and the Land to appoint a Receiver and Manager of the lands, buildings and agreements pertaining thereto.

The grounds for the application were that 140 assumed a Harbour Capital Corp. $16,000,000.00 loan secured by a mortgage against the Land in 2007 and stated the debtor 140 had defaulted on the Harbour mortgage rendering it just and convenient that the Receiver and Manager over the property be appointed. In support of the application, the Affidavit of Riaz Mamdani sworn March 8 th , 2012 (“the Mamdani Affidavit”) was filed. [ 10 ] According to the Mamdani Affidavit, Strategic acquired the Harbour mortgage on March 7 th , 2012.

In addition, the Mamdani Affidavit states that as of March 1 st , 2012, the principal balance outstanding the mortgage, together with accrued interest was $14,340,082.00 and that interest continues to accrue on the outstanding amount at the per diem rate of $3,025.54. The mortgage has been in default since January 1 st , 2012 and Strategic has exercised its option under the mortgage to have the entire balance due and payable. Also, according to the Mamdani Affidavit, 140 is a special purpose entity with no assets other than the Land.

[ 11 ] Mamdani was cross-examined on his Affidavit by counsel for Newel Post. He confirmed he is the sole Director and sole Shareholder of 140 and that he is also the sole Director of Strategic and the voting shareholder is the Mamdani Family Trust No. 2. It is not contested that Mamdani effectively controls both the creditor Strategic and the debtor 140. [ 12 ] On May 2 nd , 2012, McMahon J. granted the Receivership Order (“the McMahon Order”) as requested.

Existing actions in the Court of Queen’s Bench of Alberta 0801 07057, 0901 07374 (this action), 0901 14845 and 1101 16304 were exempted from a Stay of Proceedings. According to paragraph 18 of the McMahon Order, the Receiver is to be paid all reasonable fees and disbursements and is granted a Receiver’s Charge on the property in priority to all security interests, trusts, liens, charges and encumbrances, statutory or otherwise, in favour of any person with some exceptions, pursuant to the Bankruptcy and Insolvency Act , RSC 1985, c B-3.

In addition, according to paragraph 21 of the McMahon Order, the Receiver is at liberty and is thereby empowered to borrow from Strategic or any of its affiliates a principal amount not exceeding $2,000,000.00 for the purpose of funding the exercise of his powers and duties and thereby the holder of the property is subject to the “Receiver’s borrowing charge” with the same priority as outlined in paragraph 18, referred to above. [ 13 ] Meanwhile, on March 28, 2012, counsel for Newel Post dispatched a letter to counsel for 140, alleging that 140 has repeatedly repudiated the Settlement Agreement and frustrated it’s implementation and has now consented to a Receivership Order being granted in respect of all of its assets which, “if granted”, will render the implementation of the Settlement Agreement impossible.

The letter goes on to allege that the consent is a further repudiation of the Settlement Agreement “obviously aimed at rendering itself [140] ‘judgment proof’ and it would be futile for Newel Post to incur the cost of a trial”. Finally, the letter purports to accept 140’s repudiation and indicates that unless 140 agrees to a discontinuance of the action on a without costs basis, Newel Post will apply to the Court for an Order. [ 14 ] Counsel for 140 replied to the March 28 th , 2012 letter on May 2 nd , 2012 indicating “This letter is for the record ...”. It states in part: ... that the true facts are: 1.

The parties entered into a settlement agreement on the terms you describe; 2.

Newel Post improperly sought to attach a variety of additional terms, and subsequently sued to enforce those improper additional terms; 3. 140 has asserted throughout that, but for the improper additional terms, the settlement agreement was valid and enforceable, at least until Newel Post’s own improper conduct, and an intervening substantial change of economic circumstances, arguably frustrated such agreement; 4. 140 has remained ready, and it remains ready today, to perform the actual settlement agreement as soon as Newel Post formally abandons its improper claim for the additional terms which your letter impliedly seems to renounce – for example, the new lease referenced in subparagraph (

b) of its prayer for relief and the additional encumbrances described in its desired form of Order tendered at the time of the

summary judgment application; and 5. The limited receivership order sought by one of 140’s creditors does not render the settlement agreement impossible. Positions of the Parties A. Newel Post [ 15 ] Newel Post postulates that the sole issue is whether the Court should allow Newel Post to discontinue this action on a without costs basis. Its argument proceeds on the basis that costs are “a wholly discretionary matter” for the Court. It cites a number of Rules in

both the old ARC and the new ARC, including a number of authorities as follows: Dool Estate (Re), 2007 ABQB 12 , [2007] A.J. No. 18, at para. 33, aff’d 2009 ABCA 70 , [2009] A.J. No. 189; Courtof Queen’s Bench Act, RSA 2000, c C-31, s.21; Alberta Rules of Court, Alta. Reg. 390/1968, Rule 225(1), 225(3), 601; Alberta Rules ofCourt, Alta. Reg. 124/2010, Rules 1.3(1), 1.3(2), 1.4(2)(d), 1.6(1), 4.36(1), 4.36(2), 4.36(4), 10.31(1); Alberta Law Reform Institute,Alberta Rules of Court Project, Consultation Memorandum No. 12.14; Canadian Mortgage Investment Co. v. Teel (No. 2), (AB CA), [1923] 1 D.L.R. 576 (Alta.

C.A.); Fairway Developments Ltd. v. Hong, [2011] A.J. No. 587 (Alta. C.A.); Nazarewycz v.Dool, [2009] A.J. No. 189 (Alta. C.A.); Golda Developments Inc. v. Dawe, [2008] O.J. No. 1565 (Ont. S.C.J.); Newel PostDevelopments Ltd. v. 1402801 Alberta Ltd., [2010] A.J. No. 1281 (Alta. Q.B.); cf. Radhakrishna v. University of Calgary Faculty Association (2002), 2002 ABCA 182 , 215 D.L.R. (4th) 624 at paras. 45 and 50 (Alta. C.A.); Cellular Rental Systems Inc. v. BellMobility Cellular Inc., [1995] O.J. No. 721 at para. 17 (Gen. Div.); affirmed [1995] O.J. No. 3773 (C.A.); Fieguth v.

Acklands Ltd. (1989), (BC CA), 59 D.L.R. (4th) 114 at 121 (B.C.C.A.); Sinanan v. Woodyear 1999 NSCA 74 , [1999], N.S.J. No. 166 at para. 35, 42, 43 and 48; 176 N.S.R. (2nd) 201 (C.A.); Fuhr Farms Ltd. v. Melcor Developments Ltd., [2005] A.J. No.854 (Q.B.); Provincial Crane Inc. v. AMCA International Ltd., [1990] O.J. No. 806 (Ont. H.C.J.); Park v. McManus Motors, (1950) (ON SC), 3 D.L.R. 137 (Ont. H.C.); Morin v. Freson Market Ltd., [1993] A.J. No. 46 (Alta. Q.B.); Pharand Ski Corp. v.Alberta (AB KB), [1991] A.J. No. 471 (Alta. Q.B.); Graham v. Bonnycastle, 2004 ABCA 270 , [2004] A.J.No. 940 (Alta.

C.A.); Judicature Act, RSA 2000, c J-2, ss. 2, 4, 5 and 15. [16] The essence of Newel Post’s argument is that the new ARC contain wording changes which are not material.

The Alberta LawReform Institute, Alberta Rules of Court Project, Consultation Memorandum No. 12.14 is quoted, stating that “the wording of the rulesis somewhat complex and could be usefully rewritten in a simpler manner”. [17] Newel Post concedes that the general rule is that subject to certain exceptions, a Plaintiff will ordinarily have to pay costs ofan opposing party if an action is discontinued because the Plaintiff has concluded it cannot win the claim.

But it cites Dool Estate for theproposition that the general rule does not apply where there are extenuating circumstances and the claim is otherwise reasonable. Morerecently, Newel Post cites Fairway Developments at paragraph 14 for the following principles: 1. A plaintiff need not pay costs if the defendant benefits from a settlement between other parties. 2. The “justified action” test must be met before the plaintiff can escape paying costs. 3.

The Court will take into account whether the plaintiff’s action was frivolous or vexatious and whether the plaintiff might haveinvoked other remedies before resorting to the courts. 4. The Court will assess the circumstances to determine how the “mootness” came about. 5. The defendant will not get costs if it is obvious that the application had become moot and the defendant continued to argue themerits. [18] Thereafter, Newel Post refers to Nazarewycz (Dool estate), Golda Developments, and Fairway Developments for theproposition that when two criteria are met, the Plaintiff should not be required to pay costs.

Those two criteria are when the Plaintiff canshow its claim discloses a bona fide cause of action that is not frivolous or vexatious with some justification for the commencement ofthe claim and whether the Plaintiff can show there are circumstances beyond the Plaintiff’s control that would render the continuation ofthe action proceeding to judgment meaningless. [19] Newel Post says that it would have succeeded at trial, that both parties agree there was a Settlement Agreement made and thatit is the

interpretation of the terms and the allegation of delay that are at issue. Finally, Newel Post argues that the impact of theReceivership Order in excluding this action from the usual stay imposed is “nothing but an exercise in legal gymnastics because on Mr. Mamdani’s own version in his Affidavit of March 8th, 2012 at paragraph 20, it is stated that 140 ... “is a special purpose entity with noassets other than the Barron Building”. Newel Post says that it is obvious that Mr. Mamdani “engineered” 140’s default under the

mortgage to Strategic and consented to the Receivership Order resulting in the Receiver having a super-priority against the Barron Building. Newel Post concludes in its brief at paragraph 55: It is an unusual Receivership Order because it allows this litigation to proceed against a penniless defendant where ordinarily all actions against the debtor in receivership would be stayed. The lack of perfect precedent should not discourage the court from doing what is just and fair.

This Court may draw analogy to other cases where the plaintiffs with bona fide claims had little option but to apply to the Court to discontinue them when circumstances not of their own making made the action’s further advancement an exercise in futility. B. 140 [ 20 ] 140 agrees there was a Settlement Agreement made on September 22 nd , 2008.

The settlement had to be documented. 140 says that “despite repeated inquiries and requests for action by its solicitor, Newel Post did not provide documents to complete the settlement and to clear the title until it delivered a voluminous “Amended and Restated Lease” on December 22 nd , 2008, which 140 says was never part of the Settlement Agreement and involved other parties and new registrations on title that were never agreed to. [ 21 ] 140 argues that by its March 28 th , 2012 letter, Newel Post “seemed to accept after denying it for almost 3 years” 140’s version of the Settlement Agreement and affirmed it’s position articulated in its May 2 nd , 2012 letter, that it remains ready to perform the Settlement Agreement “as soon as Newel Post formally abandons its improper claim for the additional terms, which your letter impliedly seems to renounce” ... [ 22 ] 140 also argues that the Receivership Order appointed a receiver merely of the building and not of 140 itself. 140 generally agrees with Newel Post’s

summary of the law but vigorously disputes the impact of the Receivership Order as asserted by Newel Post.

Specifically, 140 says that from inception Newel Post knew that 140 was a special purpose entity with no assets other than the Barron Building and basically asks the question, how did the Receivership Order change anything on that regard? 140 says that there is no evidence of any absence of sufficient equity in the building to pay any judgment or any unwillingness of 140 to pay and reiterates that 140 will pay and is ready, willing and able to pay, if Newel Post abandons the imposition of the additional terms in its settlement documentation and proposals.

Analysis [ 23 ] As indicated above, the reasons of Bensler J. in Newel Post were meant to be informative to the parties and to guide them. As stated by Bensler J., a Settlement Agreement was formed as the result of an offer by Newel Post and an acceptance by 140. In September 2008, Newel Post wrote 140 and stated: We are willing to accept $2,727,000.00 to terminate the Development Profit Agreement and discharge our Unpaid Vendor’s Lien, such events not to impact the Uptown Lease and related rights or agreements. [ 24 ] 140 emailed back to Newel Post: Thank you for your offer.

I accept. [ 25 ] The true dispute between the parties appears to be the

interpretation of the Settlement Agreement and what is required for its performance. No one disputes its formation. The troublesome words are “... such events not to impact the Uptown Lease and related rights or agreements”. [ 26 ] It is common ground that the Uptown Theatre occupies the ground floor of the Barron Building in Calgary. As stated by Bensler J. when the Amended and Restated Lease was sent to 140 by Newel Post, it was submitted with a request for comments. This does not mean that the parties did not have an agreement: paragraph 41. Bensler J. adopted the reasoning of McEachern, CJBC in

Fieguth where the difference between the formation of a contract and its completion was discussed.

She emphasized that in that case, there was a statement to the effect that one can tender documents in a business arrangement without rescinding a Settlement Agreement and if the documents are not accepted, there must be further discussion but neither party is released or discharged unless there is an insistence on terms or conditions which have not been agreed upon or not reasonably implied. [ 27 ] Bensler J. also found that it is perfectly clear that the $2,727,000.00 must be paid in full prior to the discharge of the Unpaid Vendor’s Lien and the termination of the Development Profit Agreement. [ 28 ] She then went on to discuss whether Newel Post repudiated the Settlement Agreement.

She found that Newel Post did not repudiate it; rather that its actions were an attempt to complete a term of the Settlement Agreement. [ 29 ] The dispute about repudiation appears to have been continued by the March 28 th , 2012 letter dispatched by counsel for Newel Post where it alleges 140 has repeatedly repudiated the agreement and stating Newel Post is now prepared to accept the repudiation.

In its reply of May 2 nd , 2012, 140 rejects any notion that it repudiated the Settlement Agreement and states that it remains ready to perform the “actual Settlement Agreement” as soon as Newel Post formally abandons its improper claim for the additional terms. [ 30 ] As stated by Bensler J. at paragraph 41 of Newel Post , it was agreed that the Uptown Lease would not be impacted by the Settlement Agreement and that the subsequent submission of the Amended and Restated Draft Lease was an effort to complete that term of the Agreement. [ 31 ] There is no evidence, at least in this application, that 140 supplied its comments on the Draft Lease or made any proposals for documentation that would, in effect, ensure that the termination of the Development Profit Agreement and discharge of the Unpaid Vendor’s Lien would “not ... impact the Uptown Lease and related rights or agreements”. [ 32 ] The position of parties seems to have now crystalized.

Newel Post says that 140 has repudiated the Settlement Agreement and purport to accept the repudiation, thereby ending it. 140 impliedly says that it did nothing of the sort. 140 stands ready, willing and able to perform the Settlement Agreement, and has not repudiated anything. The finger pointing on this issue amounts to nothing more nor less than each side saying to the other: did so; did not. But it is not for this Court to decide the legal status of the parties in light of the March 28 th and May 2 nd letters.

I need only decide whether to allow Newel Post to discontinue its action with or without costs. [ 33 ] Applying the case law, I find that Newel Post had a reasonable cause of action and a good prospect of succeeding with its claim.

What is more troublesome is the position of Newel Post that a judgment would be a Pyrrhic victory for Newel Post because the Receivership Order has made it so. 140 has argued that Newel Post’s complaint about the super priority charge in favour of the Receiver to fund about $2,000,000.00 in needed improvements to the Land ignores the obvious beneficial effect on the value of the building; that there is no evidence of the absence of sufficient equity in the building to pay any judgment or of any unwillingness of 140 to pay.

Finally, 140 also emphasizes that the fact 140 is a special purpose entity with no assets other than the Barron Building is not new. This fact has been known to Newel Post since at least the inception of the law suit of this action. [ 34 ] The position of 140 does not square with its Amended Statement of Defence.

In paragraph 5, 140 alleges that the sending of the “Amended and Restated Lease” was not part of the terms of settlement and the attempt to impose the Amended and Restated Lease and priority registration of new instruments registered against title was a repudiation by Newel Post of the Settlement Agreement.

In paragraph 6, 140 pleads that if Newel Post genuinely believed that the tripartite execution of an Amended and Restated Lease and the priority registration of new instruments formed part of the Settlement Agreement, then the parties were never ad idem and as such, there was no Settlement Agreement. [ 35 ] It is also to be noted, that according to the unchallenged evidence of the officer of Newel Post, Blake O’Brien, in an affidavit relied on in support of this application, sworn July 22 nd , 2009, he swore in paragraph 10, that after the Amended and Restated Lease was sent to the Defendant’s counsel on December 22 nd , 2008 requesting comments, counsel for Newel Post requested comments from 140 through its counsel on January 14 th , January 23 rd , March 4 th , March 5 th , March 31 st , April 22 nd , and May 6 th , 2009 and that “having received no comments from [140], Newel Post became concerned that [140] might no longer be able to fund the agreed upon settlement and commenced [this] Action”.

The ARC [ 36 ] There is no material difference between the new ARC and old ARC governing the obligation of a party to obtain leave of the Court to discontinue an action or claim. The new ARC 4.36 (2) states as follows: 4.36

(2) After a trial date has been set but before a trial starts, a plaintiff may discontinue all or part of an action against one or more defendants only (

a) with the written agreement of every party, or (

b) with the Court’s permission. [ 37 ] The old ARC 225(3) stated as follows: Except as otherwise provided in this Rule, a plaintiff may not withdraw any claim or discontinue the action without leave of the court, but the court may, before, at or after the hearing or trial, upon such terms as to costs, and otherwise as may seem just, order the action to be discontinued or any particular claim made by him to be struck out. The Purpose of the Rule [ 38 ] Arguably, it is a matter of some controversy as to why leave of the court is needed when a Plaintiff wants to discontinue an action it commenced.

A number of reasons have been proffered for the rule, but some run aground when the timing of the requirement for leave is considered, ie. when the matter is entered for trial. Some of the reasons are articulated in the Report of the Alberta Law Reform Institute, Consultation Memorandum No. 12.14 , released in October 2004. One of the examples given is in situations where there are multiple Plaintiffs because the unilateral discontinuance by a Plaintiff may result in a loss of another Plaintiff’s claim.

Another problem that may arise, is the situation where the Defendant has issued a Third Party Notice where it may be necessary to keep the Plaintiff’s claim alive to preserve the Defendant’s right against the Third Party. The authors question the timing stipulated in the Rule on the basis that a Plaintiff can apparently unilaterally discontinue if it is done before the matter is entered for trial, provided there is no abuse of process. The authors also cite Stephenson and Côté, Civil Procedure Encyclopaedia , Volume 2 at 30-15 where examples of cases where leave was refused to discontinue unilaterally were given.

For example, one is where a divorce petitioner was refused to leave on the basis that she was going to start over in another province that she’d moved to but her motive was to prevent the respondent from concluding the proceedings. Another is where individuals were refused leave, who were co-plaintiffs with an Indian Band because their only motive was to avoid discovery. [ 39 ] In De Shazo v. Nations Energy Co. , 2006 ABCA 400 (C.A.), the Court held that the right to file a discontinuance of action could not be used to effect an abuse of the Court’s process.

The Defendants gave 2 weeks notice of their application for

Summary Dismissal of the Plaintiff’s claim and the Plaintiff filed a Discontinuance of the Action. The Court of Appeal ordered that the Discontinuance be set aside because it was an abuse of the Court’s process. In rendering its decision, the Court referenced Fox v. Star Newspaper Co. , [1898] 1 Q.B. 636 affirmed [1900] A.C. 19 , which was an attempt by a Plaintiff to discontinuance after the trial had commenced. In that case, the Court held at 639: The principle of the rule is plain.

It is that after the proceedings have reached a certain stage, the Plaintiff, who has brought his adversary into Court, shall not be able to escape by a side door and avoid the contest. He is then, to be no longer dominus litis , and it is for the judge to say whether the action shall be discontinued or not and upon what terms. [ 40 ] In De Shazo , the Court of Appeal found that the decision in Fox was “sound”.

The Court in effect refused leave of the Plaintiff to discontinue as an abuse of process and held that the Defendants were entitled to a Court decision. [ 41 ] It is clear that the case authority respects the position of a Defendant in resisting an application for leave to discontinue an action. The quest for certainty is a significant policy pillar in the civil litigation process. For example, a Defendant may wish a matter to be tried, notwithstanding the Plaintiff’s offer to discontinue, to avoid the resurrection of the same action at a later date, assuming there is

no intervening limitation. By proceeding to a judgment, there is some certainty rendered to the parties, subject of course to an appeal. [ 42 ] But in this case, there is no resistance by the Defendant to the discontinuance of the action as such. The only resistance appears to be a resistance to the discontinuance of the action on a without costs basis. [ 43 ] In this case, I am of the view that the Plaintiff’s application for leave to discontinue the action without costs ought to be refused.

Were I of the view that the evidence established that Mamdani, in the words of Plaintiff’s counsel, “engineered” the present situation so as to render the continuation of the action to a successful judgment an exercise in futility, I would grant leave to discontinue the action without costs. But I am persuaded by counsel for 140 that the evidence falls short of demonstrating that a judgment against 140 would be futile. As is pointed out by counsel for 140, there is no evidence that the equity in the Land is insufficient to fund the judgment requested in the event the Plaintiff is successful.

Secondly, the kind of judgment that the Plaintiff may attain, may be as simple as the terms ordered by Master Waller on February 3 rd , 2010, when he granted

summary judgment in favour of Newel Post against 140. His Order states in paragraph 3: Nothing in this Order shall impact the Lease dated July 9 th , 2007 between Barron, 571764 Alberta Ltd. and Platinum and related rights or agreements. [ 44 ] Or, a Court may find that the Amended and Restated Lease presented by Newel Post to 140 satisfies this requirement or it may find it offends it and decide what is necessary to satisfy this term of the Settlement Agreement.

Or, the action may not succeed. [ 45 ] In light of the May 2 nd , 2012 letter from counsel for 140, the “for the record” letter, it would seem that 140 has abandoned many parts of its Amended Statement of Defence allowed by Bensler J. with respect to the performance of the Settlement Agreement.

For example, that it must be performed within a period of no more than 30 days (paragraph 3) and that prevailing economic circumstances would permit 140 to refinance the lands (paragraph 4, paragraph 7-8) to the effect that because there was “significant delay” it was impossible for 140 to reasonably refinance the lands and that either the parties never reached an agreement or it was frustrated. Conclusion [ 46 ] The action was properly brought to enforce the Settlement Agreement. A Master granted a

Summary Judgment and a Justice of this Court found that a Settlement Agreement was formed in September 2008. She further found that the settlement monies, $2,727,000.00, were to be paid in full prior to the termination and removal of the encumbrances. Finally, she found that Newel Post did not repudiate the Settlement Agreement.

The action brought by the Plaintiff was therefore reasonably brought and bona fide . [ 47 ] The continuation of the action to judgment has not been proven in this application to be demonstrably futile, either at the behest of 140 or otherwise. [ 48 ] The application for leave to discontinue the action without costs is refused. [ 49 ] Leave to discontinue the action with costs is granted to the Plaintiff. [ 50 ] The Plaintiff shall exercise its option to discontinue the action within 30 days from the entry and service of the Order filed as a result of this judgment. [ 51 ] Should the Plaintiff exercise its option to discontinue the action with costs, it shall be liable for party and party costs payable to 140, pursuant to Column 5 of

Schedule C of the ARC .

[ 52 ] 140 is entitled to costs of this application pursuant to Column 5 of

Schedule C, in any event. Heard on the 9 th day of May, 2012. Dated at the City of Calgary, Alberta this 28 th day of June, 2012. Neil Wittmann C.J.C.Q.B.A. Appearances: Josef G.A. Kruger, Q.C. Borden Ladner Gervais LLP for the Plaintiff B.C. Yorke-Slader, Q.C. Bennett Jones LLP for the Defendant