Canbar West Projects Ltd (Can-West Projects Ltd) v Sure Shot Sandblasting & Painting Ltd, 2013 ABQB 292

Court of Queen ’ s Bench of Alberta Citation: Canbar West Projects Ltd (Can-West Projects Ltd) v Sure Shot Sandblasting & Painting Ltd, 2013 ABQB 292 Date: 20130516 Docket: 0903 04369 Registry: Edmonton Between: Canbar West Projects Ltd. carrying on business under the name and style of Can-West Projects Ltd. and Can-West Projects and the said Canbar West Projects Ltd., the said Can-West Projects Ltd. and the said Can-West Projects Ltd. and the said Can-West Projects Plaintiffs - and - Sure Shot Sandblasting & Painting Ltd., 1150044 Alberta Ltd. and Royal Bank of Canada Defendants And Between: Sure Shot Sandblasting & Painting Ltd. and 1150044 Alberta Ltd.

Plaintiff by Counterclaim - and - Wallace English and Paul Saruga carrying on business under the name of Can-West Projects Ltd., Canbar West Projects Ltd., Canbar West Projects Ltd. carrying on business under the name of Can-West Projects Ltd. and Canbar West Projects Ltd., carrying on business under the name of Can-West Projects Defendants by Counterclaim _____________________________________________________ Memorandum of Decision of the

Honourable Mr. Justice Keith D. Yamauchi _______________________________________________________ I. Introduction [ 1 ] The Alberta Court of Appeal, pursuant to a memorandum of judgment dated April 5th, 2011, reported as Canbar West Projects Ltd v Sure Shot Sandblasting & Painting Ltd , 2011 ABCA 107 , 502 AR 235 [ Canbar CA ], remitted three matters back to this Court.

Canbar CA directed this Court to determine the quantification of the builders' lien that the Plaintiffs Canbar West Projects Ltd., carrying on business under the name Can-West Projects Ltd. and Can-West Projects (collectively “CWPL”) were claiming, the interest on any such claim, and whether the counterclaim of Sure Shot Sandblasting & Painting Ltd. and 1150044 Alberta Ltd. (collectively “Sure Shot") should be dismissed or a trial of an issue directed. [ 2 ] By way of a memorandum of decision dated November 30, 2012 (the “November Decision”), this Court delivered its reasons for judgment on the issues of the quantification of the builders' lien and directed a trial of the issues set forth in the counterclaim. [ 3 ] In the November Decision at paras 27-28, this Court also said the following with respect to the interest issue: This Court heard extensive argument on the issue of the interest to which CWPL is entitled.

The difficulty with this Court ruling on this issue is that it not only heard argument on it, but it also heard discussions between the parties as they tried to resolve this issue. Although this Court understood that the parties had agreed on a methodology for calculating interest, the Defendants now resile from their position. Accordingly, this Court feels that it would be inappropriate for it to rule on this issue and directs that the parties argue this specific issue before a different judge.

Because the parties carried on their discussion in an attempt to resolve this issue, this Court directs that they not use the transcript of the proceedings that took place before this Court on September 18, 2012, or present that transcript to the judge hearing this matter. It should be heard by that judge afresh. [ 4 ] Following its receipt of the November Decision, CWPL's counsel sent an email to this Court saying, "I just received your Memorandum of Decision.

Since we have a meeting scheduled for December 13 at 9 am, I did not expect that you would write your decision before that meeting." A copy of that email was sent to Sure Shot's counsel. [ 5 ] CWPL's counsel advised this Court in that email that he had intended to present it with a copy of the Alberta Court of Appeal's decision in Becker v Alberta (Director of Employment Standards) , 2000 ABCA 329 , 277 AR 131 [ Becker ], which deals with the ability of a party to withdraw informal admissions.

It asked this Court to consider fully the issue concerning interest, and render a decision on it. [ 6 ] It should be noted that the order arising from the November Decision has not yet been entered, although the memorandum of decision has been filed. II. Whether this Court May Address the Interest Issue [ 7 ] The threshold question before this Court is whether it may address the interest issue. Rule 9.13 of the Alberta Rules of Court , Alta Reg 124/2010 (" Rules ") says: 9.13 At any time before a judgment or order is entered, the Court may

(

a) vary the judgment or order, or (

b) on application, and if the Court is satisfied there is good reason to do so, hear more evidence and change or modify its judgment or order or reasons for it. [ 8 ] This Court had not heard argument on the issue of Sure Shot counsel's "admissions" with respect to the applicable rate of interest, before it provided the parties with the November Decision. The question becomes whether this Court should consider this issue even though the November Decision (but not the order arising therefrom) has been filed.

This is not unlike the situation that Shelley J was facing in Paniccia Estate v Toal , 2012 ABQB 11 , 521 AR 73 [ Paniccia Estate ]. [ 9 ] Rules r 9.12 provides: 9.12 On application, the Court may correct a mistake or error in a judgment or order arising from an accident, slip or omission. This Court did not "rule" on the quantum of the interest. It only directed that another judge hear submissions on it. Thus, there is really nothing to correct, other than having this Court rule on the interest issue, rather than directing that another judge hear it.

If there was any mistake or error, it was this Court's haste in rendering its decision, as reflected in the November Decision, before it had given the parties an opportunity to present argument on the "admissions." As mentioned in the November Decision, this Court acknowledges that it heard extensive argument on the interest issue. [ 10 ] Equally important is Rules r 1.2, which provides: 1.2(1) The purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost-effective way.

(2) In particular, these rules are intended to be used (

a) to identify the real issues in dispute, (

b) to facilitate the quickest means of resolving a claim at the least expense, (

c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as practicable, (

d) to oblige the parties to communicate honestly, openly and in a timely way, ...

(3) To achieve the purpose and intention of these rules the parties must, jointly and individually during an action, (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense, (

b) periodically evaluate dispute resolution process alternatives to a full trial, with or without assistance from the Court,

...

(4) The intention of these rules is that the Court, when exercising a discretion to grant a remedy or impose a sanction, will grant or impose a remedy or sanction proportional to the reason for granting or imposing it. [ 11 ] In Envision Edmonton Opportunities Society v Edmonton (City) , 2011 ABQB 29 at para 47 , 507 AR 275, Moen J said: Under the Foundational Rule of the New Rules, Rule 1.2, however, timeliness and cost-effectiveness is put front and centre alongside the need for a fair and just result.

In my opinion, the Legislature in enacting Rule 1.2 is signalling the need to consider timeliness and cost-effectiveness in conjunction with the need for fairness and justice. I would go even further, and say that Rule 1.2 recognizes that a result, to be fair and just, must also be timely and cost-effective. This makes perfect sense in light of the seemingly inexorable trend toward longer and more expensive trials which put access to the courts out of reach of more and more people.

The ordinary citizen in this day and age is hard-pressed to afford a long trial. [ 12 ] This Court agrees with that statement, with the caveat that Rules r 1.2 cannot be used by a court to “dispense with observing, specific Rules which do not appeal to that judge”: Gallant (Litigation Guardian of) v Farries , 2012 ABCA 98 at para 20 , 522 AR 13.

Rules r 1.2 exists “to help interpret ambiguous Rules or doubtful points”: ibid. [ 13 ] Because this Court has heard extensive argument on the interest issue, it would be neither timely nor cost-effective to place the issue before another judge, who will hear exactly the same arguments. The fact that this Court heard discussions between the parties in their attempt to resolve this issue does not make it less “fair and just” for this Court to rule on this issue.

This Court heard those discussions (and “admissions”), but this Court’s duty is to rule on the issue based on the arguments that the parties placed before it. [ 14 ] Under Rules r 9.13(a), a court may act sua sponte . In Peters v Wilson Estate , 2011 ABQB 689 at para 3 , 528 AR 362, Hall J said: Rule 9.13(

a) clearly gives the Court a broad discretion to vary the judgment or order. It makes no reference to an application being made. It provides an opportunity to the Judge to vary the judgment or order, presumably where the judge has come to a view that it needs to be done before the order or judgment is filed, but after reasons have issued or a decision was made. I consider that the circumstances therein contemplated are those where the Judge, on his or her own, has rethought a matter or wishes to clarify it. [ 15 ] Shelley J agreed with this statement in Paniccia Estate at para 34 .

See also Evans v The Sports Corporation , 2011 ABQB 478 at para 15 , 528 AR 362, where Graesser J said that Rules r 9.13 gave him “extremely broad authority to do what I think is correct in these circumstances.” [ 16 ] Further, this Court notes that, because it is not functus officio in this matter, the inherent jurisdiction of the court allows it to return to the interest issue.

As Lee J noted in Stone Sapphire Ltd v Transglobal Communications Group Inc , 2008 CarswellAlta 895 at para 61 , 2008 ABQB 397 , 451 AR 100, “A trial judge has an unfettered discretion to reconsider matters after the pronouncement of judgment but before the entry of the final Order.” [ 17 ] Thus, this Court will deal with, and rule on, the interest issue. III. Sure Shot ’s “Admissions ” [ 18 ] This Court discussed the interest issue extensively with the parties while they were making their submissions.

It was in the context of these discussions that Sure Shot’s counsel made certain statements which CWPL insist should be characterized as “admissions.” When one reviews ps 11 through 14 of the transcript of the proceedings that took place on July 18, 2012 (“July Transcript”), Sure Shot’s counsel seems to have agreed that the interest rate would be two percent per month above the Bank of Canada prime rate of interest, compounded monthly. Sure Shot’s counsel also said that he could “live with that” (July Transcript, p 11, l 36),

“that’s a commercial rate that we can certainly live with” (July Transcript, p 12, l 12) and that the compounding would be on “principal and interest” (July Transcript, p 13, l 39). [ 19 ] Sure Shot’s counsel now argues that he made these remarks in the context of trying to resolve this matter. He claims that the privilege accorded to settlement negotiations should be applied so as to exclude his comments from consideration. CWPL, on the other hand, argues that these comments were informal admissions, which are binding on Sure Shot. [ 20 ] Romaine J. in Gerling Global General Insurance Co. v.

Canadian Occidental Petroleum Ltd. , 1998 ABQB 714 at para 29 , 64 Alta. LR (3d) 174 set out the differences between formal and informal admissions: While formal admissions are binding on the party that made them unless the court gives leave to withdraw them, the general view is that informal admissions are prima facie admissible, but that they may or may not be binding on the party that made them, depending on the circumstances under which they were made.

A party may adduce evidence to contradict or explain an informal admission. [ 21 ] The comments that Sure Shot’s counsel made at the hearing on July 18, 2012, are not formal admissions. Are they informal admissions? [ 22 ] This Court, having reviewed the July Transcript, concludes that the alleged “admissions” occurred in the course of discussions that were more in the nature of settlement negotiations than submissions being made (formally or informally) to a presiding justice. In these circumstances, a formal hearing turned into an informal settlement discussion.

In the absence of the lawyers’ clients, any concessions that counsel were making did not appear to be made with authority. Accordingly, this Court concludes that the comments that Sure Shot’s counsel made respecting the meaning of Clause 5.3.1 are not binding on Sure Shot. [ 23 ] If this Court is wrong in its analysis, and the comments by Sure Shot’s counsel were informal admissions, this Court finds that Sure Shot may withdraw the “admissions” as this Court is satisfied that, in the circumstances, it is in the interests of justice to allow it to do so: Becker at para 18 .

In the view of the subsequent comments by Sure Shot’s counsel, he undoubtedly made the “admission” hastily: ibid . IV. Whether the Contract Interest Rate Assists this Court [ 24 ] In Union Tractor Ltd v Horseshoe Contracting Ltd , 2003 ABCA 154 at paras 6 , 8-9, 14 Alta LR (4th) 90, the court said: The issue is whether the order of the first chambers judge constitutes a judgment within the meaning of the Judgment Interest Act , S.A. 1984, c. J-0.5, now R.S.A. 2000 c.

J-1 entitling Union Tractor to receive interest at the rate of 6.25%, or whether it is entitled to receive the contractual rate of 19.57% on the outstanding obligations secured by the liens from the dates of filing until payment out of court of the full amount due and owing. ... Section 2(2) (

h) of the Judgment Interest Act provides that no statutory award shall be given for pre-judgment interest where there is an agreement between the parties respecting interest. Section 6(2) of the Act mandates that post-judgment debts bear interest at the rate prescribed by s. 4. A post-judgment debt is defined in s. 6(1) as "a sum of money or any costs, charges or expenses made payable by or under a judgment in a civil proceeding". Contractual rates of interest are enforceable and secured by the garagemen's liens ... [Case citation excluded]. [ 25 ] In September of 2008, the parties entered into a written agreement for the construction and finishing of an office building (the

“Agreement”). Sure Shot does not deny that they are required to pay interest. In David I Bristow et al, Construction Builders’ and Mechanics Lien in Canada, 7th ed (Toronto, Ont: Thomson Reuters, 2005) at para 12.3.1, the authors say: If a defendant contracts to pay interest on debt, then the court is bound to follow the terms of such agreement if the agreement isotherwise enforceable against the defendant.

Where the agreement to pay interest is void for any reason, provincial interest legislationmay apply to permit an award of pre-judgment interest as damages, in the discretion of the court. [Emphasis added]. [26] Thus, it appears, Sure Shot must pay interest in accordance with the terms of the Agreement. However, the terms of theAgreement are not clear with respect to the rate of interest that Sure Shot would be liable to pay to CWPL for arrears in payment ofamounts under the Agreement.

Agreement cl 5.3.1 provides: 5.3 Interest shall be due and payable: .1 should either party fail to make payments as they become due under the terms of the Contract or in an award by arbitration orcourt, at Two percent (24%) per annum above the Bank of Canada prime rate on such unpaid amounts until payment. Such interest shallbe compounded on a monthly basis [27] The clause can be interpreted in a number of ways. CWPL argues that it means Sure Shot must pay them 2% over the Bank ofCanada prime rate per month.

Sure Shot argues that they must pay interest at a rate of 2% per annum over the annual Bank of Canadaprime rate, with interest to be calculated and compounded monthly. [28] Sure Shot further argues that because of the confusion in the wording of the clause, the interest provision is unenforceable andthis Court should award interest based on the Canada Interest Act, RSC 1985, c I-15, s 3, which says, “Whenever any interest is payableby agreement of the parties or by law, and no rate is fixed by the agreement or by law, the rate of interest shall be 5% per annum.” [29] Sure Shot’s alternative argument is that due to the “confusion” or “uncertainty” in the wording of this provision, the rule ofcontra proferentem should apply and this Court should rule against CWPL, who were the parties who created the ambiguity in the first place: Seidel v Telus Communications Inc (2011), 2011 SCC 15 , 16 BCLR (5th) 1 at para 47 (SCC), [2011] 1 SCR 531;Newfoundland (Attorney General) v Churchill Falls (Labrador) Corp (1983), 49 Nfld & PEIR 181 at para 237 (Nfld SC, TD). [30] CWPL argues that the plain wording of the Agreement cl 5.3.1 says that they are entitled to contractual interest at the rate of2% “per month” or 24% per annum above the Bank of Canada prime rate, compounded monthly.

They argue that the contra proferentemrule does not determine the issue and cite Ironside v Smith, 1998 ABCA 366 at paras 66-67 as authority for this proposition where thecourt said: The contra proferentem rule is best invoked in a situation in which one person dictates the terms of a contract to another. In Manulife,the rule was used to construe provisions against a large lending institution which drafted the documents. In Hillis, LeDain J. suggestedthat the rule applied when the author of a document proffered it to another "with no opportunity to modify its wording" (at 68).

Contra proferentem should not be used to construe an agreement against its drafter unless it is clear that the non-drafting party had nomeaningful opportunity to participate in the negotiation of the instrument. In most commercial situations each party will bargain,insisting on certain concessions and giving up others. Although one party may take charge of drafting, the agreement is a product ofnegotiations. The use of contra proferentem is contingent on an absence of meaningful negotiating ability.

So long as a party is permittedto participate in real negotiations, even if he chooses not to do so, it is inappropriate to invoke the rule. [Emphasis added]. [31] Sure Shot has agreed to pay interest on any unpaid amounts. It is clear that in the Agreement cl 5.3.1, the interest calculationis to be based on the Bank of Canada prime rate of interest. “Two percent” and “(24%)” were included in the Agreement. It has been thelaw for centuries that the term “percent” incorporates the concept of “per annum” unless otherwise clearly stated: London andHarrogate Securities Ltd v Pitts [1796] 3 All ER184 at 185 (CA).

CWPL invites this court to read in the words “per month” after “Twopercent.” It argues that the confusion arises from what essentially amounts to a typographical error. It is equally arguable, however, that a

typographical error led to the insertion of the “4" in the parentheses. [ 32 ] The contra proferentem principle is not applicable in these circumstances. This Court was presented with no evidence to suggest any significant disparity in bargaining power between the parties to the Agreement. Furthermore, the amount the Plaintiffs are claiming is unreasonable and is the most favourable

interpretation of this very confusing clause. V. Conclusion on the Interest Rate [ 33 ] The words and numbers that the parties used in the Agreement cl 5.3.1 do not make sense on a plain reading, and it is not for this Court to rewrite private contracts. [ 34 ] As mentioned earlier, there are many ways in which a person could interpret Agreement cl 5.3.1. It is not for this Court to interpret that clause in a way that is favourable to one party or another. That clause is simply incomprehensible and cannot be interpreted in a principled fashion.

In the circumstances, this Court finds that the Agreement cl 5.3.1 is void for vagueness. [ 35 ] Sure Shot acknowledges that it is required to pay interest. However, because the rate of interest in the Agreement is void for vagueness, this Court finds that it will pay CWPL interest at the rate of 5% per annum, as provided for under the Canada Interest Act , RSC 1985, c I-15 , s 3, compounded monthly. Heard on the 13 th day of December, 2012. Dated at the City of Calgary, Alberta this 22 nd day of March, 2013. K. D. Yamauchi J.C.Q.B.A. Appearances: Dennis G. Groh, Q.C.

Heil & Groh for the Plaintiffs (Defendants by Counterclaim) John E. McGee, Q.C. McGee Richard for the Defendants (Plaintiffs by Counterclaim)