Mylonas Enterprises Ltd v Foundation Place Inc, 2013 ABQB 385

Court of Queen’s Bench of Alberta Citation: Mylonas Enterprises Ltd v Foundation Place Inc, 2013 ABQB 385 Date: 20130705 Docket: 1101 17318 Registry: Calgary In the Matter of The Companies' Creditors Arrangement Act, RSC 1985, c C-36 , as amended And in the Matter of the Business Corporations Act, RSA 2000, c B-9 And in the Matter of Legacy Communities Inc, Airdrie Capital Corporation and Airdrie Country Estates Inc, Railside Capital Inc, Railside Industrial Park Inc, Foundation Place Capital Inc and Foundation Place Inc Between: Mylonas Enterprises Ltd Applicant - and - Foundation Place Inc and Ernst & Young Inc as Court-Appointed Monitor of Foundation Place Inc Respondents _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr.

Justice K.D. Yamauchi

_________________________________________ ______________ I.

Introduction [ 1 ] The Applicant Mylonas Enterprises Ltd (“Mylonas”) seeks a declaration that a proof of claim that it has filed with the Respondent Ernst & Young Inc in its capacity as the court-appointed monitor of Foundation Place Inc (the “Monitor”) is valid, which requires this Court to determine whether Mylonas has an interest in lands legally-described as Plan 7157H, Lots 1-3 (the “Lands”). [ 2 ] As with many matters that appear before the court involving the Companies’ Creditors Arrangement Act , RSC 1985, c C-36 [ CCAA ], the parties have requested this Court to render its decision promptly.

The Monitor advises that the issue presently before this Court “must be resolved” before the various stakeholders can determine how best to proceed with this matter. This Court has used its best efforts to accommodate the parties' request. II. Background [ 3 ] Mylonas was the owner of the Lands.

On December 18, 2007, pursuant to an agreement of purchase and sale between Mylonas, as vendor, and 1252064 Alberta Ltd (“125 Alberta”), as purchaser, Mylonas sold the Lands to 125 Alberta (the “Original Purchase Agreement”). [ 4 ] On August 23, 2007, Mylonas and 125 Alberta entered into an agreement, which the parties called an “Option to Purchase and Agreement of Purchase and Sale” (the “Option Agreement”), in which Mylonas acquired an “option to purchase” certain property described in the Option Agreement, which the parties defined as the “Commercial Property.” This Court will use that same term in these reasons.

In essence, the Commercial Property was to be the commercial component on the main floor of a multi-story, mixed-use project (the “Project”). [ 5 ] Pursuant to the Option Agreement, 125 Alberta covenanted and agreed to: A. commence construction within two years of the closing of the Original Purchase Agreement, being August 23, 2009, with “commence” meaning approvals having been obtained: Option Agreement art 5.2; B. provide Mylonas with an occupancy notice not less than 120 days of the proposed occupancy date for the Commercial Property (the “Occupancy Notice”): Option Agreement arts 1.1 and 5.3; C. use its best efforts to make and pursue a subdivision application for the Project as soon as possible: Option Agreement art 5.4; and D. use its best efforts to complete the Project within five years of the closing of the Original Purchase Agreement (being a completion date of August 23, 2012): Option Agreement art 5.5.

E. once Mylonas received the Occupancy Notice from 125 Alberta, it would have 30 business days to notify 125 Alberta of its intention to exercise its “option to purchase” the Commercial Property: Option Agreement art 2.1. “Subdivision” was defined as the subdivision of the Lands into a condominium plan that allowed for the development of the Project (“Subdivision”). [ 6 ] The purchase price that Mylonas would be required to pay on its exercise of the option to purchase was set forth in the Option Agreement art 3.1, which provided: 3.1 The Purchase Price for the Commercial Property shall be based on the actual construction costs of the Commercial Property which cost shall include the proportionate share of the land cost (at the time the option to purchase is exercised) based on the percentage of the total buildable area plus an administration fee of 15% of the actual construction cost of the Commercial Property only (exclusive of GST).

Actual construction costs shall be determined by a quantity surveyor, mutually agreed upon by the parties … [ 7 ] The obligations of 125 Alberta and Mylonas under the Option Agreement to complete the sale and purchase of the Commercial Property was conditional on the subdivision of the Lands, the construction of the Project and the issuance of the Occupancy Notice for the Commercial Property.

Option Agreement art 10.1 says: The Vendor and the Purchaser acknowledge and agree that the Commercial Property is not currently subdivided from the Gross Lands by virtue of a plan of subdivision or other plan or instrument registered at the South Alberta Land Registration District Office, and that the Obligation of the Vendor and the Purchaser to complete the sale and purchase of the Commercial Property is conditional upon the approval of the Municipality of the Subdivision of the Gross Lands in order to create a separate Certificate of Title for the Commercial Property.

The Vendor agrees to proceed with the Subdivision Application to the Municipality and to diligently pursue such application and the parties will keep each other fully informed as to its progress .

The Purchaser agrees to assist and cooperate with respect to the Subdivision Application, which application shall be made at the sole expense of the Vendor, including executing whatever documents and applications that are required to advance the Subdivision Application. [Emphasis added]. [ 8 ] The Lands were consolidated with a separate parcel of property and a new certificate of title was issued in respect of the consolidated property with the legal description of Plan 1011477, Block 4, Lot 41 (the “Foundation Place Lands”).

The “Subdivision” has not yet occurred. [ 9 ] On August 30, 2007, Mylonas registered a caveat bearing instrument number 071 434 678 in respect of the Option Agreement (the “Caveat”). It did this pursuant to Option Agreement art 5.6. The Caveat is currently registered against title to the Foundation Place Lands. The Option Agreement art 5.6 says that Mylonas will postpone its Caveat for the purposes of construction

financing/investor syndication to a maximum amount not to exceed the cost of the Lands and the necessary construction financing.Otherwise it shall not be required to postpone its Caveat. There is no evidence of any construction financing. [10] On or about February 12, 2008, Foundation Place Inc issued shares pursuant to an offering memorandum (the “FPI OfferingMemorandum”) to raise funds to purchase the Lands and develop the Project.

On or about February 12, 2007, Foundation Place CapitalInc issued bonds pursuant to an offering memorandum (“FPCI Offering Memorandum”) to raise funds to purchase the Lands anddevelop the Project (collectively, the FPI Offering Memorandum and FPCI Offering Memorandum shall be referred to as the “OfferingMemoranda”). [11] On December 23, 2007, 125 Alberta entered into an agreement with Foundation Place Inc to sell the Lands to FoundationPlace Inc for $4.5 million (the “Sale Agreement”). On August 23, 2008, 125 Alberta transferred the title to the Lands to FoundationPlace Inc.

On July 7, 2009, a mortgage of $8,500,000 was registered on title in favour of Foundation Capital (the “Foundation CapitalMortgage”). The Foundation Capital Mortgage remains registered against title to the Foundation Place Lands, subsequent to the Caveat. [12] Neither Foundation Place Inc nor the Monitor has decided whether to continue with development of the Lands or to abandondevelopment and sell the Lands as raw land. [13] The Offering Memoranda lists the Caveat as one of a number of encumbrances registered against the Lands and identifiesspecific provisions from the Option Agreement.

The Offering Memoranda indicates that pursuant to the Sale Agreement, FoundationPlace Inc became the assignee (as vendor) of the Option Agreement and is obligated to obtain approvals for construction of the Projectby August 2009. [14] Foundation Place Inc took steps towards obtaining the Subdivision, including retaining Landstar Teamworks ProjectManagement Ltd. (“Landstar”) and applying for a development permit for the Project. Foundation Place Inc must obtain a developmentpermit before it can apply for the Subdivision.

Landstar provided construction management services to Foundation Place Inc and assistedwith Foundation Place Inc’s development permit application. The development permit application was successful and Foundation PlaceInc is free to obtain the development permit on paying the necessary bond to the City of Calgary. Foundation Place Inc has not yet madethat payment. III. Discussion [15] Pursuant to

section 130 of the Land Titles Act, RSA 2000, c L-4 [LTA], a person claiming to be interested in land for which acertificate of title has been issued may file a caveat in the appropriate Land Titles Office. Mylonas claims to have such an interest, so itregistered the Caveat. However, a caveat does not create an interest in land or enhance an existing interest in land. Rather, a caveat is astatutory protection afforded to a person claiming an interest in land under the LTA and operates as a warning or protection of the allegedinterest: Canada Trustco Mortgage Co v Wycott, 2002 ABQB 399 at para 25.

The caveator will only protect a valid and enforceableinterest in land if the claim on which its caveat is based renders that person a “person interested in land”: LTA s 130. [16] Does the Option Agreement give to Mylonas an interest in land? The Supreme Court of Canada described the nature of anoption in Canadian Long Island Petroleums Ltd v Irving Wire Products, (SCC), [1975] 2 SCR 715, 50 DLR (3d) 265[Canadian Long Island, cited to SCR].

It said at 731-32: An option gives to the optionee, at the time it is granted, a right, which he may exercise in the future, to compel the optionor to convey tohim the offered property. … In other words, the essence of an option to purchase is that forthwith upon the granting of the option, the optionee, upon the occurrenceof certain events, solely within his control can compel a conveyance of the property to him. [17] The Monitor argues that because, among other things, the subdivision of the Lands had not been obtained, Mylonas’ option toacquire the Commercial Property had “not vested.” It provides this Court with the case of Sprague-Rosser Contracting Co v 572757Alberta Ltd, 2013 ABQB 205 (Master) [Sprague-Rosser] in support of its position.

Sprague-Rosser Contracting Co (the “Purchaser”)had purchased land from 572757 Alberta Ltd (the “Vendor”). The purchase agreement granted the Vendor an option to re-purchase thelands from the Purchaser if the Purchaser commenced construction and then failed to complete structural foundation work for anintended project on the lands within twenty-four months of the closing date.

The Purchaser brought an application to discharge thecaveat in respect of the option to purchase agreement that had been lodged. [18] Master Schlosser said at paras 17 and 18: Paragraph 20.2 goes on to provide a right to the vendor for an irrevocable option to repurchase if the structural foundations are notcompleted within twenty four months from the closing date. The Agreement does not expressly cover the eventuality of Sprague-Rossernot constructing a building but the choice not to build appears to be open to them as the Agreement does not otherwise oblige them toconstruct a building.

As I read it, it was open to the Purchaser to choose not to build. The irrevocable option to repurchase only arose ifSprague-Rosser started construction but did not otherwise comply with clause 20. Accordingly, the conditions subsequent giving rise to the right to repurchase did not materialize. At best, there may be a contractualdispute respecting a collateral agreement.

In my view, this is not enough to sustain Caveat 102090959. [Emphasis added]. [19] The Monitor argues that while the Vendor could assert a claim for damages against the Purchaser, the fact that the conditionassociated with the right to purchase the property had not materialized was fatal to the caveat registered in respect of the option. ThisCourt does not dispute the holding of Master Schlosser in Sprague-Rosser, but it is important to note the emphasized portion of thequotation.

The learned Master was repeating what he had said earlier in his decision, when he said “Nothing in the agreementspecifically required the [Purchaser] to construct a building on the lands”: Sprague-Rosser at para 8. In the case before this Court, 125

Alberta, the purchaser in the case before this Court, had a positive obligation to meet the requirements set forth in the Option Agreement. [20] Master Schlosser at para 14 also said that “[t]he essence of a right of repurchase is that it is contingent upon the happening ofconditions subsequent,” relying on Paul Perell, Options, Rights of Repurchase and Rights of First Refusal as Contracts as Interests inLands, 70 Can Bar Rev 1 (the “Perell Article”). It is important to note, however, that in Sprague-Rosser, the Purchaser had no obligationto fulfill anything.

Thus, the condition subsequent never materialized and the Vendor could not force the Purchaser to undertake it. Inany event, the Perell

Article only makes that statement as part of its argument. [21] Many times throughout the Perell Article, the author notes that options to purchase real property create interests in land. ThisCourt doubts that anyone can challenge that proposition, given the Canadian Long Island description. In the case with which this Courtis dealing, does the Option Agreement create an option to purchase the Lands?

Had 125 Alberta (or its successor in title, FPI) fulfilled itscontractual obligations to obtain the Subdivision, complete construction of the Project and issued the Occupancy Notice, then theoptionee, Mylonas, would either exercise its option or not. In other words, the option does not arise until certain conditions are fulfilled.This is a right of re-purchase. However, as the Perell

Article says at 7: …[T]he vendor sells his or her property and reserves a right to repurchase the property. In this simple form, there is nothing analyticallydifferent to distinguish a right of repurchase from the option contract … [22] In a “complex” right of repurchase, the right of repurchase does not arise immediately, but will depend on decisions or theconduct or status of the new owner of the land, in this case, 125 Alberta. The Perell

Article provides examples of where, if the newowner fails to do something, such as build something on the property, the right to repurchase is triggered. For example, had the OptionAgreement contained the positive covenant that 125 Alberta had to construct within a particular period, failing which Mylonas wouldhave an option to repurchase, this would fall within the example that the Perell

Article provides. [23] The Perell

Article says that complex rights of repurchase are analytically similar to rights of first refusal where “to becomeoperational, these rights depend upon the decision, conduct or status of the owner of the land”: Perell

Article at 9. This differs from anoption to purchase where the optionee controls the process: Canadian Long Island at 732. In support of this proposition, the authoragain refers to Canadian Long Island. The right to purchase the land in the case of a right of first refusal depends on the vendor’sdecision to sell. The vendor might decide never to sell, in which case, the rights holder’s ability to purchase would never arise. MartlandJ said at 732: [The right of first refusal] did not give to the respondents any present right to require in the future a conveyance of Sadim's undividedone-half interest in the land.

It was not specifically enforceable at the time the agreement was executed. The respondents were not givenany right to take away Sadim's interest without its consent. Their right under that clause was a contractual right, i.e., the covenant ofSadim that if it was prepared to accept an offer to sell its interest, the respondents would then, and only then, have a 30-day option topurchase on the same terms.

The contingency in this clause is resolved solely upon the decision of Sadim to sell. [24] Thus, Martland J held that the right of first refusal did not create an interest in land that was subject to the rule againstperpetuities. He went on to say that the right of first refusal could be enforced by way of an injunction “to prevent Sadim from disposingof the land.” He went on to say at 737: In this case Sadim did convey its interest in the land to Long Island, which took its title with full knowledge of the requirements of therestrictive covenant.

This being so, I do not consider that the position of Long Island as against the respondents should be improvedbecause Sadim had actually acted in breach of its commitment to the respondents, by assigning its interest to Canadian Long Island. Thisis a proper case for the application of the proposition stated in Fry on Specific Performance, 6th ed., p. 90: § 205. Generally a stranger to the contract is not a proper defendant to an action for enforcing it. But this general rule is subject toexceptions. § 206.

If a stranger to the contract gets possession of the subject-matter of the contract with notice of it, he is or may be liable to be madea party to an action for specific performance of the contract upon the equitable ground of his conscience being affected by the notice. [25] This tells us two things. First, that the stranger to the contract, if it has knowledge of the holder of the right of first refusal,could be liable for an action for specific performance. In this case, FPI took the Lands knowing that it was subject to Mylonas’s rights.Thus, it could be liable in an action for specific performance.

Second, it tells us that the rights holder has an action for specificperformance. This Court will address that issue later in these reasons. [26] Perhaps because of the finding in Canadian Long Island, the Alberta Legislature passed the Real Property StatutesAmendment Act, 1985, SA 1985, c 48, s 4, which added the LPA s 63. That

section says that rights of first refusal create equitableinterests in land. It says: 63(1) The following are equitable interests in land: (

a) a right of first refusal to acquire an interest in land; …

(2) After registration of a caveat under the Land Titles Act protecting an equitable interest referred to in subsection (1), the equitableinterest takes priority in accordance with

section 14 of the Land Titles Act and runs with the land. [27] Two Supreme Court of Canada decisions, City of Halifax v Vaughan Construction Co Ltd, (SCC), [1961]SCR 715, 30 DLR (2d) 234 [City of Halifax, cited to SCR] and Weinblatt v City of Kitchener, (SCC), [1969] SCR 157,1 DLR (3d) 241, held that complex rights of repurchase create interests in land in cases where the city conveyed land to a purchaser witha provision that the purchaser build on the land within a stipulated time and the purchaser failed so to do. In City of Halifax the court

said at 719: My opinion is that when … [the purchaser of the land] acquired the fee simple, it did so subject to an equitable interest in the land heldby the city as a result of [the right of repurchase]. [28] Even though the Perell

Article does not agree with this conclusion, it provides arguments that would support the conclusionthat complex rights of repurchase and rights of first refusal should be treated in the same manner as options to purchase, therebyproviding the potential purchaser with an interest in land. Because Martland J in Canadian Long Island said that injunctions areavailable to enforce the right contained in these instruments, the ability of the vendor to deal with the property is restrained. Aninjunction is a proprietary remedy.

If the vendor wishes to free itself from the restraint, it must obtain a release from the owner of theright, and the owner of the right may demand payment for the release: Perell

Article at 24. [29] As well, the Perell

Article argues that if complex rights of repurchase and rights of first refusal may treated like property, theyshould be classified as property: Perell

Article at 25. The LPA s 63 now statutorily says that rights of first refusal create equitableinterests in land. [30] Finally, the Perell

Article at 26, says that “rights of first refusal and complex rights of repurchase closely resemble options intheir structure and commercial function and arguably these rights merit the same treatment in law.” [31] If the LPA s 63 gives rights of first refusal the status of interests in land, and the common law gives options to purchase thesame status, why should rights of repurchase not have the same status? They bear trappings of each. The facts of this case make thisargument even stronger.

In this case, 125 Alberta (and its successor, FPI) had a positive obligation to obtain the Subdivision andcomplete the Project. It did neither. Can it merely “lie in the weeds” and defeat an interest that it agreed to grant? Is this fair? [32] The facts before this Court differ from those in the cases it has discussed so far. In those cases, the holder of the fee simplehad a duty to complete construction. If it failed to do so, the right of repurchase would arise.

In this case, the holder of the fee simple,125 Alberta (and its successor in title, FPI), had a duty to obtain Subdivision and then complete the Project at which time the right ofrepurchase would arise. If it failed so to do, the Monitor argues, Mylonas’s right to repurchase would never arise. In Pierce v Empey (SCC), [1939] SCR 247 at 252, Duff CJC said: It is well settled that a plaintiff invoking the aid of the court for the enforcement of an option for the sale of land must show that theterms of the option as to time and otherwise have been strictly observed.

The owner incurs no obligation to sell unless the conditionsprecedent are fulfilled or, as the result of his conduct, the holder of the option is on some equitable ground relieved from the strictfulfillment of them … [emphasis added]. [33] In the Perell Article, the author says at 5: … Duff C.J.C.’s statement in Pierce v. Empey leaves room for the operation of equitable doctrines that relieve the option holder of theobligation to perform strictly the conditions of the option.

In this regard, many cases about options turn on the issue of whether thevendor, by his or her words or conduct, has waived strict compliance with the terms of the option or is estopped from asserting that theoption has not been properly exercised. [34] This Court recognizes that Duff CJC and the Perell

Article were discussing strict compliance in the context of options topurchase. However, this Court could waive strict compliance in the case of a right of repurchase where the holder of the fee simple hasdone some act, or failed to do

an act, which would entitle the rights holder to exercise their rights. In Steiner v EHD Investments Ltd,1977 ALTASCAD 208 , [1977] 6 WWR 308, 6 AR 113 (Alta SC, App Div), a vendor undertook to use its best efforts to obtainsubdivision of lands, which would permit the purchaser to purchase a portion of the subdivided lands. The vendor made no reasonableeffort to obtain subdivision, and the court found that the purchaser would have no status to apply for the required subdivision.

The courtsaid at 311-312 [cited to WWR]: In my view, however, the vendor cannot by failing to apply for subdivision frustrate the entire agreement. Lord Atkinson, in the PrivyCouncil decision of New Zealand Shipping Co. v.

Société des Ateliers et Chantiers de France, [1919] A.C. 1 at 9, said this: …But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act oromission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist uponthe stipulation himself or to compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do eitherwould be to permit him to take advantage of his own wrong, in the one case directly, and in the other case indirectly in a roundaboutway, but in either way putting an end to the contract. [35] As a result, the court held at 314 that “The purchasers have requested and, in my view, are entitled to an order that thedefendant do specifically perform its contract, which is to make a bona fide application for subdivision.” [36] The Supreme Court of Canada dealt with a similar issue in Dynamic Transport Ltd v OK Detailing Ltd, (SCC), [1978] 2 SCR 1072, 6 Alta LR (2d) 156, [Dynamic Transport, cited to SCR].

In that case, subdivision approval was a conditionprecedent to the performance of the obligations to sell and to buy the real property. The sale and purchase agreement was silent as towhich party would obtain the subdivision approval. The Supreme Court of Canada held that it was the vendor who has the obligation toobtain subdivision approval by saying at 1084: In a purchase-and-sale situation, the "person who proposes to carry out a subdivision of land" is the intending vendor. It is he who mustdivide his parcel of land, which has hitherto been one unit, for the purpose of sale.

If a purchaser carried out the actual work inconnection with the application, he could only do so in the vendor's name and as his agent. The vendor is under a duty to act in good faithand to take all reasonable steps to complete the sale. I cannot accept the proposition that failure to fix responsibility for obtainingplanning approval renders a contract unenforceable. The common intention to transfer a parcel of land in the knowledge that asubdivision is required in order to effect such transfer must be taken to include agreement that the vendor will make a proper application

for subdivision and use his best efforts to obtain such subdivision. This is the only way in which business efficacy can be given to theiragreement. [37] The court declared that the sale and purchase agreement was a binding contract, including the implied term that the vendorwill seek subdivision approval. During that time, it allowed the purchaser to maintain its caveat.

This suggests that the Supreme Court ofCanada recognized that the purchaser had an interest in the impugned lands. [38] In the case before this Court, it was 125 Alberta (and its successor, FPI) that had the obligation to apply for the subdivisionand to construct the Project. Mylonas had no such obligation and it could not undertake that task. Can 125 Alberta (and its successor,FPI) rely on their failure to apply for the Subdivision to defeat Mylonas’ rights?

Based on the foregoing cases, it is clear that it cannotand, based on Dynamic Transport, Mylonas may maintain its interest in the Property through its caveat. [39] Does the Alberta Court of Appeal’s decision in 1244034 Alberta Ltd v Walton International Group Inc 2007 ABCA 372, 82 Alta LR (4th) 259 [Walton], change this. Before discussing Walton, this Court feels it worthwhile to discuss briefly the Supreme Court ofCanada’s decision in Semelhago v Paramadevan, (SCC), [1996] 2 SCR 415, 3 RPR (3d) 1 [Semelhago, cited to SCR],which Walton followed.

The issue in Semelhago involved an assessment of damages to which a purchaser was entitled on the vendor’srefusal to complete the sale. It was not a case in which the Supreme Court of Canada was asked to rule on the issue of whether specificperformance was available in the circumstances of that case. Sopinka J for the majority acknowledged as much at para 23.

Nonetheless,he dealt with the issue of whether specific performance should have been available in the circumstances before him. [40] Sopinka J at para 22 noted the tendency of courts to treat real estate as being unique such that specific performance would beavailable in the event of breach, and that some courts “have begun to question the assumption that damages will afford an inadequateremedy for breach of contract for the purchase of land: ibid.

He went on to say: Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent thatits substitute would not be readily available. The guideline proposed by Estey J. in Baud Corp., N.V. v. Brook, (sub nom. Asamera OilCorp. v. Sea Oil & General Corp) (SCC), [1979] 1 S.C.R. 633, with respect to contracts involving chattels is equallyapplicable to real property.

At p. 668, Estey J. stated: Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing to procurealternate property in mitigation of his losses, some fair, real and substantial justification for his claim to performance must be found. [Emphasis added]. [41] Sopinka J closed by saying at para 23, “In future cases, under similar circumstances, a trial judge will not be constrained tofind that specific performance is an appropriate remedy.” [Emphasis added]. [42] In Walton the Defendant Walton International Group Inc (“WIG”) purchased land and sold 151 undivided interests in theland to investors, hoping later to sell the land to make profit for the investors.

If WIG accepted an offer of sale, each investor had a rightof first refusal entitling them to purchase interests of those investors accepting the offer, on same terms. WIG entered into an agreementof purchase and sale with plaintiff 1244034 Alberta Ltd (“124 Alberta”). WIG waived the conditions precedent to the sale. One ofinvestors sought to exercise his right of first refusal. Accordingly, WIG advised 124 Alberta that it was unable to complete transaction.124 Alberta filed caveat and lis pendens certificate.

The Alberta Court of Appeal upheld the chambers judge’s dismissal of 124 Alberta’sapplication for an injunction restraining the conveyance of the land and the order requiring 124 to remove its caveat and the lis pendenscertificate. [43] Berger JA, for the majority, at para 2 repeated the statement from Semelhago that: …[I]t should no longer be presumed that specific performance should always be granted in the case of contracts dealing with the sale ofland. The Court did not conclude that specific performance will never be available in the case of property acquired for investmentpurposes.

Rather, the relevant inquiry will be whether the property is "unique" or whether damages are an adequate remedy. [Emphasisadded]. [44] The Monitor argues that Mylonas has tendered no evidence that the Lands unique such that specific performance would issueor that damages are not an adequate remedy.

It argues that the Lands are commercial property and therefore “damages can be awarded to‘compensate’ the plaintiff for the diminished quality of his investment”: Domowicz v Orsa Investments Ltd, (ONSC), [1993] OJ No 2214 at para 68, 15 OR (3d) 661 (Gen Div) [Domowicz]. [45] Walton and Domowicz were cases involving agreements for the purchase and sale of real property in which the purchaser wasseeking to purchase the property for investment purposes.

In Walton Berger JA said at para 13 “On the facts of this case, the purchaserhad every intention to flip the property and/or to acquire it for the purchase price and then sub-divide to home builders.” Berger JA goeson to say at paras 5-6: The author of Anger and Honsberger, Law of Real Property, 3rd ed. looseleaf, (Aurora: Canada Law Book, 2007) points out at p. 23-22that: In the post-Semelhago era, purchasers seeking to specifically enforce contracts for the sale of land in Canada bear the onus ofestablishing that damages would be an inadequate remedy in the particular circumstances.

Should the purchaser be attempting to obtainthe lands merely for investment purposes such onus would be exceedingly difficult to satisfy. ... The author adds that the Court must determine the true intentions of the plaintiff so as to avoid a speculative lawsuit for profit. [Emphasis added].

[46] In this case, there is no evidence before this Court that Mylonas was seeking to flip the Lands or that it was purchasing theLands only for investment purposes. Berger JA stated that whether specific performance is available remains a matter of discretion forthe trial judge and that each situation is to be determined on its facts: Walton at paras 2-3. [47] In this case, this Court is not dealing with an agreement of purchase and sale of the Lands, as was the case in Semelhago andin Walton. It is a right of repurchase which, once the vendor complies with its obligations, will be an option to purchase.

Based on theforegoing, this created an interest in the Lands in favour of Mylonas. [48] There is an added wrinkle to the matter before this Court. FPI sought protection from its creditors pursuant to the CCAA. TheMonitor advises that neither it nor FPI has made a decision about whether to continue with the development of the Lands or sell theLands as raw land.

If a decision is made to sell the Lands as raw land, one wonders whether there is any viable prospect for a plan ofarrangement under the CCAA because the sale would simply constitute a liquidation of FPI’s assets that will yield less than the balanceowing to Foundation Capital. There would be nothing left to restructure under the CCAA and thus, the CCAA might not be the mostappropriate legislation under which the interests of the stakeholders must be dealt: Royal Bank v Fracmaster Ltd (1999), 1999 ABCA178 , 244 AR 93 at para 16 (CA).

In that case, Foundation Capital might decide to commence foreclosure proceedings. In thatcase, Mylonas should be provided with an opportunity to defend any such action. [49] Damages, in this case, would not be an appropriate remedy because without the Lands, there is nothing against whichMylonas may recover its damages. FPI is insolvent and Foundation Capital, a related corporation, is the entity that would benefit fromthe discharge of the Caveat. This is a different situation from that with which the Walton court was dealing.

On this basis alone, Mylonashas established that damages would not be an appropriate remedy in the circumstances before this Court. [50] For the purposes of this application, this Court finds that Mylonas retains its interest in the Lands and it may retain the Caveat. [51] Of course, if FPI (or a successor in title) is unable to obtain the Subdivision and complete the Project, or something similar,the conditions for the establishment of the option might not be fulfilled and Mylonas’ interest might evaporate. This Court cannot rule onthat matter at this time. Much depends on how matters unfold.

Heard on the 27th day of June, 2013. Dated at the City of Calgary, Alberta this 5th day of July, 2013. K. D. Yamauchi J.C.Q.B.A. Appearances: A Robert Anderson, QC and Michael Bokhaut Osler, Hoskin & Harcourt LLP for the Applicant Walker W MacLeod McCarthy Tetrault LLP for the Respondents