0603 13311 1092369 Alberta Ltd. Plaintiff - v. -, 2013 ABQB 310

Court of Queen ’ s Bench of Alberta Citation: 1092369 Alberta Ltd. v. Joben Investments Ltd., 2013 ABQB 310 Date: 20130523 Docket: 0603 13311, 0703 10988 Registry: Edmonton Between: 0603 13311 1092369 Alberta Ltd. Plaintiff - and - Joben Investments Ltd. Kenyon Estates Development Ltd. Defendants And Between: 0703 10988 Japinder Singh Grewal Surinder Singh Mahal Amarjit Mahal Plaintiff - and - Joben Investments Ltd. Defendants

_______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Russell Brown _______________________________________________________ I. Introduction [ 1 ] This was a trial of two actions arising from contracts for the sale of building lots in a residential neighbourhood in Edmonton's northeast: 1. Action No. 0603 13311, in which the Plaintiff 1092369 Alberta Ltd. ("the Corporate Plaintiff") sued a. Joben Investments Ltd. ("Joben") for breach of two contracts for the purchase and sale to the Corporate Plaintiff of 14 building lots, and b.

Kenyon Estates Development Ltd. ("Kenyon") for breach of one contract for the purchase and sale to the Corporate Plaintiff of one building lot (the "15th lot"); and 2. Action No. 0703 10988, in which the Plaintiffs Japinder Singh Grewal, Surinder Singh Mahal and Amarjit Mahal each sue Joben on a contract for the purchase and sale of one lot to Mr. Grewal and one lot to the Mahals. [ 2 ] In the first action, the Corporate Plaintiff has abandoned its claim against Kenyon, and proceeds only against Joben for damages for breach of contract.

The Corporate Plaintiff's contract with Kenyon respecting the 15th lot (the "Kenyon contract") remains a live issue, since it alleges that Joben's breach caused not only the damages said to arise from the loss of the 14 lots that were the subject of its contracts with Joben, but also from the failure of the Kenyon contract and the consequent loss of the 15th lot.

Essentially, the Corporate Plaintiff alleges that the act constituting Joben's breach of its contracts resulted in Kenyon's breach of its contract, with the result that Joben ought to be liable for such damage as arose from Kenyon's breach. [ 3 ] In the second action, Mr. Grewal and the Mahals seek specific performance of their respective contracts with Joben or, alternatively, damages for Joben's breach. [ 4 ] The central question to be determined in both actions is whether Joben was relieved of its obligation to perform by reason of an unfulfilled condition precedent. II.

Background The Development [ 5 ] There is little dispute between the parties as to the central facts. Prior to the contracts at issue, Joben owned a contiguous

parcel of land situated at the northwest corner of 153 Avenue and 50 Street, in Edmonton. Joben's principal and sole director, Salim Johnson, planned to subdivide the parcel into lots, market and sell them to builders such as the Corporate Plaintiff, and to individual buyers such as Mr. Grewal and the Mahals. [ 6 ] Mr. Johnson had purchased most of the parcel in 2002 or 2003, except for a lot owned by Kenyon situated immediately adjacent to the northern boundary of Joben's original parcel. Mr.

Johnson recognized that, by acquiring that lot from Kenyon, he could achieve a more favourable orientation of subdivided lots.

Sometime in late 2005 or 2006, he approached Kenyon's principal and co-owner, Louis Raj, and they agreed to an exchange: Joben would acquire title to Kenyon's lot immediately, in return for one of Joben's lots that would be transferred to Kenyon upon subdivision. [ 7 ] The lot to be transferred from Joben to Kenyon is the 15th lot referenced above. [ 8 ] As Joben had not obtained final subdivision approval in respect of its parcel, the 15th lot had yet to been registered at the Land Titles Office.

Joben's agreement with Kenyon - which they did not reduce to writing - contemplated that Joben would transfer the 15th lot to Kenyon after obtaining registration, which would occur after obtaining final subdivision approval from the City of Edmonton (the "City"). While this transfer ultimately occurred (in 2008), at all times material to both actions the 15th lot was part of a parcel of land owned by Joben, and was unregistered (as a distinct parcel of land) at the Land Titles Office. [ 9 ] Mr.

Johnson, who is a professional accountant and a licensed real estate broker, testified that this was the first development project he (and, I infer, Joben) had ever undertaken. For that reason, he retained LWS Group ("LWS"), a firm of project managers, consultants and engineers.

LWS's planning technician, Dave Williams, retained a surveyor, Lynken Finner of Northland Surveys, to assist in preparing the subdivision plan supporting Joben's application for subdivision approval. [ 10 ] The subdivision plan was submitted to the City on March 10, 2005. (This plan included both the land transferred by Kenyon to Joben, and the 15th lot to be transferred by Joben to Kenyon.) [ 11 ] On November 10, 2005, the City's Subdivision Authority approved Joben's subdivision, conditional upon the following: 1. that the owner provide money-in-place of the Municipal Reserve, in the amount of $80,670.20 … ; 2. that the owner enter into a Servicing Agreement with the City of Edmonton … ; 3. that the owner prepare the necessary plans and documentation to grant new or carry forward existing easements and Restrictive Covenants in favour of the City, EPCOR Distribution Inc., EPCOR Water Serivces Inc., and ATCO Gas, or shown on the Engineering Drawings that are deemed to be part of the Servicing Agreement; 4. that the owner be permitted to register this plan of subdivision in stages … at the discretion of the Subdivision Officer … ; 5. that the owner register the walkway as road right-of-way, as shown on the "Conditions of Approval" map … ; and 6. that the owner pay all outstanding property taxes prior to the endorsement of the plan of subdivision. [ 12 ] The first and sixth conditions are not at issue here.

The fourth condition simply recognized that two unrelated lots were already serviced and could proceed to registration separately from the subject lots.

[ 13 ] The parties agree that the conditions at issue here are the second, third and fifth conditions. They also agree that the second and third conditions are, as stated, two parts of the same condition. Together, they require Joben to enter into a servicing agreement with the City incorporating completed engineering drawings satisfying the requirements of relevant City departments and agencies.

The fifth condition, the "right-of-way", was necessary to accommodate a gas pipeline. [ 14 ] The parties also agree that the City's conditional subdivision approval signified that Joben's proposed subdivision was approved, but could not be registered at the Land Titles Office until these conditions were satisfied. The Contracts [ 15 ] Mr. Johnson sought and obtained the assistance of Kenyon's principal, Louis Raj, to help market the subdivided lots. Mr. Raj is a land developer and licensed real estate agent who operates through Ranger Realty Ltd. ("Ranger Realty").

While the terms of Ranger Realty's retainer were not particularized in evidence, Mr. Raj added that, in addition to marketing the lots, Mr. Johnson asked him to "help to guide him" as to "how to develop the lands". [ 16 ] Ranger Realty began to market the lots in January 2006, securing the following offers from purchasers, all of which led to contracts between them and Joben: 1. On January 19, 2006, Mr. and Ms. Mahal offered to purchase from Joben one lot for $85,000.00, with a deposit of $4,250.00; 2.

On January 25, 2006, the Corporate Plaintiff offered to purchase twelve lots from Joben for $1,054,400.00, with a deposit of $52,720.00; 3. On February 1, 2006, the Corporate Plaintiff offered to purchase two more lots from Joben for $193,400, with a deposit of $9,670; and 4. On February 28, 2006, Mr.

Grewal offered to purchase from Joben one lot for $99,900, with a deposit of $5,000.00. [ 17 ] In addition, on January 25, 2006, the Corporate Plaintiff offered to purchase from Kenyon the 15th lot - that is, the lot that Joben had promised it would transfer to Kenyon as consideration for the lot that Kenyon had already transferred to Joben when it was assembling its parcel - for $83,000.00, with a deposit of $9,670.00. [ 18 ] The Plaintiffs' four offers were contained in the standard form residential real estate purchase contract published at the time by the Multiple Listing Service ("MLS").

Ranger Realty forwarded them to Mr. Johnson, who accepted them on Joben's behalf. The Corporate Plaintiff's offer to Kenyon was accepted by Mr. Raj on behalf of Kenyon. Ranger Realty received and held the deposits. [ 19 ] In sum, the Corporate Plaintiff agreed to purchase 14 lots from Joben and one lot from Kenyon; Mr. Grewal agreed to purchase one lot from Joben; and the Mahals agreed to purchase one lot from Joben. [ 20 ] All the agreements, including the agreement between the Corporate Plaintiff and Kenyon, contained the following terms: 7.

ADDITIONAL TERMS 7.1 All time periods, deadlines and dates in this Contract shall be strictly followed and enforced. …

… 8. CONDITIONS … 8.2 The Seller's Conditions are: SUBJECT TO PLAN BEING REGISTERED AND BUILDING PERMITS BEING OBTAINABLE ON OR BEFORE AUGUST 15, 2006.

Before 9 p.m. on AUGUST 15, 2006 (the "Condition Day"). 8.3 Unless otherwise agreed in writing, the Buyer's Conditions are for the sole benefit of the Buyer and the Seller's Conditions are for the sole benefit of the Seller. 8.4 The Buyer and the Seller may unilaterally waive or satisfy their Conditions by giving Notice to the other party (the "Notice") on or before the stated Condition Day. 8.5 Provided that the Buyer or the Seller, as the case may be, uses reasonable efforts to satisfy the Condition(s), if the Notice has not been given on or before the stated Condition Day, then this Contract is at an end. … 10.

ADVICE /DISCLOSURE 10.1 This Contract is intended to create binding legal obligations. … … 13. OFFER 13.1 The Buyer offers to buy the Property for the Purchase Price according to the terms of this Contract. … 14.

ACCEPTANCE 14.1 The Seller accepts the Buyer's offer and agrees to sell the Property for the Purchase Price according to the terms of this Contract. [ 21 ] The pith and substance of these terms provide for a seller's condition (the "Condition") that a subdivision plan be registered and building permits obtainable by 9:00 pm on August 15, 2006 (the "Condition Day"); and, so long as Joben uses "reasonable efforts" to satisfy this condition, failure to satisfy it will end the contract.

[ 22 ] In addition, all the contracts stipulated a completion day of August 30, 2006, with the exception of Joben's contract with Mr. Grewal which stipulated a completion day of August 31, 2006. [ 23 ] Either on or just prior to the Condition Day, Ranger Realty, on behalf of Joben and Kenyon, advised the Plaintiffs that they would not be completing the contracts. It refunded the Plaintiffs' deposits.

Taking its refunded deposit, the Corporate Plaintiff secured 12 lots in Leduc the next day (August 16, 2006). [ 24 ] In a completely unrelated transaction (but which will become relevant later in considering remedy), the Corporate Plaintiff had, in the first half of 2006, purchased a lot in Britnell (a neighbourhood immediately to the east of Joben's development).

The Corporate Plaintiff completed building on that lot on June 28, 2007, at which time it was ready for sale. [ 25 ] The issues before the Court arise from what happened between the making of these contracts between the Plaintiffs and Joben and their purported termination. The Plaintiffs say Joben did not use "reasonable efforts" and, had it done so, it would have satisfied the Condition by the Condition Day. Joben says it used reasonable efforts. Alternatively, Joben says employing reasonable efforts would not in any event have allowed it to satisfy the Condition by the Condition Day.

The Subdivision Process [ 26 ] Before recounting the evidence about Joben's efforts to meet the Condition, I will briefly summarize the statutory requirements for obtaining subdivision approval, and the evidence about relevant aspects of the City's process. [ 27 ] Alberta's legislative framework governing subdivision approvals is contained in Division 7 ("Subdivision of Land") of

Part 17 of the Municipal Government Act , RSA 2000, c. M-26. Section 652(1) provides that the Registrar of Titles may not accept for registration at the Land Titles Office an instrument that subdivides land, unless the subdivision has been approved by a subdivision authority who exercises subdivision powers and duties on behalf of a municipality. This effectively requires that a plan of subdivision be approved by the municipal subdivision authority. [ 28 ] Sections 653 and 654 authorize the process for assessing proposed subdivisions, which involves several steps that may vary among municipalities.

At the City, developers engage that process by submitting an application for subdivision approval to the City's Planning Department, which the Planning Department circulates to various City departments and agencies. Those departments and agencies provide written comments to the Planning Department which, after reviewing them, prepares a report for the City's Subdivision Authority.

Taking the Planning Department's report and the written comments into account, the Subdivision Authority decides whether to approve or refuse the application for subdivision approval and, if the decision is to approve, to impose conditions which the developer must meet. [ 29 ] Joben successfully passed this point in the process on November 10, 2005, when the City's Subdivision Authority approved Joben's application for subdivision approval.

As I have already described, it did so subject to various conditions - the most important being that Joben and the City enter into a servicing agreement incorporating completed engineering drawings satisfying the requirements of relevant City departments and agencies.

The Subdivision Authority's discretion to require Joben to enter into a servicing agreement is found in Section 655(1)(b)(iii), which authorizes "a condition that the applicant enter into an agreement with the municipality … to install or pay for the installation of public utilities … that are necessary to serve the subdivision." While Joben could have appealed those conditions to the Subdivision and Development Appeal Board under

Section 678, there is no evidence before the Court that it did so. [ 30 ] After the Subdivision Authority approves the application, Section 657 (1) prescribes the developer's next step of submitting to the Subdivision Authority a plan of subdivision that complies with the conditions of subdivision approval.

This was the step of the process in which Joben's project remained between November 10, 2005 and January 28, 2008. [ 31 ] The process for satisfying the Subdivision Authority that the conditions for subdivision approval have been met is similar to the initial application process itself, in that it involves obtaining input from the relevant City departments and agencies. The developer submits engineering drawings which show the design of all the municipal infrastructure required to service the subdivision (and which,

under the servicing agreement, the developer will commit to build). The drawings are then circulated among the City departments and agencies for their comments.

After one or more submissions (since it is not uncommon for the responding comments to include changes necessary to meet the conditions of approval), the drawings are approved. [ 32 ] Once this step is completed - that is, once the Subdivision Authority is "satisfied that a plan of subdivision or other instrument complies with a subdivision approval and that any conditions imposed have been met", then Section 657(1) provides that "[it] must endorse the plan … ." In other words, when Joben met the conditions of subdivision approval by entering into a servicing agreement incorporating engineering drawings that satisfied the requirements of City department and agencies, and "register[ing] the walkway as road right-of-way", the Subdivision Authority was compelled to endorse the subdivision plan.

And, because the subdivision plan would have met Section 652(1)'s conditions for registration, it could then have been registered at the Land Titles Office. [ 33 ] More to the point, had Joben met the conditions of subdivision approval on or before the Condition Day, it would have satisfied condition 8.2 of the various agreements that Joben and Kenyon had entered into with the Plaintiffs, since the plan would have been registered and (subject to a timing issue that will be considered below) building permits would have been obtainable.

Joben's Efforts to Obtain Subdivision Registration [ 34 ] A principal issue in this action is whether Joben used "reasonable efforts" to satisfy the Condition requiring that the subdivision plan be registered and building permits obtainable on or before the Condition Day of August 15, 2006. [ 35 ] Having enjoyed some success by relying upon LWS's planning technician Mr. Williams for assistance in obtaining initial subdivision approval in 2005, Joben's principal again looked to LWS to meet the conditions of subdivision approval. On Mr. Williams' recommendation, Mr.

Johnson retained Harvey Leach, a professional engineer at LWS with experience in land development engineering in Edmonton going back to 1972, to produce and secure City approval of the engineering drawings that were to form part of the required servicing agreement. Mr. Johnson was a novice in land development and "needed an experienced person to do that work." [ 36 ] As early as September 2005 - even before Joben had received conditional approval of its subdivision application - Mr. Leach had already started work on "detailed designs" for the engineering drawings. [ 37 ] Mr.

Leach, in addition to his responsibility for the engineering drawings, appears also to have had a critical role in determining the Condition Day. At some time that was not specified in anyone's evidence (but was presumably before Joben and Kenyon contracted with the Plaintiffs), Mr. Johnson raised with Mr. Raj and Mr. Leach "when subdivision approval could be achieved." While the evidence is not absolutely clear as to whether both Mr. Raj and Mr. Leach recommended the date of August 15, 2006, Mr. Leach was at least a participant to the discussion. Mr.

Johnson testified that he was told (by whom he did not say) that August 15, 2006 is "a good target date". Mr. Raj's evidence was that after he and Mr. Johnson met with Mr. Leach, "we agreed that a comfortable time for getting plans registered was August 15." Mr. Leach acknowledged that Mr. Johnson and possibly Mr. Raj asked him "when would be a reasonable date to have engineering drawings completed" (which I observe is not the same thing as either subdivision approval or registration of plans), and that he thought August 15, 2006 would "be reasonable". Based upon Mr.

Leach ’ s evidence, I find that it was upon his recommendation that Joben included the Condition Day of August 15, 2006 in its contracts with the Plaintiffs. [ 38 ] Mr.

Leach testified that this project was "fairly straightforward … from an engineering point of view." While the parcel required fill and other "remedial action" relating to preexisting buildings and a well, "from a servicing point of view, it was straightforward" and "a matter of doing engineering drawings for the internal infrastructure." [ 39 ] This is consistent with the evidence of James Wood who was in 2006 the City's Senior Development Engineer responsible for preparing and administering servicing agreements for subdivisions and other developments on Edmonton's north side.

He described Joben's project as "a fairly simple, straightforward subdivision", explaining that, because the surrounding portions of the Hollick Kenyon neighbourhood were already developed and serviced, Joben's project entailed no major offsite municipal improvements. The Plaintiff's expert John Byrne, a professional land surveyor whose expertise in municipal planning and in particular the creation and registration of subdivisions was conceded by Joben, also pointed to the pre-existing neighbourhood development.

Because Joben's subdivision was adding to an existing neighbourhood, the servicing agreement was "stock". [ 40 ] From the City's files, it is clear that it had received Mr. Leach's engineering drawings by February 28, 2006, at the latest.

The next day, Mr. Wood circulated them to relevant City departments and agencies, with a request that they provide their comments directly to LWS and to him, by March 22, 2006. The City's files also show that all comments on the drawings were received by April 21, 2006, and on the necessary terms of a servicing agreement by April 26, 2006. [ 41 ] Although the last set of comments was not received until nearly a month after Mr. Wood's requested date for comments, both Mr. Wood and Mr.

Byrne considered the City's response to have been timely, particularly given the high amount of development activity in Edmonton in 2006 (a point which nearly all the witnesses affirmed). Mr. Wood's evidence was that a seven week turnaround between submission and receipt of comments reflected, in the circumstances, "pretty good service from the City". Mr. Byrne described the City as moving ahead "very quickly" with Joben's submissions. None of Joben's witnesses suggested otherwise. [ 42 ] As to the substance of the comments from the various departments and agencies at the City, Mr.

Leach found nothing unusual or unexpected, except that some of the City's red-lined corrections to the drawings reflected 2006 engineering standards that, he said, had not yet been published. He estimated the resulting confusion and the time spent contacting and negotiating with City personnel who had made these changes consumed another "two weeks to a month", and that the process of resubmitting drawings could not have begun until sometime in May, 2006. [ 43 ] Neither the City's records nor any records produced by Joben disclose inquiries from Mr.

Leach as to the engineering standards to be applied, and he did not in his evidence particularize his inquiries or the specific discrepancies between the two sets of engineering standards that prompted them. Nor did he explain why other aspects of the revised drawings could not be prepared while such discrepancies were being resolved. Further, and as I describe below, Mr. Leach had in May 2006 become almost entirely distracted from Joben's project by other work he had taken on.

None of this is to suggest that such discrepancies did not exist, but rather to explain why I find that, to the extent they existed, they were insignificant, could have been resolved with minimal diligence by Mr. Leach and did not impede timely completion of the revised drawings. [ 44 ] During this process, Mr. Leach testified, he worked with Mr. Finner whose principal responsibility was to design the necessary right-of-way which, along with the servicing agreement, was a condition of subdivision approval. Mr.

Finner prepared a right-of-way plan - which he estimates takes only three or four hours to prepare - on June 5, 2006 and delivered it to Mr. Leach on June 13, 2006. Mr. Leach says that he reviewed it and "agreed that it was correct and would work". This prompted Mr. Finner to request "sometime in June" that the City of Edmonton prepare a right-of-way agreement. As the City's timeline for generating that document was typically "about three weeks", Mr. Finner estimates that he would have received it in late July and relayed it either to Mr. Johnson or to Mr. Raj. [ 45 ] With Mr.

Finner having carriage of preparing the right-of-way plans and obtaining the right-of-way agreement from the City, Mr. Leach's sole responsibility after April 21, 2006 was to prepare a revised set of engineering drawings for submission to the City in time to meet the Seller's Condition that the subdivision plan be registered and building permits obtainable on or before August 15, 2006. That did not happen. Mr. Leach did not submit a revised set of drawings to the City until September 5, 2006. [ 46 ] Mr. Leach's testimony on this point was candid and given entirely under direct examination.

When asked why revised drawings were not submitted earlier, he answered that in May - after he had participated in the decision to establish the Condition Day of August 15, 2006 - he had taken on three other "major projects". That he did so was, he said, "the main reason" revised drawings were not submitted earlier. More specifically, after the time spent in late April and an unspecified part of May addressing the City's 2006 standards, Mr.

Leach volunteered that there was "nothing", other than this other workload he had later taken on, that prevented him from submitting revised drawings. [ 47 ] Aside from his review of Mr. Finner's right-of-way plan and his answers to Mr. Johnson's and Mr. Raj's inquiries as to progress, there is no evidence before the Court of any work done by Mr. Leach towards obtaining the City's endorsement of the subdivision plan after May 2006. [ 48 ] I give further consideration below to Mr. Johnson's and Mr. Raj's inquiries of Mr.

Leach (under "Joben's Efforts"). [ 49 ] On or about August 15, 2006, Ranger Realty advised the Plaintiffs that the Condition was not satisfied, and refunded their deposits. On August 16, 2006, Mr. Johnson wrote to Ranger Realty and to the Corporate Plaintiff, stating:

… Joben Investments Ltd. as of this date, has not been able to register the subdivision plan required to give effect to this transaction. Thepurchase agreement herein, in accordance with its terms, is therefore at an end. III. The Condition “True” Condition Precedent vs.

Condition Precedent [50] It will be recalled that, in all the contracts between Joben and the Plaintiffs (as well as in the contract between the CorporatePlaintiff and Kenyon), the parties agreed, in part: (1) that a "Seller's Condition" required a "plan being registered and building permits obtainable" on or before August 15, 2006"(which was then qualified to "[b]efore 9 p.m." on August 15, 2006 (the "Condition Day"); (2) that the Buyer and the Seller may unilaterally waive or satisfy their conditions by giving notice on or before the Condition day;and (3) provided that the Buyer or Seller, as the case may be, uses reasonable efforts to satisfy the Conditions, if Notice has not beengiven on or before the Condition Day, then this Contract is at an end. [51] Joben's submissions before the Court affirms the position it expressed in its letter to Ranger Realty and the Corporate Plaintiffon August 16, 2006.

Specifically, (1) the Condition is a "true" condition precedent; and (2) as Joben did not waive the Condition, itsfailure to secure registration of the subdivision plan by 9:00 pm on August 15, 2006 brought the contracts to an end. (This would, Jobenadds, operate to preclude Mr.

Grewal’s and the Mahals’ claims for specific performance.) [52] The Plaintiffs submit that the Condition is not a true condition precedent, and that Joben's failure to achieve registration ofthe subdivision plan by August 15, 2006 would merely suspend performance of the parties' contractual obligations until such time asJoben performs. [53] The idea of "true" (as opposed, one supposes, to "ordinary") conditions precedent has been criticized (G.J. Davies,"Conditional Contracts for the Sale of Land" (1977), 55 Can. Bar Rev. 289).

Depending on the circumstances in which a party invokesit, the label may obscure more than it clarifies, particularly where (as here) the parties have already undertaken obligations to each other. For example, the Condition is itself subject to a "reasonable efforts" clause.

Further, the parties have agreed that their contracts are"intended to create binding legal obligations", the Plaintiffs "offer[ed] to buy the Property … according to the terms of [their contract]",and "[Joben and Kenyon] accept [the Plaintiffs' offers] and agrees to sell the Property … according to the terms of [their contract]." (Castledowns Law Office Management Ltd. v. 1131102 Alberta Ltd., 2009 ABCA 148 at para. 67, Slatter JA, dissenting.) [54] As I will discuss below, however, the distinction between a condition precedent that is "true" and one that is not does serve animportant purpose.

Moreover, the notion of a true condition precedent is firmly established in Canadian law (Leasing Group Inc. v.Prospect Developments

(2003) Inc., 2011 ABCA 83; Turney v. Zhilka, (SCC), [1959] SCR 578; F.T. Developments Ltd.v. Sherman, (SCC), [1969] SCR 203; O'Reilly v. Marketers Diversified Inc., (SCC), [1969] SCR 741;Barnett v. Harrison, (SCC), [1976] 2 SCR 531; Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 SCR 107; McCauley v. McVey, (SCC), [1980] 1 SCR 165; and Mitsui & Co. (Canada) Ltd. v. Royal Bank of Canada, (SCC), [1995] 2 SCR 187). [55] Much of the confusion may have arisen from the apparent inconsistency between the Supreme Court of Canada's descriptionin Turney v.

Zhilka (at 583) of a true condition precedent as "an external condition upon which the existence of the obligation depends",and its statement in Dynamic Transport (at 1082) that parties to a contract that contains a true condition precedent have still "created abinding agreement", but that "[their] obligations were merely in suspense pending the occurrence of the event constituting the conditionprecedent." The difficulty is that a condition upon which the obligation's very existence depends would appear to preclude recognizing

as operative some contractual provisions before the condition is fulfilled. (Triple Five Corp. Ltd. v. Crown Zellerbach Stores Ltd.(1981), (AB KB), 17 Alta LR (2d) 178 (QB) at para. 50.) I agree, however, with the observation of Slatter JA(dissenting on other grounds)) in Castledowns (at para. 70) that it is unhelpful, particularly after Dynamic Transport, to try to distinguishbetween conditions that prevent contract formation from those which suspend the duty to perform contractual obligations.

Moreover, itis not necessary to do so, since the Supreme Court has emphasized other functional bases for drawing a distinction between conditionsthat are "true" conditions precedent and conditions that are not.

As I will now explain, those bases lead me to conclude that theCondition under consideration here was not a true condition precedent. [56] The essence of a true condition precedent is found in its purpose, which is to allow a party to waive another party's default inperforming a condition intended for the benefit of the first party, while preventing a party from waiving its own default or the default of athird party upon whose discretion or effort performance depends. (Barnett at 538-41).

The two essential qualities of a true conditionprecedent are, therefore, that (1) it cannot be waived unilaterally (whereas other conditions can be waived by the party for whose benefitthe condition had been included in the contract); and (2) it depends on a future, uncertain event, which depends upon the will of a thirdparty. [57] Is the Condition a true condition precedent? [58] As to the first quality that precludes unilateral waiver, the language of the Plaintiffs’ contracts with Joben themselves affirmthat the Condition is not a "true" condition precedent.

Paragraph 8.4 of all the contracts provided that the parties could unilaterallywaive their conditions on notice on or before August 15, 2006. Joben, therefore, was entitled to unilaterally waive the Condition and(since it formed part of the sellers’ conditions) prior to the Condition Day. [59] This was a term upon which the parties themselves agreed and, as such, ought to govern. To allow otherwise woulddisrespect their liberty to contract while undermining one of the central purposes of a contract, which is to bring certainty to the parties'relationship, particularly their mutual obligations and entitlements.

It would defeat the parties' intentions, and foster commercialuncertainty more generally. In Swan Group Inc. v.

Bishop, 2013 ABCA 29 at para. 20, our Court of Appeal cautioned that "a courtshould not be 'too astute or subtle' to find that a 'true condition precedent' has been created by virtue of the inclusion of an ordinarypromise of a party in a contract, particularly where the breach of that promise does not undermine the essential agreement and where anintention of the parties that the breach should have that destructive effect is not set out in the contract." This direction applies with evengreater force where, as here, (1) breach of the Condition did not undermine the essential agreement, because registration of thesubdivision plan was a certain prospect upon Joben's satisfaction of the City's requirements; and (2) the intention of the parties that thebreach should not have that destructive effect is set out in the contract. [60] Joben's ability to waive, unilaterally, the Condition is determinative of the Condition’s status.

Were the Condition a truecondition precedent, whether understood in the Turney v. Zhilka or in the Dynamic Transport sense, it could have been circumventedonly by the Plaintiffs and Joben making new contracts.

Unilateral waiver is incompatible with a true condition precedent. (Turney at583; Barnett at 539; Castledowns at para. 67.) The parties’ agreement that Joben could unilaterally waive the Condition demonstratesthat the Condition was not a true condition precedent. [61] The contractual term allowing for waiver also furnishes an answer to Joben's submission that the reference in paragraph 8.5of all Joben's contracts to the contract being "at an end" (so long as it used reasonable efforts to satisfy the Condition) supports a findingthat the Condition was a true condition precedent.

Joben's own submissions state that "the parties agreed the contracts would be at anend … provided Joben as Seller did not waive the condition." That allowance for waiver is fatal to Joben's argument that the Conditionconstituted a true condition precedent. [62] As to the second quality of a true condition precedents (that it depends upon a third party's discretionary act), the facts ofTurney v. Zhilka are usefully reviewed here.

A contract for the purchase and sale of land contained a condition that "the property can beannexed to the Village … and a plan is approved by the Village Council for subdivision." When the vendors repudiated the contractbecause the condition had not been satisfied, the purchaser purported to waive the condition and sued for specific performance.

On thequestion of obtaining municipal approval for annexation, Judson J. for the Supreme Court recounted (at 582) that, while "[t]he purchasermade some enquiries of the Village council", "the evidence indicates that he made little or no progress and received little encouragement,and that the prospects of annexation were very remote." [63] The municipality's discretion to scuttle the bargain (and the high probability that it would) in Turney v. Zhilka contrasts with

the facts of McCauley . There, a vendor sold two lots to McVey, conditional upon the purchaser arranging and paying for a survey necessary to allow transfer of title. McVey then agreed to sell one of the lots, conditional upon the first purchaser "having title … by date set for closing of this sale." That agreement failed to close because McVey failed to have the surveys completed in time, and the purchaser sued for specific performance.

For the majority, Laskin C.J. granted specific performance, stating (at pp. 169-70): It appears that only the completion of the surveys held up conclusion of the deal between the appellant and the respondent, and this was a matter in the hands of the respondent.

Indeed, the survey obligation assumed by McVey was more a matter of conveyancing than of title, and it is clear that a vendor cannot justify a refusal to complete by relying on a matter of conveyancing that is within his power to correct. … The principal ground upon which counsel for the respondent sought to maintain the judgments below in his favour was that the condition as to title was what he called a "true" condition precedent and hence, if there was no title to pass March 30, 1973, the contract was off by his own terms.

That was the view of the Ontario Court of Appeal but, with respect, I find it untenable. … The obligation as to title was upon McVey. That obligation, as matters stood at the time of the contract between McVey and McCauley, depended for its fulfillment only on the completion of the surveys, as undertaken by McVey in his contract … . There was here no condition precedent in the sense expressed by Judson J. speaking for the Court in Turney v. Zhilka … . … There is in the present case no future uncertain event the happening of which depends on the will of a third party under the contract. [ 64 ] In Turney v.

Zhilka , then, "the prospects of annexation were very remote" and had "received little encouragement" from Village council, leading the Supreme Court to find that the condition was a true condition precedent - an "external" condition, "depend[ant] upon a future uncertain event, the happening of which depends entirely on the will of a third party".

Conversely, in McCauley the only obstacle to contract completion in McCauley was completion of the surveys which, being "in the hands of the respondents", supported no finding of a true condition precedent. [ 65 ] Our Court of Appeal, in distinguishing between true conditions precedent and ordinary conditions, has also considered whether satisfaction of the condition was dependent upon the will of a third party.

In Swan Group , the purchaser had refused to complete a purchase under a contract which included a Developer's Condition stating "[t]he Developer shall register the Phased Condominium Plan creating the units shown on

Schedule "1" on or before Sept 30, 2008." In rejecting the purchaser's argument that this created a "true" condition precedent because of the involvement of the Land Titles Office, the Court observed (at para. 13) that "Bishop did not point to any indication in the record that there was any development or subdivision impediment at any relevant time sufficient to itself engage the Turney test." Nor, the Court added (at para. 18) did the condition itself suggest that "an uncontrolled third party could frustrate the ability of either the vendor or the purchaser to complete the agreement … ." [ 66 ] The third party's role in the case before me bears much stronger resemblance to that in McCauley and Swan Group than in Turney .

Indeed, the City's discretion to influence outcomes in this case is of even less consequence than it was in McCauley or Swan Group . Joben had already secured the City's approval of its subdivision subject to the conditions stipulated by the Subdivision Authority on November 10, 2005. All that remained was for Joben to satisfy the conditions of its subdivision approval.

Had Joben done so (by completing drawings satisfying the requirements that had been received from relevant City departments and agencies, incorporating them into a signed servicing agreement and registering the required right-of-way), it would have been entitled , by virtue of Section 657(1) of the Municipal Government Act ("the subdivision authority must endorse the plan"), to immediate endorsement by the City of the subdivision plan, enabling registration at the Land Titles Office and making building permits obtainable. [ 67 ] If, therefore, I have erred in my conclusion that the Condition was not a true condition precedent by reason of Joben's contractual entitlement to unilaterally waive it, I also find that the Condition was not a true condition precedent because it was not dependent upon the exercise of discretion by others such as the City.

Rather, it was dependent only upon time, and the diligence of Joben and its agents. “ Reasonable Efforts ”

[68] Irrespective of whether the Condition is or is not a true condition precedent, it is subject to the requirement that Joben use"reasonable efforts" to satisfy it on or before the Condition Day.

(1) The Meaning and Content of "Reasonable Efforts" [69] In the context of this case (where subdivision approval had been granted subject to certain conditions, and where thoseconditions were to be met by a particular date), what did using "reasonable efforts" require of Joben? [70] In Dynamic Transport, Dickson J. (as he then was) held for the Supreme Court that, in appropriate circumstances, courts willfind an implied promise by one party to take steps to satisfy a condition, and to use its "best efforts" in doing so.

On that authority thePlaintiffs submit that Joben should be taken as having implicitly promised to make "best efforts" to satisfy the Condition. [71] The Defendants submit that the implied condition of "best efforts" in Dynamic Transport does not apply where the partieshave contracted to different terms, as they have here by stipulating that Joben use "reasonable efforts". (Emphasis added.) They urgethat a standard of "reasonable efforts" denotes less rigourous requirements of Joben than "best efforts".

To this, the Plaintiffs say that theDefendants draw a distinction without difference, since "best efforts" are synonymous with "reasonable efforts" such that reasonablenessis at the core of the "best efforts" standard. [72] Certainly, some case authorities disclose little attempt to distinguish between "best efforts" and "reasonable efforts".

Even inDynamic Transport, Dickson J., in elaborating upon the "best efforts", described (at 1084) the duty as being "to act in good faith and totake all reasonable steps to complete the sale." (Emphasis added.) This description of “best efforts” has been restated both by theSupreme Court and by our Court of Appeal. (Mitsui at para. 34; and Kempling v. Hearthstone Manor Corp. (1996), 1996 ABCA 254, 184 AR 321 at para. 78 (CA).) [73] This Court has previously suggested (but not explicitly held) that there is a difference between "reasonable efforts" and "bestefforts" to satisfy a contractual condition. In Fossum v.

Visual Developments Ltd., 1997 CarswellAlta 1257 at para. 15 (QB), Veit J.observed that the defendant in that case "did not make reasonable efforts, much less best efforts" to satisfy a condition. Justice Dorganof the British Columbia Supreme Court was more explicit in Atmospheric Diving Systems Inc. v. International Hard Suits Inc. (1994), 89BCLR (2d) 356 (SC) where the contract required the defendant to make "best efforts" to sell diving suits at a full purchase price.

Aftercanvassing case authorities from several provinces and England, she said (at para. 71) "'[b]est efforts'" imposes a higher obligation than a'reasonable effort'". "Where the parties include a 'best efforts clause in a contract", she added (at para. 72), "they must surely intend thatsomething more than 'reasonable efforts' be used." [74] I agree.

And, conversely, where parties include a "reasonable efforts" clause, as the Plaintiffs and Joben did here, they mustbe taken as having intended that something less than "best efforts" be required - especially since contractual silence on the matter would(on the authority of Dynamic Transport) have resulted in an implied term requiring "best efforts".

Where parties voluntarily agree to aterm that is different than the term that would otherwise have been implied by operation of law, then - again, out of appropriate deferenceto their liberty to contract, and as a matter of promoting commercial certainty - the Court should take that term seriously as requiringsomething different of the parties than what the displaced presumed term would have required. The Plaintiffs and Joben agreed to a termthat required not best efforts, but reasonable efforts of Joben to satisfy the Condition on or before August 15, 2006.

Having agreed tohold Joben to reasonable efforts, the Plaintiffs cannot now hold Joben to the more onerous standard of best efforts. (Bhasin v. Hrynew,2013 ABCA 90 at para. 27, 4th point). [75] If "reasonable efforts" did not require "best efforts" of Joben, what did they require? And, what distinguishes reasonableefforts from best efforts? In the abstract, it is obviously difficult to avoid generalities.

The parties in Castledowns agreed to the same"reasonable efforts" clause as appears in the contracts between the parties here (although the reasonable efforts were directed to adifferent condition, being the obtaining of the vendor's lawyer's approval before the condition day).

Conrad JA for the majority held (atpara. 42) that this term required "taking legitimate steps", and that there may be occasions when a party is obliged to take legal steps, butthat it does not require embarking upon "difficult or uncertain litigation." While taking "legitimate steps" suggests that the scope of the"reasonable efforts" obligation is context-specific, the reference to taking "legal steps" also suggests that the obligation is not satisfied bypassivity or by making token or uneven efforts.

While "reasonableness" does not require that a party spare no effort or leave no stoneunturned - for example, Dickson J. wrote in Dynamic Transport (at 1083) of "best efforts" as requiring "do[ing] all that is necessary" - itnonetheless denotes a prudent and moderate measure of sustained diligence necessary to give business efficacy to the object of theparties' underlying agreement (being, in this case, to effect the purchase and sale of subdivided lots). Alternatively put, it describes the

effort that a reasonable person, committed to achieving the objective, would have undertaken.

(2) Joben's Efforts [76] Joben's efforts to meet the Condition Day comprise the work of its agent, Mr. Leach, and the oversight of its principal, Mr.Johnson. [77] I have already described Mr. Leach's evidence that he had allowed himself to become over-extended. He had taken on workfor other clients, and was therefore unable to submit revised drawings to the City earlier than September 5, 2006. With the exception ofreviewing the right-of-way plan completed by Mr. Finner and of attending monthly meetings with Mr. Johnson and Mr. Raj, there is noevidence before me that Mr.

Leach took any steps on Joben's behalf after May 2006 and before the Condition Day - a date to whichJoben had agreed, on his recommendation - to satisfy the Condition. Not only did Mr. Leach fail to exercise a prudent and moderatemeasure of sustained diligence necessary to achieve the Condition Day, I find he exercised no diligence. While his disregard for Joben'sproject might be understandable in view of his obligations to other clients, they were not justifiable in view of Joben's contractualobligations to the Plaintiffs. [78] In short, Mr.

Leach's almost non-existent efforts as the Condition Day approached, did not constitute "reasonable efforts". [79] Mr. Leach's delinquency is determinative of Joben's breach of the "reasonable efforts" clause. As Joben's agent throughout,his efforts were Joben's efforts, for which Joben is responsible. (Eastwalsh Homes Ltd. v. Anatal Developments Ltd. (1990), (ON SC), 72 OR (2d) 661 (HCJ) at para. 46, rev'd (on other grounds) (1993), (ON CA), 12 OR (3d) 675(CA).) [80] If I am wrong in finding that Joben is bound by Mr.

Leach's delinquency, then Joben would be entitled to rely upon Mr.Johnson's efforts in demonstrating that it made "reasonable efforts" to meet the Condition by the Condition Day. I turn now to considerthose efforts. [81] Mr. Johnson testified that he, Mr. Raj and Mr. Leach agreed to meet once a month to "discuss progress" and "basically … tokeep track of the development project", "to keep tabs, see how things are going." He recalled their first meeting was on May 16, 2006. Prior to their meeting in August 2006, Mr. Johnson says, he was never told by Mr.

Leach of any problems regarding progress in meetingthe Condition Day. At that meeting, which he believes took place on August 14 or 15 (which, I note, is the Condition Day), he says thatMr. Leach told him for the first time it was going to be "difficult" to accomplish that date. He said that Mr. Leach gave no explanation,other than he "couldn't meet the date", "other requirements couldn't be met" and "sometimes it takes time, titles have to be changed, weare not being able to achieve it." Mr. Johnson gave no evidence of having pressed Mr.

Leach for any further, more specific explanationfor his inability to meet the Condition Day. [82] Mr. Leach's evidence, which I accept, confirms the superficiality of Mr. Johnson's inquiries. He testified that "Mr. Johnsonasked how we were doing at various times", that his response was that "we were working on it", and that Mr. Johnson and Mr. Raj"appeared to make a note that we were working on it and we went on to other matters that we were working on at the time." Mr. Leachalso said that he was never asked if the Condition Day needed to be revised.

This, despite his evidence (when asked if he and Mr.Johnson had ever discussed Joben's inability to meet the Condition Day) that "there was a point in July when we knew we couldn't make[the Condition Day]". Mr. Leach added that "it didn't seem to be an issue." [83] Even at the August 2006 meeting - when the Condition Day was either imminent or had arrived - Mr. Johnson's questioningof Mr. Leach was never probing. Mr. Johnson testified that, at that meeting, he "emphasized" that "the date is coming, where are we?".

He asked whether, for example, he should "extend it?" or "cancel it?". [84] Despite his passivity throughout the spring and summer of 2006, Mr. Johnson also had misgivings about Mr. Leach'sreliability. "A couple of times", he acknowledges, "I thought of changing [Mr. Leach], but it would have taken more time to getsomeone more reliable". Mr. Johnson was not asked when he considered this. His misgivings did not, however, prompt him to urge Mr.Leach to give Joben's project the attention it needed to meet the Condition Day. Mr. Johnson testified of no such exhortation, and Joben's

records reveal no written communication whatsoever between Mr. Johnson and Mr. Leach regarding efforts to satisfy the Condition, whether by the Condition Day or at all. [ 85 ] I find that, even were Joben able to divorce itself from Mr. Leach's delinquency so as to be entitled to rely exclusively upon on Mr. Johnson's efforts to achieve the Condition by the Condition Day, those efforts would not qualify as reasonable. Mr. Johnson's oversight of Mr. Leach was passive, and his inquiries were never more than superficial. The only evidence I have before me as to Mr. Johnson's inquiries of Mr.

Leach prior to the August meeting are of the most general sort - to check "progress", "to keep tabs", to "see how things are going." There is no evidence of even slightly probing inquiries into whether the Condition Day was going to be met, or of steps that could be taken to ensure that Joben could meet the Condition Day - even when, by Mr. Johnson's own admission, he had begun to question Mr. Leach's reliability. [ 86 ] Irrespective, however, of when Mr. Johnson had begun to harbour concerns about Mr. Leach, Joben's obligation to use "reasonable efforts" required throughout much more from Mr.

Johnson than assuming the role of passive onlooker, prompted to act only at the August meeting when the Condition Day's imminence required him to decide whether to waive the Seller's Condition or to notify the Plaintiffs that their contracts with Joben were ended. If, therefore, I am wrong in my conclusion that Joben is bound by Mr. Leach's unreasonable efforts despite Mr. Johnson's oversight, I also find that Mr. Johnson's oversight did not constitute reasonable efforts within the meaning of the "reasonable efforts" clause in Joben's contracts with the Plaintiffs.

(3) Would Reasonable Efforts have made a Difference? [ 87 ] Joben argues in the alternative that, even if it had made reasonable efforts to meet the Condition by the Condition Day, it was not possible to do so. The Plaintiffs argue that Joben's failure to use reasonable efforts made all the difference. [ 88 ] Mr. Wood testified that the City has assessed the average time it took in 2006 for subdivision projects to proceed from the first submission of engineering drawings to the time of endorsement of the plan (which usually coincided with execution of a servicing agreement) as being 18 weeks.

This calculation would have taken into account complex as well as simpler subdivision applications. I observe that 14 weeks from February 28, 2006 falls on July 4, 2006 - over a month before the Condition Day. [ 89 ] Under cross-examination, Mr. Wood acknowledged that an additional four weeks might pass between the developer's request that the Subdivision Officer endorse the plan and actual endorsement, and that registration of the subdivision plan at the Land Titles Office was taking as long as a further three to four weeks. In addition, Mr.

Byrne also agreed to the suggestion put to him on cross examination, that while development permits should be available upon registration of the subdivision plan on title, "oftentimes it takes the City up to two weeks to get registration details into their system" during which time the builder cannot obtain a development permit. (The implication here is that, even had Joben registered the subdivision plan by the Condition Day, development ("building") permits would not have been immediately "obtainable" within the meaning of the Condition.) [ 90 ] All this would, obviously, have taken the average subdivision application beyond the Condition Day of August 15, 2006.

In view of the unanimous evidence of Mr. Leach, Mr. Wood and Mr. Byrne that Joben's project was straightforward relative to other subdivision projects, however, it is not possible for me to find on Mr. Wood's evidence that the Condition Day would not have been met in respect of Joben's project. Joben's project, after all, may not have consumed the "average" amount of time had reasonable efforts been used. [ 91 ] Moreover, I find that development permits would still have been "obtainable" within the meaning of the Condition, notwithstanding delays at the City in getting "registration details into their system".

While, practically speaking, there may have been difficulties at the City's front desk, as a matter of law the title document makes the development permit "obtainable", subject to

Section 650 of the Municipal Government Act and any restrictions authorized thereunder in the City's land use bylaw. If I err in this regard, as will be seen the additional two weeks consumed by importing title registration information into the City's system makes no difference as to whether Joben could have met the Condition by the Condition Day. [ 92 ] The Court also heard opinion evidence from Mr. Byrne on whether reasonable efforts would have made any difference. Mr.

Byrne ’ s experience includes involvement in processing over 10,000 subdivided lots in the Edmonton area, including at the engineering and registration stages of subdivisions. In estimating the City's processing times, he identified two contemporary "comparison"

subdivision applications, both from the Magrath subdivision in Edmonton's southwest, the drawings for which were submitted at approximately the same time as Joben's. The first, submitted March 1, 2006, achieved registration on September 18, 2006 - a processing time of 201 days. The second, submitted January 16, 2006, achieved registration on September 22, 2006 - a processing time of 249 days. [ 93 ] Taking the average of those two processing times, and applying them to Joben's project, Mr.

Byrne's opinion was that - by following the ordinary process, and without taking any measures to accelerate the process - registration should have been achieved in this case by September 4, 2006 (which is 20 days after the Condition Day). [ 94 ] I note that Mr. Byrne's identification of September 4, 2006 was premised in part upon engineering drawings having been first submitted to the City on February 23, 2006 (as opposed to February 28, 2006). More significantly, it was premised upon a revised (final) submission of drawings to the City on April 23, 2006.

Given that Joben had not received all of the City's comments until April 21, 2006, I find this premise to be untenable. Mr. Byrne testified, and I accept, that it should have taken "no more than two weeks, and definitely inside of four weeks" for Joben to submit revised drawings after having received the City's comments. Giving Joben the benefit of Mr. Byrne's estimated range, the revised drawings should have been submitted no later than four weeks after April 21, 2006, which was May 19, 2006. This necessitates an adjustment to Mr.

Byrne's estimate for time of registration from September 4, 2006 to October 2, 2006 - 48 days after the Condition Day. Subject to that adjustment, I accept Mr. Byrne's evidence as a reasonable estimate of the amount of time that Joben had, more likely than not, to save in order to satisfy the Condition by the Condition Day. [ 95 ] Mr. Byrne identified four measures that, in his opinion, each represent a method of accelerating the process after submission of revised drawings for achieving registration.

Joben implemented none of them. [ 96 ] The first method contemplates the developer requesting a servicing agreement, typically 30 days after submitting revised drawings, signing it and paying fees immediately. This reduces the average time for endorsement of the plans (using the Magrath subdivision as the basis for that average) from 75 days to 30 days, thereby saving 45 days. This method is, as Mr. Byrne points out, "totally within [the developer's] control to achieve." [ 97 ] In Mr.

Byrne's opinion, a reasonable consultant or developer would have implemented this first method in order to help meet the Condition by the Condition Day. [ 98 ] The second method contemplates the developer submitting the final subdivision plan, and asking the Subdivision Authority to review and endorse the plan in advance of payment of fees and execution of a servicing agreement. Assuming the City Clerk also endorses the plan immediately, this can reduce the average time for achieving this step from 27 days to two days, thereby saving 25 days. This method, Mr.

Byrne says, "requires the agreement and a good working relationship with the Subdivision Authority and can only be used in circumstances such as these." [ 99 ] In Mr. Byrne's opinion, a reasonable consultant or developer would have implemented this second method in order to help meet the Condition by the Condition Day. I observe however that, because this method entailed cooperation of the Subdivision Authority, the most that Mr.

Byrne can say, and what I take him as saying, is that a reasonable consultant or developer would have attempted to implement it. [ 100 ] The third method contemplates the developer's surveyor having all necessary documentation in place for registration at the Land Titles Office, so that once the Subdivision Authority has executed the servicing agreement, the surveyor can submit the necessary documentation within one day. Mr.

Byrne's report states that this saves 41 days. (I note that, since both Magrath comparable subdivision applications took 43 days to achieve this step, the actual time saving might be 42 days, but that discrepancy is not of consequence here, and I will use Mr. Byrne's figure of 41 days). [ 101 ] In Mr.

Byrne's opinion, a reasonable consultant or developer would have implemented this third method in order to help meet the Condition by the Condition Day. [ 102 ] The fourth method contemplates the developer or its consultant requesting that the Land Title Office make an accommodation by departing from its first-come, first-serve practice to allow the developer to "jump the queue" for registration of the subdivision plan.

Mr. Byrne opined that this would reduce the average time for registration of the subdivision plan from 20 days to five days, thereby saving 15 days. [ 103 ] In his report, Mr. Byrne applied a discount of 50% to the total savings to be achieved by implementing all four methods.

Before addressing whether a discount is appropriate, however, I will consider each of the four methods so that the target of and rationale for such a discount can be identified having first determined whether those methods or any of them formed part of Joben's obligations to employ "reasonable efforts". [ 104 ] The first method - requesting and execution a servicing agreement and paying fees within 30 days of submitting revised drawings - is, as Mr. Byrne testified, entirely within a developer's control.

Where, as here, a developer contractually agrees to make reasonable efforts to meet a timeline, the preparing and signing a servicing agreement is a modest measure requiring little effort - and, indeed, such effort as it requires would otherwise have to be undertaken later in any event. While in some instances it may well be oppressive to developers to incur financing charges associated with paying fees earlier, Joben does not advance that objection here. [ 105 ] I therefore find that Joben's contractual obligation to employ "reasonable efforts" required it to employ the first method identified by Mr.

Byrne. [ 106 ] The success of the second method - asking the Subdivision Authority to review and endorse the subdivision plan before the developer has paid fees or executed a servicing agreement - obviously rests with the Subdivision Authority. For the reasons that I have stated in respect of the first method, however, I also find that Joben was obliged, in making "reasonable efforts", to at least make that request to the Subdivision Authority. [ 107 ] The third method - which would have required Joben to instruct Mr.

Finner to have documents prepared so that he can proceed promptly, once the servicing agreement was executed, with registration of the subdivision plan at the Land Titles Office - would also have entailed at most some moderate effort by Joben or its agents. This would have been a reasonable step to take in order to preserve Joben's ability to meet its contractual obligations of conveying title to the Plaintiffs. Unlike the second method, its success lay entirely with Joben. I therefore find that Joben was obliged to employ the third method identified by Mr.

Byrne. [ 108 ] As to the fourth method - jumping the queue at the Land Titles Office to secure earlier registration - its success (as was the case with the second method) would have required the cooperation of a third party - in this case, the Registrar of Titles. Mr. Byrne described it as "an extreme situation" in which "you need everything to line up perfectly", and requiring "an extreme amount of diligence." [ 109 ] Mr. Byrne did not offer his opinion as to whether a reasonable consultant or developer would have attempted to implement this fourth method in order to help meet the Condition Day.

I find, in view of Mr. Byrne's evidence describing this method as "an extreme situation", that Joben's obligation to use "reasonable efforts" did not require it, or its agents, to attempt to implement this method. [ 110 ] I return to the question of the 50% discount which Mr. Byrne applied to the total time savings achievable by implementing all four methods.

In his report, he explained his decision by referring to the total time savings as "requir[ing] an extreme amount of diligence and the cooperation of several departments, Land Titles and City Subdivision Approving Authority" and that "a saving of about half of this would be the safety factor we would suggest." He did not elaborate further upon this statement or the discount in his viva voce evidence, although he noted in his report that the effect of the discount would be to reduce the total savings from 126 days to 63 days.

Given the adjustment I have made earlier to account for the time to provide revised engineering drawings, however, and removing the time savings to be realized by the fourth method (which I have rejected as going beyond "reasonable efforts"), the effect of applying a 50% discount to the combined time savings of methods one through three, inclusive, would be a reduction from 111 days to 56 days (rounding up). [ 111 ] Do I apply this discount? And, if so, to which of the three methods comprising part of Joben ’ s obligation to use “ reasonable efforts ” do I apply them? [ 112 ] Mr.

Byrne's statement in his report that the undiscounted savings "would require an extreme amount of diligence" is incongruous with his view, expressed in his viva voce evidence (which I accept) that a reasonable consultant or developer would have implemented the first three methods. An "extreme amount" of diligence would certainly not be required of a developer who has

contracted to make "reasonable efforts" as I have described them. [ 113 ] Mr. Byrne's reference to requiring "the cooperation of several departments, Land Titles and City Subdivision Approving Authority" sheds light, however, on his reference to "an extreme amount of diligence". Taken together, both the fourth method (which Mr. Byrne included in his calculation of total time savings) and the second method entail the cooperation of the Registrar of Titles and the Subdivision Authority.

His application of a discount was therefore intended to address the contingency that such cooperation might not be forthcoming and the consequent possibility that no time savings whatsoever would be achieved through the second and fourth methods. His caution is clearly justified. There is no evidence before me to support a finding that either the Land Titles Office or the City Subdivision Authority would have cooperated with Joben, had Joben attempted to implement either or both methods. Indeed, Mr.

Byrne's evidence that everything must "line up perfectly" for the fourth method to succeed, suggests the opposite (at least with respect to the fourth method). The Plaintiffs have not demonstrated that, by implementing the second or fourth method, Joben would have saved any time. [ 114 ] The first and third methods, in contrast, do not depend upon the contingent cooperation of a third party necessitating Joben's "extreme" diligence. They require only that the developer or its agents act.

There is therefore no need to make any discount to the time savings thereby gained. [ 115 ] By adopting the first and third methods for accelerating registration of the subdivision plan, what savings would Joben have achieved? [ 116 ] Joben argues that, even if those methods had been employed, it could not have met the Condition Day, for two reasons. First, it appears that Mr. Wood did not forward the draft servicing agreement to the City's solicitor for review until June 22, 2006. This is not, however, evidence that the Condition Day could not be met. As Mr.

Wood testified, the solicitor had replied (with no comments) by July 6, 2006. Moreover, and as Mr. Wood immediately proceeded to add, the only thing he was awaiting from that point onwards was a revised set of engineering drawings from Joben. Those did not arrive for another two months. [ 117 ] Joben's second argument points to the testimony of Joben's surveyor, Mr. Finner, which it characterizes as signifying that, on August 1, 2006, he was still awaiting the City's response on the right-of-way agreement.

Because the process of registration might take as long as several weeks, Joben argues, the Condition Day could not be met. This argument misconstrues what Mr. Finner actually said. After Mr. Finner received Mr. Leach's approval of the right-of-way plan (which Mr. Finner had sent to him on June 13, 2006), Mr. Finner would have initiated a "document request process" with the City, in this case for a right-of-way agreement for a two metre-wide strip to accommodate a gas pipeline. His evidence was that he made that request "sometime in June". The City responded with the right-of-way agreement. Their timeline was, Mr.

Finner explained, typically "about three weeks to get that document back", and "that's consistent with the correspondence I have in my file." He then confirmed that he would probably have received that document "back in July." Mr. Finner's evidence was also that a letter dated August 3, 2006 from him to Kenyon (which was not in evidence before the Court) references enclosures, including the right-of-way plan. [ 118 ] Absent (1) evidence about how long it took Mr. Leach - whose lack of diligence was the basis for his own explanation for why the Condition Day was not met - to respond to Mr.

Finner's draft plan after June 13, 2006; or (2) evidence about how long it had taken him to instruct Mr. Finner to draft the plan in the first place; or (3) more precise evidence about when Mr. Finner (who was, after all, Joben's agent) requested the servicing agreement from the City for the right-of-way, or (4) how long it took Mr.

Finner after receiving the servicing agreement to proceed to have it registered, none of this assists Joben in demonstrating that it could not have met the Condition Day even if it had used reasonable efforts. [ 119 ] The Plaintiffs submit that adopting the first and third methods would have made all the difference. This is supported by Mr. Byrne's evidence that doing so would have saved 45 days (for the first method) and 41 days (for the third method), respectively, for a total time savings of 86 days.

Even allowing that this reflects an estimation based upon an average of two other projects, I accept it as a reasonable calculation of the time which Joben would more likely than not have saved had it implemented these methods as part of its reasonable efforts to satisfy the Condition by the Condition Day. [ 120 ] I have already found that a reasonable and probable estimate of the amount of time which Joben had to save from the usual course of subdivision approval in order to meet the Condition by the Condition Day was 48 days.

The 86 days that I have found would have been saved by Joben had it made reasonable efforts would therefore have been more than sufficient to enable Joben to satisfy the Condition by the Condition Day.

[ 121 ] While my findings in respect of Mr.

Byrne's evidence on their own satisfy me that Joben's failure to use reasonable efforts was the cause of its failure to satisfy the Condition by the Condition Day, other factors taken together affirm this conclusion. [ 122 ] First, because the Court is concerned to give business efficacy to the parties' agreement, including the reasonable efforts clause, and because the parties presumably agreed to use reasonable efforts in satisfying their respective conditions because they knew that reasonable efforts might be required to give business efficacy to the bargains they had struck, the Court should require clear and cogent evidence from a party asserting that its failure to use reasonable efforts would not have changed the result.

Even giving Joben the benefit every benefit of every possible doubt as to the steps it might have taken to accelerate the subdivision approval process, such clear and cogent evidence exonerating Joben's delinquency as the cause of the failure to meet the Condition by the Condition Day is not before the Court. Indeed, Mr. Byrne's evidence demonstrates quite the opposite, such that Joben had significantly more time than it needed. [ 123 ] Second, the suggestion of August 15, 2006 as the Condition Day was included in Joben's contracts with the Plaintiffs at Joben's instance, having taken advice from Mr. Leach.

There was no suggestion from Mr. Leach, whose experience then comprised nearly 35 years of land development engineering in Edmonton, or from any other witness that the City's response to Joben's first submitted revised drawings was anything but timely. Assuming that Joben entered into its contracts with the Plaintiff in good faith, and taking into account Mr. Leach's experience and the City's timely response, these considerations tend to affirm that the Condition Day was achievable, and that Joben or its agents knew it was achievable, so long as Joben employed reasonable efforts.

More specifically, they tend to detract from the effect of Joben's submission, which would require the Court to conclude that, from the time Joben submitted revised drawings on or before February 28, 2006, its contracts with the Plaintiffs were doomed to fail. It lies uneasily in Joben's mouth to advance such an argument, not only because of the dearth of evidence of efforts by Joben to satisfy the Condition during the two and one-half months leading to the Condition Day, but also in light of its having made one of its contracts (with Mr. Grewal) on that same date of February 28, 2006. IV.

The 15th Lot [ 124 ] As already noted, the Corporate Plaintiff's contracted with Joben for the purchase and sale of 14 building lots. It also claims against Joben, however, for damage arising from the failure of the Kenyon contract for the purchase and sale of the 15th lot, and relies upon Mr.

Raj's testimony that (1) the reason Kenyon did not complete the Kenyon contract was Joben's failure to obtain subdivision registration by August 15, 2006; and (2) had Joben obtained subdivision registration by August 15, 2006, Kenyon would have completed the contract. [ 125 ] The Corporate Plaintiff argues that its losses arising from the 15th lot flow naturally from Joben's breach of its obligations, owed to the Corporate Plaintiff under its contracts with Joben for the 14 other lots, to use reasonable efforts to meet the Condition by the Condition Day.

Citing the well-known test for remoteness stated in Hadley v. Baxendale (1854), 9 Ex. Ch. 341 (Eng. Ex. Div.) of whether the loss arose "according to the usual course of things" or may be reasonably supposed "to have been in the contemplation of both parties at the time they made the contract", the Corporate Plaintiff emphasizes the central role of "Mr. Raj, through Ranger Realty" as Joben's agent in the marketing of all the lots in the subdivision. As Ranger Realty knew of the Kenyon contract, Joben is also deemed to know of it. Further, the Corporate Plaintiff says it is reasonable to infer that Mr.

Johnson had direct knowledge of the Kenyon contract, since it also contained the same Condition Day as Joben's contracts. [ 126 ] Arguments based on agency do not assist the Corporate Plaintiff. The law of agency contemplates a principal authorizing an agent to enter into contracts with third parties on the principal's behalf. The Kenyon contract was not, however, a contract entered into by Ranger Realty on behalf of Joben, but of Kenyon.

It appears as such on the face of the document itself, and it was received into evidence as such ("Residential Real Estate Purchase Contract #189984 between Kenyon Estates Development Ltd. and 1092369 Alberta Ltd. … ."). Were it even open to me to ignore the document itself, there is no other evidence before me - from the Corporate Plaintiff ’ s principal Avtar Sidhu, or Mr. Johnson or Mr. Raj - suggesting that Ranger Realty (or, for that matter, Kenyon) was acting as an agent for anyone other than Kenyon in respect of the Kenyon contract.

While Joben may be bound by Ranger Realty's knowledge acquired in its capacity as an agent for Joben, it is not bound by Ranger Realty's knowledge acquired in its capacity as an agent for Kenyon. [ 127 ] Nor does the Corporate Plaintiff's argument respecting Mr. Johnson's direct knowledge assist it here. The mere fact that Kenyon used the same Condition Day of August 15, 2006 that was used in Joben's contracts should not be surprising, since Mr. Raj testified that he was present when Mr. Leach suggested that date as reasonable. It is at least as likely that Mr.

Raj simply adopted that date for the purposes of Kenyon's contract with the Corporate Plaintiff as it is that Mr. Johnson dictated or otherwise influenced the terms of that contract. There being no other evidence before me of Mr. Johnson's direct knowledge of Kenyon's contract or its terms or even of Kenyon's efforts to market the 15th lot, I am unable to conclude that he had such knowledge. I find, therefore, that the Corporate Plaintiff has failed to demonstrate that its losses arising from the failure of its contract with Kenyon was within the reasonable

contemplation of Joben. [128] If I am wrong in finding that Joben (through Mr. Johnson) had no knowledge of the Corporate Plaintiff's contract with Kenyonor of its terms, such knowledge by Joben would not, by itself, determine the question of remoteness of loss. It is insufficient, indetermining how far Joben's liability should extend in this matter, to ask merely whether Joben, had it known of and directed its mind toKenyon's inability to complete its contract, would have contemplated the Corporate Plaintiff's losses respecting the 15th lot.

Argumentsabout remoteness of damage must account for the actual agreement between the parties and, more specifically, for the limits of whatJoben promised the Corporate Plaintiff it would do. It is, after all, the Corporate Plaintiff's two contracts with Joben, and not its contractwith Kenyon, which forms the basis for its claims against Joben. And, under those two contracts, Joben promised that it would employreasonable efforts in meeting the Condition by the Condition Day so as to be able to convey registered title to 14 lots.

Losses such as theforegone profit arising from Joben's failure to convey those 14 lots are therefore recoverable, even where the results are more seriousthan would have been reasonably contemplated, because they fall within the scope of the risk assumed by Joben when the partiesexchanged promises. Losses such as those which arose from Kenyon's inability to complete its contract with the Corporate Plaintiff,however, do not fall within the scope of the risk assumed by Joben when it made its promises to the Corporate Plaintiff.

Joben did notpromise the Corporate Plaintiff anything at all with respect to the 15th lot. [129] In short, the connection between the Corporate Plaintiff's losses arising from Kenyon's failure to complete the Kenyoncontract for the 15th lot, and Joben's breach of its contracts to sell 14 other lots, is too attenuated to justify imposing responsibility for theformer on Joben. V. Remedy Specific Performance [130] While the Corporate Plaintiff claims only for damages, Mr.

Grewal and the Mahals claim for damages only as an alternativeto their principal claim, which is that they are entitled to specific performance of their respective contracts with Joben. And, in view ofmy finding that the Condition was not a true condition precedent, it remains open to them to advance that claim. [131] Mr. Grewal and Mr. Mahal both tes

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