Sprague-Rosser Contracting Co. Ltd. v., 2013 ABQB 205

Court of Queen ’ s Bench of Alberta Citation: Sprague-Rosser Contracting Co. Ltd. v. 572757 Alberta Ltd., 2013 ABQB 205 Date: 20130404 Docket: 1203 16830 Registry: Edmonton Between: Sprague-Rosser Contracting Co. Ltd. Applicant - and - 572757 Alberta Ltd., Proland Corp., Gocan Corp. Serengetto Developments Ltd. and U Construction Ltd. Respondents _______________________________________________________ Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This is Sprague-Rosser ’ s application to have Caveats removed from title.

Section 141 of the Land Titles Act , R.S.A. 2000, c. L-4 applies. The facts are not in dispute. [ 2 ] In May 2008, Sprague-Rosser purchased land from 572750 Alberta Ltd. and Proland Corp. The numbered company is misnamed in the style of cause. Leave to amend to reflect the correct entity was sought and given.

[ 3 ] The Purchase was conditional upon the lands being subdivided and the vendors constructing roads in accordance with the subdivision plan. [ 4 ] The purchased land was subdivided into three lots. The other vendors ’ conditions were waived by the Sprague-Rosser. [ 5 ] The Respondents, Gocan Corp., Serengetti Developments Ltd. and U Construction Ltd., filed a Caveat, March 26, 2008. They were not parties to the Purchase Agreement and any claim they might have is distinguishable from the claim of the other Respondents.

Their Caveat is unsupportable on the facts advanced by the Respondents. [ 6 ] It was apparently the Sprague-Rosser ’ s intention to build a shop, office and yard on “ the lands ” . This would have required all three subdivided lots. The purchase agreement required Sprague-Rosser to comply with architectural controls “ attached as

schedule A ” with respect to the construction of improvements. However, no

schedule A to the Agreement was provided in evidence. [ 7 ] Paragraphs 20.1 - 20.3 of the Agreement provided: 20.1 [Sprague-Rosser] shall submit copies of its plans for a proposed building to be constructed on the Lands for approval of the Vendor prior to commencing any construction on the Lands. Following such approval in writing (such approval to not be unreasonably withheld), the Purchaser will have substantially completed the structural foundation(

s) upon the Lands in accordance with the approved plans within twenty four (24) months from the Closing Date. 20.2 In the event that the Purchaser has not substantially completed the structural foundation(

s) on the Lands within twenty four (24) months from the Closing Date (in the exclusive opinion of the Vendor), the Purchaser hereby grants to the Vendor an irrevocable and exclusive option (the “ Option ” ) to re-purchase the Lands for the same amount as the Purchase Price as defined in this Agreement (the “ Option Purchase Price ” ). 20.3 The Option may be exercised by the Vendor at any time after eighteen (18) months from the Closing Date, when the Vendor becomes aware that substantial completion of the structural foundation(

s) of the approved construction has not then been completed on the Lands, by written notice to the Purchaser.

The notice will state that the Vendor is exercising the Option and will include a confirmation that ten percent (10%) of the Option Purchase Price has been put in trust with the Vendor ’ s solicitors, with the balance of the Option Purchase Price, subject to normal adjustments, payable on the Option Closing Date (as hereafter defined) of the Option purchase. [ 8 ] Nothing in the agreement specifically required the Applicant to construct a building on the lands. “ Conditions Precedent ” [ 9 ] Sprague-Rosser raises three arguments with respect to the Caveat filed by 572750 and Proland.

First, they argue that any obligations of the purchaser/Applicant were contingent upon a number of vendors ’ obligations being discharged; including development of the surrounding subdivision. Since the vendor did not do what it promised, the right to repurchase never arose. [ 10 ] The difficulty with this argument is that any of the vendors ’ obligations spoken of in the Agreement are conditions precedent to closing . The vendors ’ conditions were waived by the purchaser and the deal did in fact close.

The Agreement contains a “ entire Agreement ” clause and even if it were admissible, there is no evidence of a collateral obligation on the part of the vendors that would be a condition precedent to any of the purchasers ’ obligations now in issue. Accordingly, this argument is without merit. Perpetuities

[11] Clause 20.3 of the Agreement (quoted above) permits the exercise of the vendors’ option to repurchase anytime after 18months from the closing date. Sprague-Rosser argued that since this right is open-ended, it ran afoul of the rule against perpetuities. This argument was successfully met by the Respondents in their Brief and was abandoned at the application. Interest in Land [12] The Caveat sought to be impugned was filed against the three subdivided lots: 13, 14, and 15. Lots 13 and 14 were sold bySprague-Rosser and the Caveat was voluntarily discharged from those two lots.

At issue is only the Caveat on lot 15. Sprague-Rosserargues that since the lands are defined by the agreement to be all three lots, the vendors’ right to repurchase “the lands” has been lost. Accordingly, the vendors’ right is no longer specifically enforceable and all that remains is a question of contract damages (if any). Sprague-Rosser cites authority holding that if damages are an adequate remedy, there is no longer “an interest in land” and on this basisthe Caveat ought to fail. 1244034 Alberta Ltd. v. Walton International Group Inc., 2007 ABCA 372 at para. 17, per Berger, J.A. 1404761 Alberta Ltd. v.

Compro Developments Ltd.

(2010) ABQB 156 per Ross J., at para. 21. [13] The Respondents counter with authorities that show that an option to repurchase is plainly an interest in land as required bysection 130 of the Land Titles Act and therefore will support a Caveat: London and South Western Railway Company v. Gomm, 1881, 20 Chancery Division 562 at 580-81(CA); City of Halifax v. Vaughan Construction Company Limited, (SCC), 1961 SCR 715 at 720; Weinblatt v. Kitchener (City) (SCC), 1969 SCR 157 at 161; Nepean (City) v. Jain, (1992) (ON CA), 9 OR (3d) 11(Ont. C.A.); and, Carruthers v.

Tioga Holdings Ltd. 1997 CanLll 14862 (ABQB) at para. 34. [14] The essence of a right of repurchase is that it is contingent upon the happening of conditions subsequent: Paul Perell (nowPerell J. ): “Options, Rights of Repurchase and Rights of First Refusal as Contracts as Interest in Lands”, 1991, 70 Canadian BarReview 1. This leads us to the greatest difficulty with the Respondents’ position. [15] Sprague-Rosser never did submit plans for a building and never completed (substantially or otherwise) structural foundationson the lands. Some clay was put on the land but that is about it.

Given that it was apparently the intent of Sprague-Rosser to utilize allthree lots for the office shop and yard, these plans were effectively ended when two of the three lots were sold. [16] As noted above, paragraph 20.1 of the Agreement simply reads: The Purchaser shall submit copies of its plans for a proposed building to be constructed on the lands for approval of the Vendor prior tocommencing any construction on the Lands.

(emphasis added) [ 17 ] Paragraph 20.2 goes on to provide a right to the vendor for an irrevocable option to repurchase if the structural foundations are not completed within twenty four months from the closing date. The Agreement does not expressly cover the eventuality of Sprague-Rosser not constructing a building but the choice not to build appears to be open to them as the Agreement does not otherwise oblige them to construct a building. As I read it, it was open to the Purchaser to choose not to build.

The irrevocable option to repurchase only arose if Sprague-Rosser started construction but did not otherwise comply with clause 20. [ 18 ] Accordingly, the conditions subsequent giving rise to the right to repurchase did not materialize. At best, there may be a contractual dispute respecting a collateral agreement. In my view, this is not enough to sustain Caveat 102090959. [ 19 ] The application to discharge Caveats 102090959 and 08225/288 is allowed. Heard on the 7 th day of March, 2013. Dated at the City of Edmonton, Alberta this 4 th day of April, 2013. W. S. Schlosser M.C.C.Q.B.A.

Appearances: Lyle Brookes and Morgan Deacon Fraser Milner Casgrain LLP for the Applicant Jeremy Hockin Parlee McLaws LLP for the Respondents