Forwest Development Enterprises Ltd. v. High River Regional Airport Limited, 2012 ABQB 785

Court of Queen’s Bench of Alberta Citation: Forwest Development Enterprises Ltd. v. High River Regional Airport Limited, 2012 ABQB 785 Date: 20121220 Docket: 0901 15091 Registry: Calgary Between: Forwest Development Enterprises Ltd. Plaintiff - and - High River Regional Airport Limited and Municipal District of Foothills No. 31 Defendants - and - Donald Jewitt and Robert Griesdale Third Parties _______________________________________________________ Memorandum of Decision of J.L. Mason, Master in Chambers _______________________________________________________ Introduction

[ 1 ] Forwest Development Enterprises Ltd. commenced discussions with High River Regional Airport Limited in early 2007 regarding a sub-lease of airport lands and construction of a multi-bay hangar on those lands. The Airport is jointly owned by the Municipal District of Foothills No. 31 and the Town of High River. Forwest paid the Airport a deposit, commenced site preparation and purchased a steel frame for the hangar. In June, 2008, Forwest applied to the MD for a development permit to the for the construction of an eight bay hangar. [ 2 ] In November, 2008, the MD approved six individual hangars.

It did not approve the eight bay hangar proposed by Forwest. [ 3 ] Forwest commenced this action against the MD and the Airport. It alleges negligent misrepresentation as against the Airport and the MD. It alleges that the Airport told it that it had the authority to approve construction and did so. Forwest further alleges that the Airport told it that the MD would approve the eight bay hangar.

It also alleges breach of contract as against the Airport. [ 4 ] Forwest alleges it relied on the Airport’s representations in entering into the sub-lease with the Airport, and in commencing construction and the purchase of the steel hangar frame. At questioning, Forwest’s corporate representative, Tony Kasper, stated that two volunteers of the Airport, Rob Griesdale and Donald Jewitt, made the representations.

The evidence discloses that representations were made by them in regard to site preparation prior to the issuance of a development permit, and that the MD had previously approved development permits that had been supported by the Airport. [ 5 ] The MD and the Airport have defended the claim on the bases, among others, that any representations were made without authority and alternatively, no duty is owed. [ 6 ] The Airport also third partied Mr. Griesdale and Mr. Jewitt, alleging that they lacked authority to make the representations, such that they must be personally responsible if negligence is found. Mr.

Griesdale and Mr. Jewitt defend the third party notice on the bases, among others, that they made no misrepresentations and cannot be personally liable in any event pursuant to provisions of the articles of association of the Airport, the Companies Act , R.S.A. 2000, c. C- 21 and the Municipal Government Act , R.S.A. 2000, c. M-26. [ 7 ] The MD and the Airport apply to summarily dismiss the negligent misrepresentation action against them [1] . Mr. Griesdale and Mr.

Jewitt apply to summarily dismiss the Airport ’s third party claim against them. [ 8 ] For the reasons that follow, the application of the MD and the Airport is granted in part. There remain genuine issues for trial in regard to the negligent misrepresentation claims against the MD and the Airport relating to site preparation. The misrepresentation regarding the MD ’s past approvals of development permits is a representation as to the MD ’s future intentions and is not actionable at law. The application of Mr. Griesdale and Mr. Jewitt is dismissed.

There are genuine issues for trial in regard to the Airport ’s scope of authority, and the personal liability of Mr. Griesdale and Mr. Jewitt. The test for

summary judgment [ 9 ] Rule 7.3 of the Alberta Rules of Court provides that a defendant or third party defendant may apply for

summary dismissal on the ground that there is no merit to a claim or third party notice, or part of it. [ 10 ] The applicant seeking

summary judgment or dismissal bears the legal onus of showing no genuine issue for trial: Murphy Oil Co. v. Predator Corp ., 2006 ABCA 69 , 384 A.R. 251 . [ 11 ] To succeed, it must be "plain and obvious", or "beyond real doubt" that the action should be determined summarily: Tottrup v. Clearwater No. 99 (Municipal District) , 2006 ABCA 380 , 401 A.R. 88 . Each side must put its best foot forward with respect to the existence or non-existence of material issues to be tried. Relying on mere allegations or the pleadings will not suffice: Canada (Attorney General) v. Lameman , 2008 SCC 14 , [2008] 1 S.C.R. 372 at paragraph 11 .

[ 12 ] A plaintiff responding to a

summary dismissal application is not required to prove all the requirements of its cause of action, but must raise enough evidence to warrant the cause of action going to trial: Elbow River Marketing Limited Partnership v. Canada Clean Fuels Inc. , 2012 ABCA 328 at paragraph 14 . A respondent may successfully resist by establishing the existence of disputes on material questions of fact, including inferences to be drawn therefrom, or on points of law that cannot be readily resolved given the factual disputes: Condo Corp 0321365 v. MCAP Financial Corporation , 2012 ABCA 26 at paragraph 43 .

If the evidence establishes that there are missing links in the essential elements of a cause of action or that there is no cause of action in law, there will be no genuine issue for trial: Condo Corp 0321365 v. MCAP Financial Corporation at paragraph 43. The representations [ 13 ] Forwest’s corporate representative, Mr. Kasper swore an affidavit on October 30, 2012 resisting the defendants’ application for

summary dismissal. [ 14 ] Mr. Kasper deposes that, based on discussions he had with present and former members of the Airport’s board, and upon his review of the Airport’s Notice of Intent to Initiate Development issued in 2003 (which included multi-bay hangars), he understood that the Airport wanted Forwest’s development at the Airport’s lands. [ 15 ] He recalls Mr. Griesdale, President and Chair of the Airport board at the time, saying on more than one occasion, that he wished some contractor would come along and build a row of hangars. [ 16 ] Mr.

Kasper states that discussions with respect to the sub-lease for the site began in early 2007. The actual site for Forwest’s proposed eight bay hangar was created when the Airport’s board amalgamated six lots into one to accommodate the project. [ 17 ] Mr. Kasper deposes that Mr. Griesdale (a director of the Airport) and Mr. Jewitt (an officer of the Airport) specifically told him that he could start site preparation before a development permit was issued. Site preparation began one year before the sublease was signed.

The first deposit from Forwest to the Airport contemplated by the sub-lease was made in 2007, and site preparation began after that. [ 18 ] He says Mr. Griesdale and Mr. Jewitt encouraged him to commence site preparation early, while other equipment was already on site at the Airport. Mr. Kasper commenced site preparation before execution of the sub-lease because everybody else building hangars followed the same procedure, and because of the encouragement of Mr. Griesdale and Mr.

Jewitt. [ 19 ] The MD and the Town, joint owners of the Airport, approved Forwest’s sub-lease application on or about May 1, 2008 and the sublease was entered into by Forwest and the Airport at that time. The terms provide in part that Forwest will submit its “construction plans” to the Airport for its approval. [ 20 ] Mr. Griesdale and Mr. Jewitt told Mr. Kasper that they could make decisions on the part of the Airport relating to operating and developing the airport, but that he still had to get a development permit. [ 21 ] Mr. Kasper was not concerned about the development permit getting rejected as Mr.

Griesdale and Mr. Jewitt told him that no applications had ever been refused as long as they were recommended by the Airport’s board. [ 22 ] He spoke with MD development officer, Heather McInnes on June 5, 2008 and she advised him that his proposal would have to go before council. She did not tell him that he should not start any “site preparation” work. Mr. Kasper told Mr. Griesdale and Mr. Jewitt about his discussion with Ms. McInnes and he says that they told him to continue with site preparation and that they would look into her comments. Four weeks later, Ms. McInnes told Mr.

Kasper that there were problems at the Airport, not just with Forwest’s development, but with all developments. Forwest ’s application for a development permit was tabled in July, 2008. [ 23 ] Mr. Kasper deposes that Mr. Griesdale and Mr. Jewitt informed him that in a meeting among themselves and the MD in September of 2008, the MD had authorized Forwest to continue with “site preparation”. This is also referenced in a notice prepared by Mr. Griesdale and Mr. Jewitt following the meeting and provided to Forwest.

[ 24 ] On October 5, 2008, the Airport’s board unanimously recommended to the MD that the Forwest eight bay hangar be approved. [ 25 ] Mr. Kasper continued working on the project until he was informed at some point prior to the end of October, 2008 that there was going to be a hearing and that he should stop work. Following the hearing, the MD refused Forwest ’s application for an eight bay hangar. 1. The application of the MD and the Airport to summarily dismiss Forwest ’s claim [ 26 ] The MD submits that the evidence of Forwest’s corporate representative, Mr.

Kasper is that he never had any discussions with any representative of the MD prior to submitting the development permit application, and thus it is plain and obvious that the claim of negligent misrepresentation against the MD must fail. [ 27 ] The Airport submits that Forwest’s action in negligent misrepresentation against it is bound to fail due to the clear absence of the requisite special relationship. [ 28 ] The MD and the Airport further submit that the representation regarding the MD’s approval of Forwest’s application for a development permit was as to a future event and therefore not actionable.

Is it plain and obvious that the MD made no actionable representations to Forwest? [ 29 ] Forwest’s development permit application was dated and submitted June 6, 2008. Mr. Kasper deposes to a discussion with MD Development Officer, Heather McInnes on June 5, 2008. Ms. McInnes deposes to a discussion on June 6, 2008. It is not clear whether any discussion took place between representatives of Forwest and representatives of the MD, prior to Forwest’s submission of the development permit application on June 6, 2008. There is a further lack of clarity in that Ms. McInnes says she specifically told Mr.

Kasper not to commence “any construction”, while Mr. Kasper says Ms. McInnes did not tell him “not to commence any site preparation”. [ 30 ] In any event, as noted, Mr. Griesdale deposes that at the meeting among MD and Airport representatives in September of 2008, he and Mr. Jewitt asked about what should be done with those sub-tenants, including Forwest, that had already commenced site preparation. He says that the MD advised that those who had commenced site preparation could continue site preparation. [ 31 ] Mr. Kasper deposes that he was advised by Mr. Griesdale and Mr.

Jewitt after this meeting, that the MD had authorized Forwest to proceed with “site preparation” work prior to receipt of a development permit. Mr. Griesdale and Mr. Jewitt confirm this, and it is also reflected in a notice issued by Mr. Griesdale and Mr. Jewitt after the meeting and attached as Exhibit “K” to Mr. Kasper’s affidavit. Mr.

Kasper continued working on site preparation after these statements were made, but stopped at some point prior to the end of October, as noted above. [ 32 ] This is some evidence that representatives of the MD told the Airport’s director and officer after their specific inquiry, that Forwest could continue with site preparation work, and that this was communicated to Mr. Kasper. [ 33 ] Chief Administrative Officer for the MD, Harry Riva Cambrin was questioned and also submitted affidavits on these applications. Mr. Cambrin’s account of the discussion of “site preparation” differs from Mr. Griesdale’s and Mr.

Jewitt’s. He says that any discussion of “site preparation” was not directed at Forwest or any specific individual who had commenced site preparation before getting a development permit. [ 34 ] There is a dispute in the evidence as to what MD representatives communicated to Mr. Griesdale and Mr. Jewitt about the site preparation. If the evidence of Mr. Kasper , Mr. Griesdale and Mr. Jewitt is accepted, that may support a finding of misrepresentation by

the MD at trial. It is not plain and obvious that the MD made no actionable representation to Forwest. The MD’s application to dismissForwest’s negligent misrepresentation against it on this basis is denied. Is it plain and obvious that there was no special relationship and corresponding duty of care between the Airport and Forwest? [35] In Condo Corp 0321365 v. MCAP Financial Corporation at paragraph 65, the Court of Appeal of Alberta summarized the fiveelements of a successful negligent misrepresentation claim originally set out in Queen v.

Cognos, [1993] 1 S.C.R. 97: ...First, there must be a duty of care based on a “special relationship” between the representor and the representee. Second, therepresentation in question must be untrue, inaccurate or misleading. Third, the representor must have acted negligently in making therepresentation. Fourth, the representee must have relied, in a reasonable manner, on the negligent misrepresentation.

And fifth, thereliance must have been detrimental to the representee in the sense that damages resulted. [36] In regard to the first element of “special relationship”, the Court confirmed at paragraph 66 that the two-part Anns test applies toassess whether a duty of care exists in the context of negligent misrepresentation. At the first stage of the Anns test, the court mustdetermine whether the representor and representee can be said to be in a relationship of proximity or neighbourhood, that is a “specialrelationship”: paragraph 67.

Two criteria must be met: the defendant ought to reasonably forsee that the plaintiff will rely on itsrepresentations; and reliance by the plaintiff would be reasonable in the circumstances. [37] At paragraph 43 of its reasons in Hercules Management Ltd. v. Ernst & Young, (SCC), [1997] 2 S.C.R. 165,the Supreme Court of Canada identified some general indicia of the existence of reasonable reliance: 1. The defendant had a direct or indirect financial interest in the transaction in respect of which the representation was made; 2.

The defendant was a professional or someone who possessed special skill, judgment or knowledge; 3. The advice or information was provided in the course of the defendant’s business; 4. The information or advice was given deliberately, and not on a social occasion; and 5. The information or advice was given in response to a specific enquiry or request. [38] If the proximity requirement is met, a court must then go on and consider the second part of the Anns test: are there policyconsiderations that warrant not recognizing, or otherwise limiting, the duty of care?

It is at this stage that a court is concerned about thepossibility of indeterminate liability: paragraph 68. [39] At the time of the representations, Mr. Griesdale was a director of the Airport, and Mr. Jewitt an officer. It is not disputed thatfrom the outset, these gentlemen held themselves out to Mr. Kasper as having the authority to manage the Airport and were theindividuals who dealt with Mr. Kasper in regard to Forwest’s proposed eight bay hangar[2]. It is also not disputed that they handled thediscussions leading to the sub-lease between the Airport and Forwest. Mr. Griesdale and Mr.

Jewitt signed the sub-lease on behalf of theAirport and this sub-lease was approved by the MD and the Town. The sub-lease contained terms that the Airport would approveForwest’s “construction”. [40] This is some evidence that the Airport ought to have reasonably foreseen that Forwest would rely on its representations. [41] Counsel for the Airport also submits that it is plain and obvious that there was no reasonable reliance by Mr. Kasper onstatements made by Mr. Griesdale and Mr. Jewitt for these reasons: Mr. Griesdale and Mr. Jewitt were volunteer directors with no

special knowledge; they were not employed by the MD; Mr. Kasper was aware that a development permit was required before he could commence construction; Mr. Kasper was aware that the MD’s council would decide whether to grant the development permit; and Mr. Kasper had previously developed a hangar on the Airport lands and was familiar with the MD’s process. [ 42 ] These submissions from the Airport are based on certain of the evidence before the court. However, some of the evidence is open to

interpretation, and there is other evidence before the court that, at least arguably, puts a different spin on the issue. [ 43 ] The head lease between the Airport as lessee and the Town and the MD as lessors sets out that the Airport was in charge of operating, developing and maintaining the airport property. The evidence of Mr. Griesdale and Mr. Jewitt is that so called “site preparation” work had been going on at the airport lands for years, prior to and after the creation of the Airport.

Forwest and the Airport began discussions in 2007 regarding Forwest sub-leasing from the Airport and building some sort of hangar development. As with any corporation, the Airport had a board of directors and officers. It is undisputed that Mr. Griesdale was a director and Mr. Jewitt an officer at the material times. Each admit that they told Mr. Kasper that Forwest could start site preparation before a development permit was issued. That work started before the sub-lease was signed, but after Forwest paid the Airport the deposit required in the sub-lease that was ultimately signed in May, 2008.

It is common ground that these discussions did not take place in a social setting. The sub-lease states that Forwest must submit its “construction plans” to the Airport for “its approval”. Mr. Griesdale and Mr. Jewitt say that, in response to their specific inquiry at a meeting in September of 2008, representatives of the MD told Mr. Griesdale and Mr. Jewitt that Forwest could continue with its site preparation work, and that they passed this on to Mr.

Kasper . [ 44 ] This is some evidence that might be relied on to support the requisite reasonable reliance to ground a duty of care owed by the Airport to Forwest. [ 45 ] The Airport emphasizes that Mr. Kasper knew of the requirement of a development permit prior to commencement of construction and that this was a decision to be made by the MD’s council. However, the evidence is not clear as to what, if any work was permitted prior to the issuance of a development permit. [ 46 ] The Airport was the apparent responsible party for the operation, development and maintenance of the Airport lands. The evidence of Mr.

Kasper, Mr. Griesdale and Mr. Jewitt is that the Airport had allowed all its sub-leaseholders to commence “site preparation” prior to obtaining a development permit. Mr. Griesdale describes “site preparation” as stripping off the topsoil down to clay, moving in fill and preparing the site for a slab or posts to support the building.

He says that at no time during his 12 years of volunteering at the Airport , including his five year tenure as volunteer director, did the MD , the Town , or any of their various board representatives or employees ever inform him that “site preparation” was not permitted before a development permit was granted, or that this practice was contrary to the Land Use Bylaw . [ 47 ] In contrast, the MD and the Airport witnesses suggest that this type of work was not permitted under the MD ’s Land Use Bylaw. Mr. Cambrin and Ms. McInnes both depose that the purpose of the meeting with Mr. Griesdale and Mr.

Jewitt in September of 2008 was in part to express concern over the manner in which the business of the Airport was being conducted. The concerns included the fact that “developments” were being undertaken by the Airport without any formal board approval and without obtaining permits from the MD. Mr. Cambrin and Ms. McInnes say that Mr. Griesdale and Mr.

Jewitt were told that the Airport required permits for these developments. [ 48 ] The evidence [3] suggests that there was quite a difference in what the directors of the Airport on one hand, and the MD on the other, considered the Airport was permitted to do. [ 49 ] Mr. Kasper, Mr. Griesdale and Mr. Jewitt distinguish between “site preparation” and other “construction” that requires a development permit.

In 2003, the airport operations and management underwent a change, with the newly formed Airport taking over responsibility to “operate, develop and maintain” the airport lands, according to the head lease between the Town, the MD and the Airport. The Airport’s practice of permitting site preparation prior to a development permit continued. The form of sub-lease the Airport was to use was prepared by the MD and contains clauses that, at least arguably, suggest that the Airport has some role in approving construction of some type. [ 50 ] MD witnesses Mr. Cambrin and Ms.

McInnes take the position that any site preparation (with the exception of “landscaping”) prior to a development permit is contrary to the MD’s Land Use Bylaw, and that Airport representatives were told that this practice was contrary to its Land Use By-law. Over many years, the Airport had been permitting site preparation prior to a development permit being obtained, apparently under the MD’s nose, as their witnesses say that if they had become aware of this practice, they would have stopped it.

[ 51 ] The evidence also generally suggests that there may have been a power struggle going on between the MD and the Airport. The MD took issue with how Mr. Griesdale and Mr. Jewitt were running things. This is the milieu in which Forwest entered into discussions with Mr. Griesdale and Mr.

Jewitt, paid the Airport a deposit, embarked on site preparation and entered into the sub-lease with the Airport. [ 52 ] The evidence before the court is not sufficient to determine what was allowable without a development permit, and what was not, and the impact of the long standing practice of the Airport to permit site preparation prior to the issuance of a permit, and the MD’s authorization of Forwest’s continued site preparation, if the latter is found to have occurred. It is not plain and obvious that Mr.

Kasper’s knowledge of the development permit process made it unreasonable for him to rely on the Airport’s statements about “site preparation”. [ 53 ] I emphasize that Forwest need not prove the special relationship giving rise to the duty at this juncture: Elbow River Marketing Limited Partnership v. Canada Clean Fuels Inc . The evidence is sufficient to persuade me that the issue of the existence of a duty should proceed to trial.

It is not plain and obvious that there is no duty. [ 54 ] Counsel for the MD and the Airport did not address policy considerations that warrant not recognizing, or otherwise limiting, the duty of care in these circumstances. I make no comment on that issue. Is it plain and obvious that the representation regarding the MD’s approval of Forwest ’s development permit was as to a future event? [ 55 ] As for the Airport’s representation to Mr. Kasper that the MD had never rejected a development permit that had been approved by the Airport, the evidence is clear that both Mr. Griesdale and Mr.

Jewitt made such statements to Mr. Kasper. [ 56 ] It is also undisputed that these statements as to the MD’s past approvals were true. Counsel for Forwest concedes that a true statement is not actionable: Condo Corp 0321365 v. MCAP Financial Corporation at paragraph 65. [ 57 ] Counsel for Forwest submits, however, that these statements constitute an implied representation that the MD would approve Forwest’s development permit application in the future. [ 58 ] The Court of Appeal addressed representations about the future at paragraph 90 of its reasons in Condo Corp 0321365 v. MCAP Financial Corporation .

It stated that while this issue was not definitively resolved by the Supreme Court in Queen v. Cognos at paragraphs 71-72, the weight of authority supports the view that statements about future intentions cannot ground an action in negligent misrepresentation. The Court cited its own earlier decision in Motkoski Holdings Ltd. v. Yellowhead (County) , 2010 ABCA 72 , 474 A.R. 367 at paragraphs 39-55 . [ 59 ] In Motkoski Holdings Ltd. v.

Yellowhead (County) , the trial judge found that the County represented to the plaintiff that it would “facilitate the development” sought by the plaintiff and “investigate site suitability” in that regard. [ 60 ] In considering whether these representations were actionable, the Court observed at paragraph 43 that actions for negligent misrepresentation usually rest on misrepresentations of fact. Sometimes, however, representations are made about the future that depend on the facts as they exist at the time of the representations.

If these words are inaccurately or negligently stated, the words may be actionable, as in Queen v. Cognos . [ 61 ] The Court went on to explain that sometimes people are retained to give opinions about the future, and if those predictions are negligent, they too may be actionable. The Court therefore concluded that there is “some room” for an action for negligent misrepresentations about the future.

The Court stated at paragraph 44: However, an action for misrepresentation generally cannot be based on a representation about how the speaker intends to act in the future, unless the representation amounts to a covenant that the speaker will act in that way....Unless consideration has been given, the

plaintiff is generally not entitled to rely on a representation about how the defendant intends to conduct itself. That liability sounds incontract, if at all. [62] The Court in that case held that the first representation as to the County’s intention to “facilitate the development” was not arepresentation of an existing fact. It was at best an indication of future intentions, something generally not actionable unless it amountedto a covenant to act in the future in accordance with the expressed intention. Further, this representation was not false or inaccurate, inthat the County did facilitate the development.

The Court concluded that the second representation that the County would “investigatesite suitability” was also an expression of future intention, and that given the express provision in the agreement between the parties, thatthe County did not warrant the condition of the soils or make any other representation regarding the lands, this representation could nothave amounted to a covenant of any kind. [63] Forwest did not assert that the Airport’s representation as to the MD’s future approval of Forwest’s development permit amountsto a covenant. [64] The representation made by the Airport in this case regarding the absence of past rejections is similar to the representationaddressed by the British Columbia Court of Appeal in P.S.D.

Enterprises Ltd. v. New Westminster (City), 2012 BCCA 319. [65] In that case, an action was commenced against the city of New Westminster for a negligent misrepresentation made by the city’ssolicitor to the effect that if a bylaw passed third reading of city council, it would always pass the fourth and final reading. The bylaw didnot ultimately pass the fourth and final reading. At paragraph 65 of its reasons, the Court stated: Further, as the City submits on appeal, P.S.D.’s allegations as to Mr. Scheving’s representation engages the law concerningrepresentations as to future events.

P.S.D. essentially argues (and its pleading confirms) that it was reasonable for it to rely on Mr.Scheving’s “advice” that applications that had passed third reading had always been approved at fourth reading. In other words, Mr.Walia relied on Mr. Scheving’s representation that, because fourth reading had never been denied in the past, it would not in future bedenied to P.S.D. It is difficult to see this as anything other than a representation as to a future event.(Emphasis added.) [66] The Court of Appeal cautioned in Condo Corp 0321365 v.

MCAP Financial Corporation that one has to be careful not toconfuse a statement of present fact with the future consequences flowing from the negligent misrepresentation of that fact, noting that“[m]any statements of existing facts are inextricably linked to the future and it is what happens in the future that brings home the fullextent of the damages caused by the negligent misrepresentation” (at paragraph 90). [67] This is not a case of a mis-stated present fact with future consequences.

Here, to the extent that the Airport’s statement as to theMD having never rejected a development permit application that had been approved by the Airport’s board is being relied on as astatement of future intentions of the MD, it is not actionable. Forwest’s negligent misrepresentation action against the Airport based onthis representation is summarily dismissed. 2. The application of Mr. Griesdale and Mr. Jewitt for

summary dismissal of the Airport’s Third Party Claim [68] I have concluded that there are genuine issues for trial relating to Forwest’s negligent misrepresentation allegations against theMD and the Airport in regard to site preparation. The Airport’s third party claim against Mr. Griesdale and Mr. Jewitt alleges that theyare personally responsible as they were not authorized to permit site preparation prior to the issuance of a development permit. [69] Mr. Griesdale and Mr.

Jewitt submit, however, that even if Forwest is successful, they cannot be held personally responsible. [70] It is at least arguable that if a director or officer exceeds his or her authority, personal liability can result: R. Davis, Directors’Liability in Canada, (North Vancouver: STP Specialty Technical Publishing, 2006) at 8-15 to 8-16, citing Angus v. R. Angus AlbertaLtd. (1988), 1988 ABCA 54 , 85 A.R. 266, and see also Deep v. M.D. Management (2007), (ON SC), 35B.L.R. (4th) 86 (Ont. S.C.J.); Pandher v. Ontario Khalsa Darbar, 2010 ONCA 273 at paragraph 10. [71] Mr. Griesdale and Mr.

Jewitt submit that the scope of the Airport’s authority to act clearly includes the ability to allow site

preparation without a development permit. They rely on the head lease among the MD, the Town and the Airport, which contemplates in the

preamble that the Airport was taking over the “operation and development” of the Airport, and which states in paragraph 2.5 that the Airport was to “manage” the airport lands. They also suggest that the requirement in the head lease that the Airport comply with the Land Use Bylaw and the High River Area Structure Plan obviously implies that the Airport has some authority to discuss development issues with tenants at the airport lands.

They further note that there are no specific restrictions in the Articles of Association on the Airport’s power to “organize and develop” the Airport, including no express prohibition regarding site preparation or the development permit process. They also rely on the broad powers conferred on the Airport under

section 20 of the Companies Act . [ 72 ] Mr. Griesdale and Mr. Jewitt further rely on the evidence that the predecessor to the Airport (in which the MD and the Town were actively involved) had been authorizing pre-development permit site preparation for years, with no adverse comment from the MD. This continued when the Airport took over. As well, the MD approved the sub-lease which contained terms as to construction approval by the Airport . Mr. Griesdale and Mr.

Jewitt assert that in all the circumstances, it is plain and obvious that the Airport had authority in regard to site preparation, or at the very least that it was reasonable for Mr. Griesdale and Mr. Jewitt to believe that this authority existed. [ 73 ] The Airport takes a different view of the documentation relating to the creation of the Airport, and relies on additional evidence and documentation to show that Mr. Griesdale and Mr. Jewitt did not have authority to authorize site preparation prior to a development permit, nor was it reasonable for them to consider that they had such authority. [ 74 ] Mr.

Cambrin deposes that the general purpose of the Airport was to manage the day to day operations of the Airport on the airport lands, jointly owned by the MD and the Town of High River. [ 75 ] He says that the day to day business was supposed to be managed through a volunteer board of directors, consisting of five members, one of whom was appointed by the Town, another by the MD and the remaining three selected through a nomination process by all of the stakeholders of the Airport. It was never under the control or direction of the MD.

Very few “properly constituted” meetings of the Airport’s board were held between 2007 and 2009 due to the illness of the Town’s representative on the board. [ 76 ] Mr. Cambrin goes on to describe that although the Airport was authorized to enter into sub-leases with parties wishing to “develop” hangars for “private” airplanes, it did not have any authority to approve the “development” being proposed for a leased lot on the airport lands.

He states that the authority to approve the form or type of “development” rested with the MD and that the MD exercised its authority through its council, pursuant to the Municipal Government Act and its Land Use Bylaw. [ 77 ] He also comments on the affidavits of Mr. Griesdale and Mr. Jewitt and takes issue with what they have sworn to. For example, Mr. Griesdale deposes that the MD did not approve Forwest’s development permit for an eight bay hangar because, without notice to the Airport’s board, the MD began to employ a “new approach” when interpreting the High River Regional Airport Area and Structure Plan.

The suggestion is that the MD was now restricting development to “private” use and no longer permitting “commercial” use. Mr. Cambrin denies that the MD was implementing a “new” policy with respect to the granting of development permits, but rather that the governing document was and remains the High River Regional Airport Area Structure Plan. He goes on to explain that the MD’s council used the Plan to exercise its discretion and decided to reject the eight bay hangar. It was the council that rejected Forwest’s development permit application. [ 78 ] Mr. Cambrin also takes further issue with Mr.

Griesdale’s statements that the MD was taking a new approach to development, at paragraph 33 of his affidavit: Prior to the Application being received by the MD, I am aware of concerns that individuals applying for Development Permits for development on the Airport Lands were being advised by Jewitt and Griesdale what to disclose and what not to disclose on their applications to get around the private versus commercial distinction. [ 79 ] It is at least arguable that this evidence suggests that Mr. Griesdale and Mr.

Jewitt had their own views as to how the airport lands should be developed, and may have been aware that their views ran contrary to the MD ’s approach to development. [ 80 ] Further, as noted above, Mr. Cambrin deposes that at no time did the MD, either as a shareholder of the Airport or as the planning and development authority of the airport lands, direct or authorize Mr. Griesdale or Mr. Jewitt to advise any developer of the airport lands to commence site preparation before a development permit was issued.

He agrees that it is not unusual for a “developer” to do this, but “this practice is not approved or condoned by the MD.” He goes on to state that he recalls a meeting in September 2008 to

discuss the fire safety moratorium, but denies that the discussion was specific to Forwest, or that there was specific discussion about any individuals who had commenced site preparation continuing to do so without a development permit. [ 81 ] Mr. Cambrin states that if Mr. Griesdale and Mr. Jewitt “did not like the current rules they were free to apply to amend the Plan and that the MD would provide resources to assist them in this regard...”. [ 82 ] Mr. Griesdale submitted an additional affidavit sworn March 28, 2102 in which he attaches a map and arial photographs depicting the airport lands.

He points out that he saw “site preparation” work being performed on several lots in 2010 and 2011, prior to development permits being issued. He lists dates of the issue of permits for each of the lots, except for three lots, which have never been issued permits. [ 83 ] Ms. McInnes responded to Mr. Griesdale’s additional affidavit with another of her own. She does not comment on the “site preparation” that apparently took place at the airport lands, other than to reiterate that the Airport had no authority to allow this.

She does, however, refer to the affidavit of Airport Chairman William Lovse, who deposes that the work done on the three lots without any development permits was simply “landscaping”. Ms. McInnes states that such work does not require a development permit under the MD’s Land Use Bylaw. [ 84 ] Mr. Lovse’s affidavit also specifically responds to Mr. Griesdale’s March 28, 2012 affidavit. He concedes that there was “some site preparation” on the three lots with no permits. He states, however, that this work was not preparatory to any proposed development.

Rather, he says the Airport was trying to make the lots more attractive to proposed sub- lessees and that the work was limited to “landscaping”, and in particular “leveling” the lots, which Mr.

Lovse understands can be done without a development permit. [ 85 ] The fact that some level of site preparation work was still taking place at the airport lands without a development permit after this litigation arose arguably underlines the lack of clarity as to what is and is not permitted prior to the issuance of a development permit. [ 86 ] This lack of clarity is also reflected in the Land Use Bylaw itself. [ 87 ] It defines “landscaping”as “physical modification for the purpose of changing the appearance of the parcel...but does not included lot grading”. “Lot grading” consists of berms over 6.5 feet, and stockpiling of soil in excess of 6.5 feet [4] . [ 88 ] Neither “site preparation” nor “construction” is defined in the Land Use Bylaw. “Development” is defined as an “excavation or stockpile and the creation of either of them,...a building...a change of use of land...or change of intensity of use of land ...” [ 89 ] Further, the Land Use Bylaw states in

section 4.2.1 that a development permit is not required for the “stripping or stockpiling of soil...and grading of a multi lot sub division when the lot upon which all or any such activities are carried out is the subject of an approved subdivision or development...” [5] . [ 90 ] Arguably, there is a blurring in the continuum of landscaping, site preparation, construction and development in some of the evidence from MD witnesses, and within the Land Use Bylaw itself. The evidence is not clear where the Airport’s authority begins and ends. [ 91 ] Mr. Cambrin further suggests that neither Mr. Griesdale nor Mr.

Jewitt followed the proper Airport procedure in dealing with Forwest. He suggests the procedure is as contained in a one page document exhibited to Mr. Griesdale’s affidavit. He points out that nowhere in the procedure sheet does it say that a sub-lessor could commence “site preparation” prior to obtaining a development permit. [ 92 ] This direction as to procedure is cryptic. Arguably it can be interpreted as setting out a sequential series of steps. However, it refers to the start of “construction”, again underlining the issue that has arisen in this case.

Further, it does not purport to be a complete code for the conduct of the Airport’s dealings with sub-lessors. The lack of clarity in the document at least arguably further demonstrates the uncertainty in the scope of the Airport ’s authority.

[ 93 ] The upshot of these competing

interpretations and discrepancies is that it is not clear whether Mr. Griesdale and Mr. Jewitt had the authority to permit site preparation prior to a development permit being issued, or, as discussed above, whether or not a representative of the MD approved of Forwest’s continued site preparation prior to the issuance of a development permit. Whether or not it was reasonable for Mr. Griesdale and Mr. Jewitt to believe the Airport had the requisite authority is similarly not capable of determination on the affidavit evidence before the court. A trial is necessary to determine these issues. [ 94 ] Mr.

Griesdale and Mr. Jewitt also rely on provisions found in the Articles of Association, the Companies Act and the Municipal Government Act to suggest that it is clear they cannot have any personal liability. Articles of Association [ 95 ]

Article 35 of the Airport’s Articles of Association provides that no director or officer of the Airport shall be liable for any loss occasioned by bona fide error of judgment, oversight, or any other loss, damage or misfortune that “shall happen in the execution of the duties of his office...”. [ 96 ] As noted above, whether or not Mr. Griesdale or Mr. Jewitt were acting within their authority is a live issue in this litigation. That must be determined in order to properly consider the application of this provision. Companies Act [ 97 ]

Section 311 of the Companies Act contemplates relief from negligence claims. That section, however, is not mandatory but grants a discretion to the court to relieve a director from liability where the director has acted “honestly and reasonably”. Here, the determination as to whether or not Mr. Griesdale and Mr. Jewitt acted reasonably in the circumstances is dependent on facts that need to be tried.

Municipal Government Act [ 98 ] Section 535(2) of the Municipal Government Act provides that “volunteer workers” are not liable for loss or damage caused by anything said or done or omitted to be done in good faith in the performance or intended performance of their functions, duties or powers under the Act or any other enactment. [ 99 ] “Volunteer worker” is defined in section 535(1)(

b) to include “any...volunteer performing duties under the direction of a municipality”. [ 100 ] Here, Mr. Griesdale and Mr. Jewitt were volunteer members of the five-member Airport board that had the responsibility to manage the Airport. The MD and the Town each had a representative on the Airport’s board and did not direct the Airport’s operations. It is at least arguable that Mr. Griesdale and Mr. Jewitt were not under the direction of a municipality in performing their volunteer roles and thus the application of section 535(2) is not clear at this time. [ 101 ] Given the high threshold required to obtain

summary judgment, I cannot determine the scope of the Airport’s authority, nor the application of limitation of liability provisions in the Articles of Association, the Companies Act or the Municipal Government Act in chambers based on the affidavits before me. Conclusion [ 102 ] The application for

summary dismissal of the negligent misrepresentation action against the MD and the Airport is allowed in part. The application for

summary dismissal of the Airport’s third party claim against Mr. Griesdale and Mr. Jewitt is denied. If the

parties cannot agree as to costs, they may approach me within 30 days of these reasons. Heard on the 16 th day of April, 2012 and 11 th day of May, 2012 and the 5 th day of December, 2012. Dated at the City of Calgary, Alberta this 20 th day of December, 2012. J.L. Mason M.C.C.Q.B.A. Appearances: T. Thomas Mudry McCaffery Mudry Ptritchard LLP for Forwest Development Enterprises Ltd. Dennis K. Yasui, Q.C.

Brownlee LLP for the Municipal District of Foothills No. 31 and High River Regional Airport Limited Steve Smyth Burnet, Duckworth & Palmer LLP for the Third Parties Robert Griesdale and Donald Jewitt (at the May 11, 2012 hearing) Todd Wytrychowski Horne Wytrychowski for the Third Parties Robert Griesdale and Donald Jewitt (at the December 5, 2012 hearing)