Dabbs v, 2013 ABQB 427

Court of Queen ’ s Bench of Alberta Citation: Dabbs v 1567877 Alberta Ltd., 2013 ABQB 427 Date: 20130731 Docket: 1201 04412 Registry: Calgary Between: Michael William Dabbs Plaintiff - and - 1567877 Alberta Ltd. and Edwards Land Services Ltd. Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.M. Bensler _______________________________________________________ I. Introduction [ 1 ] This trial addressed the narrow issue of whether an interest rate of 12% was agreed upon between the parties in relation to a contractual severance agreement.

On September 17, 2012 Master Laycock signed an Order whereby the parties agreed to a settlement and partial

summary judgment was granted in favour of the Plaintiff. The issue of interest on the settlement amount was reserved for trial. This decision resolves this one remaining issue.

II. Facts and Background [ 2 ] The dispute between the parties arose out of an agreement wherein the Plaintiff, Michael William Dabbs, would resign as president and director of the Defendant companies Edwards Land Services Ltd. (“Edwards Land”) and 1567877 Alberta Ltd. (“1567877"). [ 3 ] In 2010, Mr. Dabbs was approached by Justin Edwards, the son of the then owners of Edwards Land, to join a group to purchase Edwards Land. Mr. Dabbs agreed and originally acquired 25% of Edwards Land at the beginning of 2011 for $205,000. In order to effect the purchase, Mr. Dabbs and his colleagues set up 1567877. Mr.

Dabbs made his investment into 1567877 which then, along with the other partners’ investments, purchased Edwards Land, becoming its parent company. Upon the purchase Mr. Dabbs became the president, chairman of the board and director of Edwards Land and was also acting in the same capacity for 1567877. [ 4 ] In March 2011, Mr. Dabbs and his fellow shareholders bought out the shares of one of the original shareholders, Piers Earl. Mr. Dabbs’ contribution towards the purchase of Mr. Earl’s shares totalled $20,833. Mr. Dabbs’ original 25% share increased to 27.8% following the purchase. Mr.

Dabbs made a further cash injection of $24,000 into Edwards Land in April and May, 2011. [ 5 ] In October and November 2011, the shareholders of 1567877, including Mr. Dabbs, held three meetings with the eventual outcome being that Mr. Dabbs was asked to resign his positions and leave both companies. Another shareholder, Leslie Petrick, would also be exiting the companies along with Mr. Dabbs. At these meetings Mr. Dabbs and the other shareholders reached an agreement in principle that Mr.

Dabbs would be paid $265,000, an amount that would allow him to recover his investments into the company and act as a severance package. A $65,000 down payment was to be made with the remaining $200,000 to follow in monthly installments. Mr. Dabbs vacated the offices of president of both companies, but retained his directorship in both until the agreement became official. [ 6 ] The issue before the Court concerns the interest rate that applied to this agreement between Mr. Dabbs and the other shareholders. On November 2, 2011, Mr. Dabbs received an email from Mr.

Edwards that outlined the agreement in principle (the “November 2 Agreement”). This agreement read: A total payment of $265,000.00 will be made to Michael Dabbs for the repurchase of shares in 156778 (sic) Alberta Ltd., shareholders loan, shareholders loan interest, pay in lieu of severance for November and December 2011 and holiday pay. The first payment of $65,000.00 will be made by November 9, 2011. This payment will be accompanied by the legal documentation to facilitate this transaction.

We will not require you to sign a non-competition agreement in this process. [ 7 ] As can be seen by the wording above, the Agreement contains five component amounts: repurchase of shares, shareholders loan, shareholders loan interest, two months pay in lieu of severance, and holiday pay. The dispute between the parties concerns whether the “shareholders loan interest” component is already included in the $265,000 or whether it is to be paid on top of the $265,000 to be paid to Mr. Dabbs. [ 8 ] Following the receipt of this letter, Mr. Dabbs emailed Mr.

Edwards that he was “good with the agreement on one condition: the share transfer happens when the cash deposit is paid and the remaining balance is either a loan or a promissory note registered against the numbered company that is to be paid back in under 18 months.” The following day, November 3, 2011, Mr. Dabbs emailed Shaun MacIsaac, Q.C., a corporate lawyer working with Edwards Land, and attached his correspondence with Mr. Edwards. This email to Mr. MacIsaac contains the first documented mention of the specific interest rate of 12% being a term of Mr. Dabbs’ exit.

It read: I am sure you have heard I am leaving Edwards. I have attached their offer letter and my conditions. I will only sign this deal If (sic) the share transfer happens immediately and I am issued a promissory note or loan that will be registered against 1567877 Alberta. I also want it to be clearly stated in the documents that he (sic) loan is to be paid out in 18 months and the interest rate is 12%. It also has to be stated that the company (els) is responsible for all taxes owing on my shareholder draws. [ 9 ] Mr. Edwards testified that he was surprised that Mr. Dabbs would send this to Mr.

MacIsaac without his knowledge. Mr. MacIsaac responded on November 4, 2011 to Mr. Dabbs’ email:

I will do my best to promptly reduce to writing your agreement with Edwards and 1567877 to writing promptly when I am given a copy of it. Remember that as corporate lawyer, I can only act to paper what has been agreed, and cannot negotiate for one side. [ 10 ] At trial Mr. Edwards testified that in early November 2011 Edwards Land received $110,000 from Mr. Edward’s parents to pay the down payments to Mr. Dabbs and Mr. Petrick. On the same day Mr. Edwards was informed by his bank that Edwards Land must immediately make a $106,000 payment on a loan Edwards Land had received from the bank. Mr.

Edwards used the $110,000 to make this latter payment and was therefore unable to make the initial payment to Mr. Dabbs, or to Mr. Petrick, without placing the company in insolvency. [ 11 ] On November 5, 2011 Mr. Edwards sent an email to Mr. MacIsaac regarding the plan to transition Mr. Dabbs and Mr. Petrick out of Edwards Land. This email included an attachment of the November 2 Agreement. Mr. Edwards wrote: Please see the attached letters that outline the transition plan for Mike and Leslie. We have not sorted out all the details, we will be relying on you to help us get everything wrapped up.

As per our discussion yesterday, both Mike and Leslie would like to setup a loan agreement in exchange for their shares. The timing for payout on the loans is sensitive of course because of our commitments/covenants with the bank as well as our purchase and sale agreement with Pam and Darcy. [ 12 ] On November 7, 2011 Mr. MacIsaac responded to the above email indicating that he had drafted agreements relating to the Dabbs transfer. In this email Mr. MacIsaac also informed Mr. Edwards that he required information on “several points” before he could complete the documents. During his evidence at trial Mr.

Edwards did not recall Mr. MacIsaac asking for any particular instructions in this regard. [ 13 ] On November 8, 2011 Mr. MacIsaac dictated a letter to Mr. Edwards and Mr. Earl, who continued to advise Mr. Edwards as an accountant, that discussed the ongoing drafting of the documents. In this letter, Mr. MacIsaac discusses the promissory note that Mr. Dabbs had requested, and addresses the issues of interest directly: I would rather have the Promissory Note not bear interest and simply set out the payment obligations on a monthly basis.

Once your figured out the new sum which, for example, might be $300,000, then it is simply a question of dividing into 18 monthly payments the difference between the $65,000 and the $300,000. If you could address your mind to this issue and provide me with the figure, be it $300,000 or some figure that is greater or lesser than that sum, and the interest calculation for the 18 monthly payments, this would be appreciated. [ 14 ] At trial Mr. Edwards testified that he did not recall receiving this email, but that, given that the email was sent to him, he must have. He also explained that he would have trusted Mr.

Earl to handle the matters addressed by Mr. MacIsaac. [ 15 ] On November 9, 2011 Mr. MacIsaac sent Mr. Edwards a further email with draft documents relating to the Dabbs transaction attached: Please find enclosed a copy of the draft documents on the Dabbs transaction with the figures as received today from MNP. Please let me know if they are acceptable. Feel free to circulate as you see fit. [ 16 ] According to Mr. Edwards’ testimony he does not recall ever telling Mr. MacIsaac that the documents were acceptable and did not look at the documents.

Because of the economic situation of Edwards Land he knew that the company would be unable to complete any agreement with Mr. Dabbs and therefore did not think it was necessary to review the documents Mr. MacIsaac had sent. Included in these documents was the same promissory note that will be discussed below. [ 17 ] On November 28, 2011 Mr. Dabbs received an email from Mr. Edwards containing several attachments that outlined the provisions of the deal for Mr. Dabbs to exit Edwards Land and 1567877 (the “November 28 Email”). Between November 4 and 28, Mr. Dabbs and Mr.

Edwards had occasional conversations regarding the timing and progress on the documents, but there is no record of any

negotiation regarding the terms of the deal taking place. According to Mr. Edwards he never even opened or read any of the documents attached to the November 28 Email. Contained in the attachments to the November 28 Email was the Promissory Note Mr. Dabbs requested from Edwards Land and 1567877. This Promissory Note dated November 9, 2011 (the “Promissory Note”) outlined that payment would be made “in consecutive monthly installments, due on the last day of each month, commencing on November 30, 2011 and ending with a final installment on April 30, 2013".

The Promissory Note also contained a term regarding interest: Commencing on November 9, 2011, the Principal Amount shall be repaid together with 12% simple interest. [ 18 ] As Mr. Edwards had not examined the documents and had no intention of signing anything until the company’s financial situation improved, he claims to have been unaware that a Promissory Note was included in the documents, or of any of its specific terms. [ 19 ] Mr. Dabbs was informed later that same day in an email from Mr.

Edwards that “some of the documents will be changed to reflect the management fee payout and release.” On December 6, 2011 (the “December 6 Email”) Mr. Dabbs received these revised documents in an email from Mr. MacIsaac. Though some of the documents were revised, the Promissory Note, including the provisions regarding the 18 month payment and the 12% interest rate, remained unchanged. In response to these revised documents, Mr. Dabbs emailed Mr. MacIsaac and Mr. Edwards.

This email read: I am not comfortable in signing any of this paperwork prior to being paid out 100% ($265,000) of the monies owed to me with applicable interest at 12%. [ 20 ] Indeed, the paperwork remained unsigned by both Mr. Dabbs and Edwards Land prior to the commencement of legal proceedings. Edwards Land was not prepared to sign the documents due to financial restraints at the time and Mr. Dabbs was not comfortable signing them without his payments becoming current.

Clause 3.3 of the Settlement and Share Purchase and Repayment of Shareholder’s Loan Agreement, which was one of the documents included in the November 28 Email, specified: Upon and subject to each of the terms, conditions, provisions and limitations contained in this Agreement, the Corporation hereby delivers the following to the Vendor as full repayment of the Shareholder Loan in full satisfaction of all amounts due to the Vendor under the Shareholder Loan a promissory note substantially in form of

Schedule “A” attached hereto. [ 21 ] Under these terms the signing of the promissory note by Edwards Land would constitute full payment of what was owed to Mr. Dabbs. [ 22 ] Mr. Edwards testified that at the time he received Mr. Dabbs’ response to the December 6 Email it was clear to him that Edwards Land would be unable to complete the deal as they remained unable to make the $65,000 initial payment. This was also the first time Mr. Edwards, according to his evidence, became aware of the 12% interest rate. [ 23 ] At trial, Mr.

Dabbs testified that 12% was the standard interest rate used by Edwards Land and 1567877 to repay its directors for their investments into the company. This rate was his suggestion after he had seen it used by a company he had worked for previously. Mr. Dabbs stated that the other directors agreed to use this interest rate by a vote of four out of five. Mr. Dabbs provided a General Ledger Report of Edwards Land that contained transactions “to record interest payment on Shareholders Loans” at an amount that he was confident demonstrated an interest rate of 12%. Mr.

Dabbs stated he was the main person managing the books for the company and that 12% interest was paid or accrued on all investments by shareholders. Mr. Edwards disagreed with Dabbs on this point. According to Mr. Edwards these ledger entries do reflect payment of interest on shareholder loans, but that the interest rate varied amongst the shareholders depending on how much money they loaned the company as part of an April 2011 cash injection. [ 24 ] Furthermore, Mr. Edwards does not ever recall holding a vote that shareholders loans would be repaid at 12%, as suggested by Mr. Dabbs. He recalls Mr.

Dabbs suggesting 12%, but does not recall the other shareholders agreeing to it. He also provided evidence that he received 8% interest on his preferred shares. [ 25 ] Throughout his testimony, Mr. Edwards was often unable to recall various things related to the case at bar. Despite this

difficulty, I find him to be a forthright and credible witness, and I accept his evidence regarding his recollection of these events. At thetime, Mr. Edwards was occupied primarily with ensuring the continued viability of Edwards Land. He was aware that dealings wereongoing with Mr. Dabbs, but was also aware that Edwards Land and 1567877 were not in the financial positions to be able to sign any ofthe documents that were being drafted and are now at issue. Accordingly, I find it is understandable that Mr. Edwards treated thenegotiations with Mr. Dabbs as of secondary importance. III.

Issue [26] This Court must determine whether the parties agreed to an interest rate of 12% on payments made pursuant to the settlementagreement and, if not, whether any form of interest be paid and at what rate? IV. Parties’ Arguments A. The Plaintiff’s Position [27] Mr. Dabbs’ argument relies upon the November 2 Agreement being viewed as a provisional agreement with exact details tobe worked out later. This agreement specifically includes “shareholder loan interest”, so at this stage both parties at least agreed thatinterest would be paid to Mr.

Dabbs for his investment in the companies, though the rate was not set out at this time. Mr. Dabbs thenarrives at the rate of 12% as an implied term in the agreement because that had been the amount used by the business in all of itsprevious repayments or accruals of shareholder investments. Though the amount that Mr. Dabbs was to be paid included othercomponents, the majority of it was to be repayment of his original shareholder investment. Mr.

Dabbs argues that Edwards Land wasalready in the practice of repaying or accruing shareholder investments with an interest rate of 12% and therefore he should receive thissame interest rate on his investment. [28] Mr. Dabbs then argues that he made this implied term explicit when he stipulated directly to Mr. MacIsaac that thedocumented version of the agreement should make clear that payment is to be made in monthly instalments over 18 months and that a12% interest rate will apply. Mr. Dabbs argues that though Mr.

MacIsaac is only able to draft documents that reflect what the partieshave agreed, the 12% interest rate was included in the drafted documents and that this binds Edwards Land as Mr. MacIsaac was actingas their solicitor and agent. In any event, considering that the agreement was drafted including the 12% interest rate, Mr. Dabbs arguesthat he is entitled to view this as an agreed upon term, for, as per Mr. MacIsaac’s instructions, only things that had been agreed uponcould be included in the documents. [29] Furthermore, Mr. Dabbs points out that very shortly after the receipt of the initial documents Mr.

Edwards wrote him toinform him that revised documents were being prepared and that they would be received soon. When these revised documents wereeventually sent, the inclusion of an interest rate of 12% remained unchanged, despite Mr. Edwards being asked to address his mind to theissue of interest prior to the first set of documents being sent to Mr. Dabbs. Mr. Dabbs argues that Mr. Edwards did not sign theagreement prior to legal proceedings because of the financial situation of Edwards Land, not because of any disagreement regarding theterms of the agreement, including the interest rate.

No objection to the interest rate was raised until after the filing of the Statement ofClaim. [30] Mr. Dabbs further argues that he was not repudiating the agreement by not signing it. He argues that this was the only tacticavailable to him to try to get Edwards Land to begin making the owed payments. Mr. Edwards had indicated that he could not sign thePromissory Note because of the financial situation of Edwards Land, so Mr. Dabbs refused to sign the other documents until he receivedthe Promissory Note, which constituted full payment. [31] Finally, Mr.

Dabbs relies on Wild Rose Properties Limited v Latam (1985), 1985 ABCA 79 , 59 AR 95 at para 6(ABCA) (“Wildrose”), as authority that the original agreement can be considered binding with whatever inferred clauses are necessary,such as interest, that can later be made explicit should the parties so decide, but if they do not the binding nature of the originalagreement will not be altered. Mr.

Dabbs also proposes an alternative argument, with aid from Poon Estate v Dickson (1982), 1982ABCA 112 , 35 AR 609 at para 15 (ABCA), that should the Court be unable to find that 12% interest was agreed upon betweenthe parties, a reasonable interest rate should be fixed based on the facts of the particular case. In this instance, considering that 12% wasthe standard interest rate paid on shareholder investments, Mr. Dabbs argues that a reasonable interest rate would be 12%.

B. The Defendants ’ Position [ 32 ] The Defendants argue that because Mr. Dabbs’ Statement of Claim alleges that the November 2 Agreement included a provision regarding the accrual of interest at 12%, the inquiry should be limited to determining whether there in fact was such a term in the November 2 Agreement. The Defendants note that the November 2 Agreement does not contain any mention of a 12% interest rate, though it does include payment of “shareholders loan interest” in its text. Because of this omission the Defendants argue that Mr.

Dabbs’ claim should be dismissed. [ 33 ] Additionally, the Defendants put forward several sections of the Judgment Interest Act , RSA 2000, c J-1. It is useful to reproduce the relevant sections here: 2(1) Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest in accordance with this Part from the date the cause of action arose to the date of the judgment

(2) The court shall not award interest under this Part [...] (

h) where there is an agreement between the parties respecting interest;

(3) If it considers it just to do so having regard to changes in market interest rates, the circumstances of the case or the conduct of the action, the court may (

a) refuse to award interest under this Part, (

b) award interest under this part at a rate higher or lower than the rate set out in this Part, or ... [...] 4(2) Interest awarded under this Part on pecuniary damages and in debt or other actions shall be calculated, for each year or part of a year included in the period in respect of which the interest is payable, at the prescribed rate applicable to that year. [ 34 ] The Defendants argue that the November 2 Agreement is inclusive of interest. The Agreement contained five component amounts that were to be paid to Mr. Dabbs, one of which is shareholder’s loan interest.

The Defendants’ position is that the $265,000 to be paid to Mr. Dabbs already included shareholder’s loan interest and therefore there was no need to further negotiate interest, or any basis for Mr. Dabbs to request 12% interest on the $265,000. The Defendants point to the correspondences between the parties as evidence that this agreement, with interest included in the total amount, was accepted by Mr. Dabbs. The Defendants adopt the position that further documents that include the 12% interest do not change the nature of what was agreed to in the initial agreement. Because Mr.

Dabbs’ Statement of Claim alleges an agreement was made that included 12% interest around the time of the November 2 Agreement the Court should find that 12% interest has not been included in the agreement between the parties. [ 35 ] In any event, the Defendants argue that the documents that did eventually emerge, with 12% interest included, were prefaced by emails by Mr. Edwards explaining that, due to the financial situation of Edwards Land, he was not prepared to sign the documents. By this reasoning Mr.

Dabbs should not be able to rely on these documents as evidence of an agreement that included 12% interest, as they were clearly not approved by the Defendants. The Defendants argue that the documents containing the 12% interest rate are little

more than potential future agreements that neither party ended up accepting and therefore only the initial agreement should be relied upon and it contains no mention of 12% interest payable to Mr. Dabbs. [ 36 ] The Defendants argue that because there was an agreement regarding interest the Judgment Interest Act does not apply. They continue that though the Court has discretion to award interest, the question at bar concerned whether there was an agreement regarding interest, not whether the Court should award interest in these circumstances. They refute Mr.

Dabbs’ position that there was an implied term of 12% interest and request that the action be dismissed without any further awarding of interest. V. Findings A. Was there a meeting of the minds on an interest rate of 12%? [ 37 ] The Defendants seek to limit the inquiry to simply whether there was an agreement on a 12% interest rate at the time of the November 2 Agreement based on the wording of Mr. Dabbs’ Statement of Claim. Certainly, on a plain reading, there is no mention of 12% interest in the November 2 Agreement, but this does not determine the matter.

The November 2 Agreement is a preliminary agreement, or an agreement in principle. It sets out the basic terms of the agreement between the parties while allowing for specifics to be determined in the future. As such, the language of Mr. Dabbs’ Statement of Claim is not fatal to his claim and evidence of the subsequent dealings of the parties can be considered to see whether there was ever a true meeting of the minds on the matter of the interest to be paid to Mr. Dabbs. [ 38 ] Even when considering the entirety of the evidence, finding consensus ad item on the interest issue is difficult.

The only time both parties were seemingly in agreement on the payout was at the time of the November 2 Agreement and the evidence shows that neither side was on the same page even at this time regarding interest. Mr. Dabbs believed that the November Agreement included either an implied interest rate of 12% or that an interest rate was not yet settled and would be determined in subsequent negotiations. Mr.

Edwards, on the other hand, believed that his offer of $265,000 was inclusive of interest. [ 39 ] These circumstances show that on November 2, 2011 there was no meeting of the minds on interest, at a rate of 12% or otherwise. The parties were in agreement that Mr. Dabbs was owed interest on his investments, but were not in agreement about whether this repayment was already included in the money offered to Mr. Dabbs, whether it was to be paid out at a 12% rate, or any other possibility in between. [ 40 ] Once the 12% interest rate finally appeared in negotiations the preliminary agreement was in jeopardy. Mr.

Edwards knew that Edwards Land would be unable to make any payments and was only providing the documents to Mr. Dabbs to appease him. Given these circumstances, I accept Mr. Edwards’ evidence that he did not read the Promissory Note and was unaware of the inclusion of an interest rate of 12% until Mr. Dabbs’ response to the December 6 Email. Mr. Edwards could have potentially avoided his present situation had he adopted a more vigilant approach to the ongoing dealings with Mr.

Dabbs, but he cannot be said to have agreed, nor to have even contemplated, a 12% interest rate simply because such a term was included in documents, that Mr. Edwards never read and had no intention of signing, by his counsel who erroneously thought the inclusion reflected an agreement by the parties. In order to hold Mr. Edwards to the payment of 12% interest some form of actual acceptance from Mr. Edwards of this term was necessary. Instead Mr. Edwards remained completely unaware of its existence throughout the entire period wherein Mr.

Dabbs is attempting to point to an agreement. [ 41 ] Accordingly, there was no meeting of the minds concerning the inclusion of 12% interest in the agreement between Mr. Dabbs and Edwards Land. B. Did Mr. MacIsaac bind Edwards Land by including a 12% interest rate in the Promissory Note? [ 42 ] Mr. Dabbs advances that it is trite law that solicitors as agents bind their clients as corporations. In the case at bar, however, it is clear that Mr. MacIsaac was never given any authority to negotiate or enter into agreements on behalf of his client, Edwards Land. Mr. MacIsaac clearly informed Mr.

Dabbs that he could only draft documents that reflected what the parties had agreed to amongst themselves and that he could not be involved in the negotiations. The inclusion of the 12% in the promissory note occurred because Mr. MacIsaac believed that the two sides must have agreed to this figure when in fact Mr. Edwards had yet to even become aware of Mr. Dabbs’ request.

[43] In the classic English case Freeman & Lockyear v Buckhurst Park Properties (Mangal) Ltd, [1964] 1 All ER 630, [1964] 2QB 480 approved by the Supreme Court of Canada in Canadian Laboratory Supplies Ltd v Englehard Industries of Canada Ltd, (SCC), [1979] 2 SCR 787, Diplock LJ., discussed what is required for a corporation to be bound by an agent when the agentlacks authority at p 646: If the foregoing analysis of the relevant law is correct, it can be summarized by stating four conditions which must be fulfilled to entitle acontractor to enforce against a company a contract entered into on behalf of the company by an agent who had no actual authority to doso. It must be shown: (

a) that a representation that the agent had authority to enter on behalf of the company into a contract of the kindsought to be enforced was made to the contractor; (

b) that such representation was made by a person or persons who had “actual”authority to manage the business of the company either generally or in respect of those matters to which the contract relates; (

c) that he(the contractor) was induced by such representation to enter into the contract, i.e., that he in fact relied on it; and (

d) that under itsmemorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought tobe enforced or to delegate authority to enter into a contract of that kind to the agent. [44] In these circumstances, Mr. MacIsaac expressly represented that he did not have authority from Edwards Land to enter intothe agreement with Dabbs. Furthermore, he had no such actual authority granted to him by Edwards Land in this regard, and in any eventthe documents were signed by neither Mr. Dabbs nor Mr. Edwards. In the circumstances, it was Mr.

Dabbs who was requesting theinclusion of the 12% interest rate. He would have known that inclusion of the 12% figure was at his own behest as a suggestion; there isno evidence of inducement on the facts. C. Should a 12% interest rate be implied into the agreement between the parties? [45] Mr. Dabbs argues that even if no consensus can be found in the negotiations between the parties on a 12% interest rate, such arate should be implied into the November 2 Agreement because this is the rate that Edwards Land used to pay back shareholders loans.Considering that the vast majority of the $265,000 to be paid to Mr.

Dabbs constituted a repayment of his shareholder loan he argues that12% interest should apply. Mr. Dabbs provides Wildrose, supra as authority that reading 12% interest into the Agreement would beappropriate: [4] We think the contract was enforceable. In our view the form the agreement for sale took is not central to the vitality of thistransaction. In the interim agreement the interests passing were described. So was the price. If terms of payment including how interestwas to be calculated were not precisely spelled out they were reasonably ascertainable.

The respective concessions to the Vendor andPurchaser were set forth with adequate clarity. [5] It is not the law of this Province that a bald reference to the preparation of formal documents in the future, per se renders earlieragreements void for uncertainty.

If it were the prompt closing of commercial transactions generally would be thrown into a questionablestate. [6] If the real intention of the parties can be collected from the four corners of the spawning instrument, here the interim agreement, thecourt must give effect to such intention by supplying anything necessary to be inferred and rejecting whatever is repugnant to such realintention so ascertained. That is the effect of the case law. [46] As already discussed though, the real intention of the parties concerning interest cannot be collected from the four corners ofthe November 2 Agreement.

The parties’ evidence conflicts as to whether a 12% interest rate was truly the practice at Edwards Land.Mr. Edwards does not recall voting on 12% interest and testified that he was paid 8% interest on his preferred shares. [47] Additionally, that Mr. Dabbs had to specifically request that the promissory note include a 12% interest rate demonstrates thateven he was aware that the preliminary agreement was vague about how interest would be handled and was uncomfortable leaving theAgreement as it was to imply his desired interest rate. [48] Other than Mr.

Dabbs’ testimony, the only evidence entered at trial concerning whether the payment or accrual of interest at arate of 12% was standard practice was a ledger report that contained three entries entitled “to record interest payment on Shareholders

loans dated September 23, 2011. Each entry shows a different amount being paid which Mr. Dabbs is confident represents interest being paid at a 12% rate to different shareholders based on the amounts of their investment into the companies. Mr. Edwards, on the other hand, testified that different rates of interest were paid to each investor dependent upon the dollar amount of cash injections made in April 2011. As discussed above, Mr. Edwards also provided evidence that he received interest payments at a rate of 8% on his preferred shares.

I find that the ledger report fails to clearly demonstrate a 12% rate of interest payable by the company. While it does evidence that some interest was paid, it does not unequivocally show that the rate is 12%. [ 49 ] I am unable to find evidence of payments at a 12% interest rate on shareholders loans sufficient enough to demonstrate a clear standard practice by Edwards Land and 1567877 to pay interest at this rate. [ 50 ] Accordingly, an interest rate of 12% should not be implied into the agreement between the parties. D.

Does the Judgment Interest Act apply? [ 51 ] The Defendants argue that the Judgement Interest Act , supra , should not apply to Mr. Dabbs’ repayment because an agreement regarding interest had already been made between the parties as evidenced in the November 2 Agreement. Though “shareholders loan interest” was included in the that Agreement, there was effectively no agreement between the parties concerning interest at any time leading up to settlement and

summary judgment. As such, s 2(2)(

h) of the Judgment Interest Act does not preclude me from awarding interest pursuant to

Part 1 of the Act , or from exercising my discretion to award interest at a different amount. Given the uncertainty surrounding interest throughout the dealings of the parties I decline to award interest at 12%, or another rate that I deem appropriate in these circumstances, as suggested by Mr. Dabbs through Poon Estate , supra . Interest should be awarded in the manner set out in the Judgment Interest Act . VI. Conclusion [ 52 ] Mr.

Dabbs shall receive interest at the appropriate rate as set out in the Judgment Interest Regulation , Alta Reg 215/2011, pursuant to s 4 of the Judgment Interest Act . [ 53 ] If the parties are unable to agree on costs, they may speak to me within 30 days of the release of this decision. Heard on the 6 th day of March, 2013. Dated at the City of Calgary, Alberta this 31 st day of July, 2013.

S.M. Bensler J.C.Q.B.A. Appearances: Shanna L. Hunka, Bishop & McKenzie LLP for the Plaintiff Shaun T. MacIsaac, Q.C. and Thomas J. Eaves, Pittman MacIsaac & Roy for the Defendants