Paragon Capital Corporation Ltd v Morgan, 2013 ABQB 339

Court of Queen ’ s Bench of Alberta Citation: Paragon Capital Corporation Ltd v Morgan, 2013 ABQB 339 Date: 20130612 Docket: 1001 13168, 1101 08914 Registry: Calgary Between: Paragon Capital Corporation Ltd. Plaintiff - and - Gail Morgan, Cara Morgan and Janna-Joy Morgan Defendants Docket: 1101 08914 Between: Cara Morgan and Janna-Joy Morgan Applicants - and - Paragon Capital Corporation Ltd. Respondent Corrected judgment: A corrigendum was issued on June 21, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment.

Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R. J. Hall _______________________________________________________ [ 1 ] The Plaintiff Paragon Capital Corporation Ltd. (“Paragon”) loaned $4,800,000, with interest at a rate of 1.5% per month, to 1301940 Alberta Ltd. for property development, taking a mortgage as security for the development property.

The Defendant Gail Morgan and her husband John Morgan personally guaranteed the loan. The borrower went into default and after the issuance of Demand Letters Paragon issued a Statement of Claim against the borrower and against Gail Morgan and John Morgan as guarantors. Gail Morgan was served with the Statement of Claim on September 23, 2008. In September of 2007 Gail Morgan purchased the house municipally described as [...] Squirrel Street, Banff, Alberta (“[...] Squirrel Street”) for $995,000.

Just over a year later on October 16, 2008 Gail Morgan transferred [...] Squirrel Street to her daughters Cara and Janna-Joy Morgan. [ 2 ] In this action Paragon seeks a declaration that the transfer by the Defendant Gail Morgan to the Defendants Cara and Janna- Joy Morgan constituted a fraudulent preference, and that, as a result of that transfer Paragon has been injured, prejudiced or delayed. The Plaintiff pleads the Statute of Elizabeth , 13 Eliz. 1, C.5 and the Fraudulent Preferences Act , RSA 2000, c.

F-24 as amended, and seeks a declaration that the transfer was a fraudulent conveyance or alternatively a fraudulent preference, and an order that the Defendants Cara Morgan and Janna-Joy Morgan convey the lands to the Plaintiff in trust for execution by the creditors of the Defendant Gail Morgan. [ 3 ] The Defendants deny that the transfer was either a fraudulent preference or a fraudulent conveyance. The Defendants Cara Morgan and Janna-Joy Morgan counterclaim for damages under sections 141 , 144 , and 149 of the Land Titles Act , RSA 2000 c. L-4 and under

section 4 of the Civil Enforcement Act , RSA 2000, c C-15. They do not claim for economic loss arising out of the alleged wrongful conduct of Paragon. However, they claim damages at large and exemplary damages to denounce Paragon for having taken these proceedings. [ 4 ] The Statute of Elizabeth , prohibits fraudulent conveyances. Justice Clackson, in Proulx v Proulx 2002 ABQB 151 , [2003] 316 AR 150 set out the principles defining the remedy in the Statute of Elizabeth at paragraph 14 as follows: i. There must be a conveyance of either real or personal property; ii.

The transaction must have been for no or nominal consideration; iii. It must have been the intent of the settlor to defraud, hinder or delay his creditors;

iv. The intent of the settlor may be inferred from his circumstances and the circumstances of the settlement or may be the result of direct evidence; v. The fact that there was no consideration or voluntary consideration will in most cases justify the inference of necessary intent absent evidence rebutting that inference; vi. Inference of intent will be strong if the settlor was insolvent at the time of settlement or the settlement effectively denuded him of assets sufficient to cover the existing obligations; vii.

The party challenging the conveyance must be a creditor or someone with a legal or equitable right to claim against the settlor; viii. The conveyance must have had the intended effect. [ 5 ] The application of the Fraudulent Preferences Act is best described in the Saskatchewan Court of Queen’s Bench decision of Moody v Ashton , 2004 SKQB 488 , [2005] 248 DLR (4th) 690 commencing at paragraph 122 . While the case involved the Fraudulent Preferences Act in place in Saskatchewan, it is virtually identical to the Alberta Act.

Justice Baynton stated that while the law applicable under the Statute of Elizabeth and the Fraudulent Preferences Act is very similar, in that both require proof of a fraudulent intent to defeat creditors on the part of a transferor, the Fraudulent Preferences Act requires the transferor, at the time of the conveyance, to be (

a) in insolvent circumstances, (

b) unable to pay his debts in full, or (

c) to know that he is on the eve of insolvency. [ 6 ] Justice Baynton discusses the burden of proof in cases where a plaintiff claims under the Fraudulent Preferences Act or the Statute of Elizabeth beginning at para 139: Although determining the intent of a person is usually a difficult task, judges and juries are routinely required to do it. The difficulty of the task does not relieve the court from making the determination. Nor do the criminal law principles of presumption of innocence and proof beyond a reasonable doubt apply to this determination.

A civil court should not hesitate to conclude, on a balance of probabilities, that fraudulent intent has been proved in circumstances where there is no credible and cogent evidence to counter the strong inferences of fraudulent intent that are raised by the factual circumstances of the case. Sometimes there is direct evidence of intent, but most often there is only indirect or circumstantial evidence of intent.

The intent or motive of a person usually has to be inferred from the time-tested common sense presumption that he or she intended the natural consequences of his of her actions considered in the light of the circumstances of the particular case before the court. I make these observations to demonstrate that this is what the evidentiary aids developed by the case law were designed to do. Although they are given different terms, they all achieve the same purpose.

Once the creditor establishes a factual basis to demonstrate that the necessary consequence of the voluntary conveyance in the circumstances of the case was to defeat creditors, the fraudulent intent to defeat creditors on the part of the transferor is presumed and the creditor has established a prima facie case.

Absent cogent and credible evidence from the transferor or from any other source tending to show that the conveyance was bona fide and not indicative of a fraudulent intent, the prima facie case becomes proof that the conveyance constitutes a fraudulent conveyance that is void pursuant to the Statute of Elizabeth. In other words, although proof of fraudulent intent to defeat creditors is required in all cases where the necessary consequence of the impugned transaction is to defeat creditors proof of fraudulent intent will be presumed absent cogent and credible evidence to the contrary.

Where there is such cogent and credible evidence to the contrary, the presumption of fraud no longer applies, the evidentiary burden of proving fraud shifts back to the creditor and the court must determine, on a consideration of all of the evidence available to it, whether the creditor has established on a balance of probabilities that the transferor had the fraudulent intent to defeat his or her creditors.

Many cases observe that upon proof of a voluntary conveyance in suspicious circumstances or where the parties did not deal at arm’s length, the evidentiary burden of proof respecting the bona fides of the conveyance shifts to the transferor. In my view, this is simply a different way of describing an evidentiary presumption of fraud that arises once certain suspicious facts are established by the creditor. These suspicious facts are often termed “badges of fraud”.

Where suspicious circumstances call for an explanation, such as where at least one or more “badges of fraud” are established, an inference of fraudulent intent arises that is sufficient to shift the evidentiary burden to the transferor to prove that the conveyance was bona fide. [ 7 ] Justice Baynton went on to discuss the “badges of fraud” which are suspicious circumstances suggesting fraud. When one or more of these suspicious circumstances exist, they can form circumstantial evidence of fraudulent intent and may establish a prima facie case of a fraudulent conveyance.

The more badges of fraud that are proven, the stronger the prima facie case of fraudulent intent will be. Justice Baynton enumerated a number of badges of fraud at paragraph 143 of the decision including the following:

(

a) a transfer is made pending a writ; (

b) secrecy respecting the transaction; (

c) the grantor retains some benefit in the property; (

d) the consideration was grossly inadequate; (

e) the grantor continued in possession after the transfer; (

f) the transfer amounted to a trust of the property; (

g) the deed contained false statements as to the consideration; (

h) unusual haste in making the transfer; (

i) the property is shown as an asset of the grantor after the transfer; and (

j) the transfer substantially reduces the property of the grantor that would be available to his creditors otherwise. [ 8 ] In this case, the Plaintiff has demonstrated certain “badges of fraud”, for example, the transfer was made 23 days after Gail Morgan was served with a Statement of Claim issued by the Plaintiff, in which she was being sued on a personal guarantee for which she had no defence. The transfer was not at arm’s length. The Plaintiff called evidence to show that Gail Morgan lived at [...] Squirrel Street since the property was purchased.

There was considerable evidence that Gail Morgan represented to the world that she resided in Banff, Alberta. It appears that she continued in possession of [...] Squirrel Street after the transfer, albeit in the company of her daughter Cara.

There is a demonstrably false statement as to the consideration paid by Cara and Janna-Joy Morgan to their mother, in that the Affidavit of Transferee indicates that the consideration paid was “cash $1.00 plus trade of two homes”. [ 9 ] The Plaintiff urges that the proof of the “badges of fraud” shift the burden of proof to the Defendants to explain the transaction in a manner that does not amount to a fraudulent conveyance, or indeed to a fraudulent preference. [ 10 ] The Defendant Gail Morgan acknowledges that the business in which she and her husband were engaged was the buying and selling of real estate.

She had become very knowledgeable in this area. She was a Commissioner for Oaths. She often prepared legal documents on her own such as transfers, affidavits of transferee, and trust declarations. She acknowledges the loan agreement with Paragon and acknowledges that she and her husband each signed a guarantee.

She acknowledges that the loan eventually went into default, and that as guarantors she and her husband were each liable to Paragon for the shortfall once the development property had been foreclosed upon. [ 11 ] She maintains that in the summer of 2007 she knew that her daughter Cara wished to move to the town of Banff. While Gail was in Banff with her husband she saw the property at [...] Squirrel Street offered for sale.

A few days after first seeing the sign, she, her husband and Cara viewed the property and decided to make an offer to purchase the property at $995,000 (it is to be noted that property in Banff is owned by the Federal Government and the fee simple interest cannot be purchased.

Rather, what was being purchased was a leasehold interest in the subject property.) [ 12 ] The offer to purchase the leasehold interest was signed jointly by Gail Morgan and Cara Morgan on July 5, 2007 and was accepted that same day. [ 13 ] Gail Morgan indicates that at that time the payments on the Paragon loan were not in default, nor did she consider that there was any problem or difficulty with the loan. [ 14 ] Gail Morgan indicates that she listed herself as a co-purchaser because it was uncertain as to whether her daughter Cara would have the necessary funds to close the transaction.

She maintains that the essence of the transaction was that she was providing bridge financing to her daughter Cara.

[ 15 ] Gail and Cara Morgan engaged the services of Mr. Rod Froese, Barrister and Solicitor in Banff, Alberta to act as their lawyer in regard to this transaction. The leasehold interest in [...] Squirrel Street was transferred into the name of Gail Morgan in September 2007. In October of 2007 Gail Morgan transferred that interest to her daughters Cara and Janna-Joy. [ 16 ] The evidence of both Cara Morgan and Gail Morgan is that Cara had sold a piece of property located at 10128 96th Avenue, Grande Prairie, Alberta, receiving $392,000 in the sale.

Her evidence was that these funds, along with approximately $20,000 in savings were transferred to a Guaranteed Investment Certificate (“GIC”) and subsequently to her mother’s trust account at the office of Mr. Bruce Logan, Barrister and Solicitor. Cara explained that she transferred this money to her mother’s trust account with the intent that it would be used to purchase a property, and also because she was in the throes of marital discord at the time. The evidence shows that Mr. Logan did transfer funds to the office of Mr.

Froese for the purpose of paying for [...] Squirrel Street. [ 17 ] The Plaintiff attacks the evidence of the Morgans in regard to this transaction. The Plaintiff reviewed a number of transactions involving Cara Morgan, who acknowledged that she had spent a number of years buying and selling property in an effort to make money in real estate. The Plaintiff maintains that the property at 10128 96th Avenue, Grande Prairie was actually property owned by Gail Morgan. However, that property was legally registered to Cara Morgan in June 2006.

Even if Cara Morgan obtained this property in whole or in part by assistance from her parents, any such assistance from her parents is of no particular assistance to the Court. There is no evidence that Cara Morgan acquired the property at 10128 96th Avenue, Grande Prairie in a fraudulent manner, or with an intent to defraud creditors of Gail Morgan, or that Gail Morgan transferred that property to Cara for that purpose. There is nothing sinister in parents assisting their children.

Further, there is nothing sinister in transferring property to a child, at a time when the transferor is neither bankrupt nor insolvent, nor acts with an intention to delay or hinder creditors.

There is no evidence that the series of transactions leading to Cara Morgan owning 10128 96th Avenue in Grande Prairie were fraudulent conveyances or were performed with an intent to delay, hinder or prejudice creditors. [ 18 ] The evidence supports Cara Morgan’s statement that she sold the property at 10128 96th Avenue in Grande Prairie and received some $370,000 or so in payment for that transfer. [ 19 ] Therefore, I find, that when the [...] Squirrel Street property was originally purchased, Cara Morgan put into the property some $392,000 in the manner described above. [ 20 ] When the property was transferred from its previous leasehold owner, it was transferred into the name of Gail Morgan.

The explanation given by Gail and Cara Morgan in that regard is that, because Cara did not have the money to close the transaction, Gail was lending it to her daughter Cara, while Cara arranged financing. Gail was concerned that the breakdown of her daughters’ marriage could cause complications if title was registered in Cara’s name; and Gail needed to have access to the funds which she had provided, without complication from Cara’s husband making a claim in relation to the property. Therefore, the property was placed in Gail’s name.

Paragon challenges the reliability of that evidence. [ 21 ] Janna-Joy Morgan indicates that she became interested in sharing the ownership of [...] Squirrel Street, and was prepared to sell property of her own in order to participate in the purchase. Cara and Janna-Joy gave evidence that they applied to the Commonwealth Credit Union in October of 2007 for a loan, and a loan agreement was entered into with that Credit Union pursuant to which the Credit Union loaned $602,387.65 jointly to Cara Morgan, Janna-Joy Morgan, and their father John Morgan.

Cara and Janna-Joy say that they had understood their father to be a co-signer rather than a borrower. Regardless, the loan agreement was entered October 29, 2007 and the funds were provided by Commonwealth Credit Union to Mr. Froese, who then provided the sum of $536,000 to Gail Morgan in the form of two cheques, one for $450,000 and the other for $136,000, both cheques dated October 30, 2007.

His Statement of Receipt and Disbursements shows a receipt of $600,000 from Commonwealth Credit Union, payment to Commonwealth Credit Union (payment of loan proceeds) of $14,000, then payment to Gail Morgan the $586,000 referred to above, as “refinancing proceeds”. [ 22 ] Cara and Gail Morgan indicate that the $14,000 shortfall between that $586,000 and the $600,000 provided by Gail Morgan to close the purchase of [...] Squirrel Street, was repaid by Cara to Gail over the ensuing months. [ 23 ] As security for the Commonwealth loan, Cara Morgan provided an Assignment of Sales Proceeds and an encumbrance agreement in respect to property owned by her at 7620 99A Street, in Grande Prairie, Alberta.

Janna-Joy Morgan was the registered owner of property located at 10122 90th Street, Grande Prairie, Alberta and pledged that property to Commonwealth Credit Union as further security for the loan.

[ 24 ] Eventually Cara Morgan sold 7620 99A Street, and Janna-Joy Morgan sold 10122 90th Street, and used the funds to pay back the Commonwealth Credit Union loan. [ 25 ] The Plaintiff embarked upon a review of all of the various real estate transactions entered into by Cara Morgan and also by Janna-Joy Morgan, in an attempt to show that all of these properties were in fact beneficially owned by Gail Morgan as opposed to how they were shown on title. [ 26 ] In regard to Janna-Joy Morgan, both she and her mother acknowledge that her mother had bought her the first piece of property which she owned.

Since that time Janna-Joy had been fixing up properties and selling them at a profit, to the point where she was able to pledge the property at 10122 90th Street to the Commonwealth Credit Union. [ 27 ] Again, there is nothing sinister in a parent helping her daughter to make her first real estate purchase, absent lack of evidence of an intent to delay or hinder the mother’s creditors at the time that assistance was provided. [ 28 ] Janna-Joy later sold that property to a Tristan Blackwood. The circumstances of that transaction are impugned by the Plaintiff, with Mr.

Blackwood taking the stand and indicating that he was intended to be a straw-buyer in an “in and out transaction” but eventually ended up as the owner of the property and responsible for the mortgage on it. While that transaction may be of concern to Mr.

Blackwood, its legitimacy is not relevant to the proceedings herein. [ 29 ] I am satisfied that Janna-Joy Morgan contributed the proceeds from the sale of her property at 10122 90th Street, Grande Prairie, to purchase an interest in [...] Squirrel Street. [ 30 ] The history of ownership of 7620 99A Street is an interesting one, with John and Gail Morgan being previous owners, and then Cara Morgan becoming the owner in January 2004 and remaining the owner at the time the [...] Squirrel Street transaction was being contemplated. [ 31 ] Again, while a number of transactions involving 7620 99A Street have been impugned by the Plaintiff, there is no evidence that anyone other than Cara Morgan was the legal and beneficial owner of that property at the time she took out the Commonwealth Credit Union loan and encumbered that property as security for the loan.

There is no evidence that she acquired that property fraudulently, or from anyone intending to delay, hinder or prejudice any creditor. [ 32 ] In the result, I have reached the conclusion that the [...] Squirrel Street property transferred to Cara Morgan and to Janna-Joy Morgan was fully paid for by them, using their own property and their own funds to do so. [ 33 ] Once the monies had been repaid by Cara Morgan and Janna-Joy Morgan to Gail Morgan, the leasehold interest in [...] Squirrel Street was transferred from Gail Morgan to Cara Morgan and Janna-Joy Morgan, with the assistance of Mr.

Froese, in October of 2008. [ 34 ] The Plaintiff maintains that the timing of that transfer is suspicious, in that it occurred within days of service of Paragon’s Statement of Claim upon its borrower and the two guarantors, John and Gail Morgan. [ 35 ] However, the clear facts presented both in viva voce testimony and in documentary evidence are that the [...] Squirrel Street was purchased using the funds of Cara Morgan and Janna-Joy Morgan.

The fact that Gail Morgan may have resided at the property; the fact that Gail Morgan held herself out as residing in Banff, Alberta; the fact that previous friends of the Morgans testified that they had visited with John and Gail Morgan and understood that John and Gail Morgan owned the house on Squirrel Street; the fact that some previous transactions were not at arm’s length amongst family members; and the cloud of suspicion thrown over other real estate transactions involving John and Gail Morgan - that is to say the alleged “badges of fraud” - do not impeach this finding.

Cara Morgan and Janna-Joy Morgan provided the funds that purchased [...] Squirrel Street. The funds which they provided, far from being nominal, were for the full purchase price of $995,000.00.

[ 36 ] Returning to the decision of Justice Clackson in Proulx v Proulx , supra , in order for the Statute of Elizabeth to provide a relief to creditors, “the transaction must have been for no or nominal consideration”. [ 37 ] Here, Cara and Janna-Joy Morgan have established that they paid full value for [...] Squirrel Street. [ 38 ] Turning to the Fraudulent Preferences Act and the principles set out in Moody v Ashton , supra , the Defendants have provided cogent and credible evidence to show that the conveyance was bona fide .

Therefore, notwithstanding the existence of some “badges of fraud”, the defence has answered those allegations, shifting the burden of proof back to the Plaintiff. The Plaintiff has not made out its claim on a balance of probabilities. Therefore the Plaintiff’s claim is dismissed. Counterclaim [ 39 ] This action was not commenced until September 3, 2010.

However, in May of 2010, in the Action by Paragon against its debtor and the guarantors, Cara Morgan swore and filed an affidavit indicating that she and Janna-Joy Morgan had paid $995,000 to purchase the leasehold interest in [...] Squirrel Street, and indicated the manner in which they had made those payments, and the source of those payments. Cara Morgan was cross-examined on that affidavit. It was after that cross-examination that the within action was commenced. [ 40 ] In her affidavit Cara Morgan details the payment of $392,000 from a GIC and from sale of her property at 10128 96th Avenue in Grande Prairie.

She details the bridge financing arrangement made with Gail Morgan and indicates the reasons why the property was purchased in the name of Gail Morgan. She details the loan agreement entered into by her and Janna-Joy Morgan with Commonwealth Credit Union, borrowing $602,387.65, secured by the equity in her property at 7620 99A Street, Grande Prairie and the equity in the property owned by Janna-Joy Morgan at 10122 90th Street, Grande Prairie. In

summary, she indicated in her affidavit why the property was originally purchased in her mother’s name, where the funds had come from to allow her and her sister Janna-Joy Morgan to purchase the property and, most importantly, showing that good and valuable consideration had been paid for the purchase of the property. [ 41 ] The Plaintiffs by Counterclaim claim compensation in respect of a caveat wrongfully filed, relying on

section 144 of the Land Titles Act which provides as follows: 144 Any person, other than the registrar, filing or continuing a caveat without reasonable cause is liable to make compensation to any person who may have sustained damage by that filing or continuation, and the compensation may be recovered by action if the caveator has withdrawn the caveat and no proceedings have been taken by the caveator or the caveatee as provided in this Act, but if the proceedings have been taken then the compensation is to be decided by the court in the proceedings whether the caveat has been withdrawn or not. [ 42 ] The Plaintiffs by Counterclaim also claim in respect to the filing of the lis pendens , pursuant to

section 149 of the Land Titles Act which provides: 149 A person filing or continuing a certificate of lis pendens without reasonable cause is liable to make compensation to any person who may have sustained damage by that filing or continuation. [ 43 ] The Plaintiffs by Counterclaim also claim damages pursuant to the Civil Enforcement Act , relying on sections 2 and 4 of that Act as follows: 2 The following applies with respect to the carrying out of civil enforcement proceedings:

(

g) all rights, duties and functions of creditors, . . . under this Act must be exercised or discharged in good faith and in a commercially reasonable manner; 4 A person who has suffered loss or damage as a result of another person’s failure to comply with this Act (

a) has a cause of action against that other person with respect to that failure, and (

b) is entitled, if the Court or the Provincial Court finds that the person has suffered loss or damage, to judgment for the damages suffered or $200, whichever is the greater. [ 44 ] Both the Land Titles Act and the Civil Enforcement Act provisions quoted above provide for compensation where a claimant has not acted bona fide , or in the belief that it has reasonable cause for making the claim, filing the caveat or lis pendens . [ 45 ] Here Paragon identified a number of “badges of fraud” which led it to believe that it had a valid claim to an interest in [...] Squirrel Street.

Certainly, the initial filing of the caveat was not unreasonable in the circumstances, given the information available to Paragon at the time it filed its caveat. [ 46 ] However, upon the filing of Cara Morgan’s affidavit on May 31, 2010, and the further cross-examination of Cara by Paragon’s counsel, it must have been apparent to Paragon that Janna-Joy Morgan and Cara Morgan could demonstrate that they had fully paid for the purchase of [...] Squirrel Street. [ 47 ] Paragon investigated the various real estate transactions that had resulted in Cara Morgan and Janna-Joy Morgan being the owners of property which they sold, or encumbered in order to pay for [...] Squirrel Street.

Paragon embarked at that point upon an investigation in an effort to impugn those transactions, essentially seeking to cloak them all with a fraudulent intent to hinder, delay or prejudice creditors. Some of those impugned transactions go back as far as 1992. [ 48 ] 1301940 Alberta Ltd. was not in default on the Paragon loan until April 15, 2008, at which time the loan was extended by six months and reduced payments were negotiated. Demand was made on that loan on September 10, 2008 and the Statement of Claim served September 23, 2008.

Even at that time there was no knowledge that the loan would not be fully repaid by sale of the development property securing it. [ 49 ] Prior to the default by the borrower on the Paragon loan, there is no evidence before the Court that Gail Morgan was insolvent or on the eve of insolvency; and there is no evidence that, to the extent that she assisted her children in purchasing real estate in earlier years, she did so to defraud, delay, hinder or prejudice any creditors. [ 50 ] Without such evidence, the Paragon claim herein was doomed to fail.

While I am satisfied that Paragon believed that it had a reasonable cause of action justifying the caveat and the Certificate of lis pendens against the property, when the evidence was objectively reviewed, that conclusion was unreasonable. [ 51 ] Cara Morgan, and to a lessor extent Janna-Joy Morgan, complain of the stress which this litigation has caused to them. They claim damages at large and also exemplary damages for what they term was high-handed reckless behaviour, slandering their title.

They also claim that the actions of the Civil Enforcement agent for the Plaintiff were oppressive and threatening. [ 52 ] I am not satisfied on the evidence that the actions of the Civil Enforcement Agency were oppressive or threatening. However, I am of the view that the caveat and certificate of lis pendens should have been discharged and this Action discontinued once document production and questioning had been completed.

For damages at large for the maintenance of the caveat and Certificate of lis pendens against [...] Squirrel Street, I assess $5,000 damages in favour of each of Cara Morgan and Janna-Joy Morgan.

[53] The Plaintiffs by Counterclaim also seek exemplary damages, relying on the trial decision of Captain Developments Ltd v Nu-West Group Ltd (1982), (ON SC), 37 OR (2d) 697, 136 DLR (3d) 502 (ON H Ct J). That decision was overturned bythe Ontario Court of Appeal in Captain Developments Ltd v Nu-West Group Ltd (1983) 45 OR (2d) 6 DLR (4th) 179 (ONCA).

ThePlaintiffs by Counterclaim did not cite any Alberta authority, or binding authority allowing the assessment of exemplary damages beyonddamages at large in a case such as this. [54] Exemplary damages would only be awarded if the evidence showed willful and wanton misconduct on the part of theDefendant by Counterclaim. I cannot find, on the facts of this matter, and given the suspicious nature of a number of the transactions,that the Defendant by Counterclaim acted in such a manner. Accordingly, no award is granted for exemplary damages. Conclusion [55] The Plaintiff’s claim against the Defendant is dismissed.

The claims by the Plaintiffs by Counterclaim Cara Morgan andJanna-Joy Morgan, are allowed in the amount of $5,000.00 each. [56] The parties are invited to appear before me to make submissions as to costs. Heard on 19, 21, 22, 25, 26, 27, and 28 of February and the 1st day of March, 2013. Dated at the City of Calgary, Alberta this 12th day of June, 2013. R. J. Hall J.C.Q.B.A. Appearances: J. Burke and D. Nash of Demiantschuk Lequier Burke & Hoffinger LLP for the Plaintiff G. Hickerson of Wilson Laycraft LLP for the Defendants Cara Morgan and Janna-Joy Morgan J. W.

Moroz of McLeod & Co. for the Defendant Gail Morgan

_______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice R. J. Hall _______________________________________________________ Please be advised that the front page of the Reasons for Judgment has been change in order that the Style of Cause now includes Action No: 1101 08914.