Milner v. Sostar, 2012 ABQB 473

Court of Queen ’ s Bench of Alberta Citation: Milner v. Sostar, 2012 ABQB 473 Date: 20120720 Docket: 1101 02005 Registry: Calgary Between: Dean Milner and Susan Milner Plaintiffs - and - John Sostar Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice T.F. McMahon _______________________________________________________ [ 1 ] These parties entered into an agreement in December 2007 by which Dean Milner and Susan Milner (the “ Milners ” ) granted to John Sostar ( “ Sostar ” ) an option to purchase certain lands.

The option was conditional upon Sostar obtaining subdivision approval of the lands before January 1, 2011. That time could be extended for five years to January 1, 2016 if subdivision approval was delayed for reason of a breach or non-performance by the Milners.

[2] In an earlier hearing, on June 15, 2011, I found on the evidence that the Milners were in breach by their refusal to sign anauthorization for Sostar to act on their behalf in a renewed subdivision application in July 2010 unless Sostar paid his share of taxesowing. I concluded that Sostar could then have chosen to extend the time for subdivision approval to January 1, 2016 but had failed to doso before the condition expired on January 1, 2011.

As a result, my order discharging the Sostar caveats from title was made June 15,2011 and entered on July 4, 2011. [3] On June 30, 2011, several days before entry of my order, counsel appeared again before me. Counsel for Sostar for the firsttime produced a letter of December 31, 2010 from himself to Milner’s lawyer which purported to give notice that Sostar was exercisinghis right to extend the time to obtain subdivision approval. Counsel argued that the letter had been innocently over-looked and that hehad not considered that proof of notice given would be needed.

I declined to give consideration to that evidence. On appeal, the Court ofAppeal has returned the matter before me to consider whether the new evidence should be admitted into evidence pursuant to Rule 9.13.That Rule requires that I be satisfied that there is good reason to hear more evidence. The Rule is not to be used routinely to re-hear or re-argue a matter. Reconsideration should occur in only limited circumstances – which may include important new facts. A party must bediligent in marshalling all relevant evidence.

Applications, like trials, are not to be presented piece-meal. [4] This letter is now said to be important to Sostar’s case as evidence of an exercise of his discretion to extend the conditionterm before January 1, 2011. [5] In determining whether to accept this letter into evidence at this stage, counsel for the Milners cites 671122 Ontario Ltd. v.Sagaz Industries Canada Inc., 2001 SCC 59 , [2001] 2 S.C.R. 983. In that case, after the trial reasons were released but beforeformal judgment was entered, a motion to hear fresh evidence was brought.

In reversing the Court of Appeal and restoring the trialjudge’s decision to refuse the new evidence, Major, J. for the Supreme Court of Canada referenced the two-part test from Scott v. Cook, (ON SC), [1970] 2 O.R. 769, at para. 59: 1. Whether the evidence, if presented, would likely change the result, and 2.

Could the evidence have been obtained before the conclusion of the trial by the exercise of reasonable diligence. [6] Both branches of the test must be met. [7] The issue is for the trial judge whose decision is entitled to deference (para. 60). [8] A decision to re-open a trial should be made sparingly and with great care (para. 61).

The trial judge had concluded that hecould not say that the new evidence would probably or likely change the result but only that it “may have” changed the result (para. 62). [9] I have now heard argument from both counsel on the significance or lack of significance of the letter of December 31,2010. Its relevant parts are the following: I have had one meeting with my client and have reviewed the option agreement. I note that the option is set to expire on January 1, 2011,absent a breach of the contract.

My client is of the opinion that yours has failed to reasonably comply with the promises, representations,and obligations contained in provisions D&E of the

preamble to the agreement and asserts that he is accordingly entitled to the extensionunder condition 3(b). (underlining added) [10] I observe that reiterating one’s entitlement to have something is different from exercising his right to obtain it.

[ 11 ] The letter then goes on to propose settlement discussion: My client also advises that yours has apparently landscaped the “ option land ” at a considerable price approximately a year and a half ago, and prior to my client ’ s application for subdivision.

If this is correct, it obviously demonstrates that your clients want the lands to be theirs and so I query whether they would like to sit down and work out a reasonable settlement of this issue. [ 12 ] After discussing amounts, the letter concludes by saying: My client is prepared to discuss a global resolution. [ 13 ] On a reading of the whole of this letter, I cannot conclude that it would likely be taken as an unequivocal exercise by Sostar to extend the condition term before the expiry option on January 1, 2011. It is at least as likely to be a call for negotiations combined with the suggestion of litigation.

The Milners were entitled to know without equivocation that Sostar had claimed his right to extend the term. That is particular so where, as here, the Milners would have disputed the occurrence of the pre-condition necessary to create the right to extend the term. [ 14 ] This is in fact how the Milners read the December 31 letter. Their lawyers response on February 9, 2011 said: Thank you for your letter of December 31 canvassing the possibility of settlement. I disagree with your client ’ s

interpretation of the option agreement.

If he has a specific settlement proposal, I would be duty bound to communicate it to my clients. [ 15 ] In addition, Sostar in an affidavit sworn March 15, 2011 (after the expiry of the option), at para. 17, said: I am, in my sole and absolute discretion extending the condition date to the earlier of approval and registration of subdivision necessary to give effect to exercise the option, or a further five years in accordance with the agreement. [ 16 ] No reference is made to an exercise of his discretion on December 31 to extend the term. [ 17 ] I conclude therefore that the letter of December 31, 2010 would not likely have changed my earlier decision.

The application fails the first part of the Scott Test. The application to admit this additional evidence is dismissed with costs. My order of June 15, 2011 is affirmed. Heard on the 3 rd day of July, 2012. Dated at the City of Calgary, Alberta this 20 th day of July, 2012.

T.F. McMahon J.C.Q.B.A. Appearances: Matthew X. James Machida Shewchuk James for the Plaintiffs Christopher M.A. Souster Barrister & Solicitor for the Defendant