Vandal v Cousineau, 2014 ABQB 658

Court of Queen ’ s Bench of Alberta Citation: Vandal v Cousineau, 2014 ABQB 658 Date: 20141105 Docket: 0503 10293 Registry: Edmonton Between: Dean L. Vandal Plaintiff - and - Melissa Cousineau, Ron Cousineau and Mary Cousineau Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice E.J. Simpson _______________________________________________________ I Introduction . 2 II Background . 2 III Issues . 3 IV Decision . 4 V Reliability and Credibility of Witnesses . 4 A Gertie Bochon . 4 B Ernesto Sanchez . 4 C Kelly McKiel 4 D Darrin Huculak . 5 E Melissa Cousineau . 5 F Dean Vandal 6

G Ron Cousineau . 7 VI Facts . 8 VII Law .. 14 VIII Analysis . 16 A Rectification . 17 B Uncertainty . 17 1 Subject Matter of the Sale . 17 2 Operating partnership . 19 3 Obligations relating to the Land . 19 4 Future formal contract 20 5 Part Performance . 21 6

Summary . 23 IX Conclusion . 23 X Costs . 24 I Introduction [ 1 ] The Plaintiff Dean Vandal was the sole shareholder of an Alberta corporation 672290 Alberta Limited (672), which carried on the business of a bar on 175 th Street in west Edmonton under the business name of Smokin’ Joe’s Roadhouse. [ 2 ] Mr. Vandal claims that he agreed to sell all of his shares in 672 to the Defendant Melissa Cousineau by way of a written agreement dated January 5, 2005. He sues for breach of that agreement. II Background [ 3 ] Mr.

Vandal filed a Statement of Claim alleging that Melissa Cousineau took over the business on January 7, 2005 but failed to pay him. He alleged that the parties had agreed that if he did not receive the cash by May 17, 2004, Melissa Cousineau was to transfer her residence, municipally described as 18229 - 107 th A Street in Edmonton (the Land) to him. Aside from a deposit, he received neither the funds nor the Land. [ 4 ] He alleged that while he took all the necessary steps to close the sale, Melissa Cousineau did not cooperate.

He claimed $100,000 plus adjustments of $32,804, or an order for specific performance directing transfer to him of the Land, or an order for sale of the Land and the net proceeds paid to him. [ 5 ] On August 11, 2005, Ron Cousineau filed a Mortgage in the amount of $90,000 against the Land, ostensibly for money, supplies and labour expended on the construction of the residence and for future advances. [ 6 ] Foreclosure proceedings were commenced by CIBC in relation to the Land around May 2006.

CIBC discontinued its action in November 2006, apparently on Ron and Mary Cousineau’s undertaking to pay arrears and ongoing rent and to reside in the property. [ 7 ] On November 21, 2006, Mr. Vandal filed a Certificate of Lis Pendens against the Land. [ 8 ] On December 14, 2006, Melissa Cousineau transferred the Land to Mary Cousineau, ostensibly to give her status in the foreclosure proceedings and to salvage the Land and a number of “advances” to Melissa Cousineau. [ 9 ] In October 2011, Mr.

Vandal filed an Amended Statement of Claim adding Mary Cousineau and Ron Cousineau as Defendants, alleging that Melissa Cousineau transferred the Land to her parents when she was insolvent or on the eve of insolvency and that the mortgage and transfer were made to defeat, hinder, delay or prejudice the Plaintiff’s claim against Melissa Cousineau. [ 10 ] Melissa Cousineau filed for bankruptcy in 2013. Mr. Vandal’s claim was disallowed as Melissa Cousineau was not the registered owner of the caveated Land as at the date of bankruptcy.

She was discharged in July 2014. [ 11 ] The proceedings against Melissa Cousineau are stayed under the Bankruptcy and Insolvency Act , RSC 1985, c B-4 , but the trial proceeded against the Defendants Ron Cousineau and Mary Cousineau. Melissa Cousineau did not advance a claim at trial pursuant to her counterclaim. [ 12 ] Mr. Vandal now asks that the Land be transferred to him free of any interest of Ron Cousineau or Mary Cousineau, or in the

alternative, for a court-ordered sale of the Land with payment of his claim secured by an equitable mortgage on the Land after payment of the first mortgage held by CIBC. [ 13 ] All parties to this action appeared at trial with counsel and asked the Court to decide what, if any, legal obligations have been created as between them, and if legal obligations were created, the consequences thereof.

III Issues [ 14 ] The main issues for the Court to determine in this case are: 1) Did the parties enter into an enforceable agreement? 2) If so, what are the terms of the agreement? 3) Has Melissa Cousineau breached the agreement? 4) If so, what is the appropriate remedy? IV Decision [ 15 ] The purported agreement is void for uncertainty on a number of material terms. In particular, the agreement is uncertain regarding whether it was a sale of shares or assets, whether it was a final document or letter of intent, and whether an “operating partnership” was created and, if so, its terms.

The alleged acts of part performance do not assist the Court in ascertaining the terms of the agreement or the “final deal” referenced therein. V Reliability and Credibility of Witnesses [ 16 ] All witnesses acknowledged or demonstrated trouble with memory due to the passage of almost 10 years from the events in question. This is reasonable and to be expected. This goes more to reliability than credibility. In the end, it produces the same result, as it affects the weight which the Court can attribute to their evidence. A Gertie Bochon [ 17 ] No one challenged Gertie Bochon’s credibility.

She is Dean Vandal’s mother, and was the bookkeeper for his various companies. B Ernesto Sanchez [ 18 ] Similarly, no one challenged the credibility of Ernesto Sanchez, a DJ who provided services from time to time for Dean Vandal’s businesses, and who loaned $5,000 to Melissa Cousineau for part of the deposit. C Kelly McKiel [ 19 ] A good deal of what Mr. McKiel told the Court made sense and was reliable. However, on matters that the parties considered to be critical, he came across as too glib, smooth and certain for me to place any weight on his evidence.

I will provide a few examples. [ 20 ] Immediately upon taking the stand, Mr. McKiel testified with respect to the January 5, 2005 meeting at the home of Melissa Cousineau. He stated that an agreement was already in place and it was merely being formalized. The deal was an exchange of her house for the bar. He did clarify she was allowed three months to sell the house to obtain equity of approximately $10,000 out of it for an operating fund.

Shortly thereafter, he testified the price was $100,000, which was not in line with his evidence upon first taking the stand that it was an exchange of the house for the bar. [ 21 ] Similarly, very early in this testimony he testified with respect to whether Melissa Cousineau was buying shares or assets. He said it was to be a share deal because it was easier. However, when he was asked what was being sold, he testified it included shares, inventory, floats and concluded by saying “all within the walls”.

He confirmed that buying shares was easier and it was a share deal so she got everything within the four walls. His evidence on this point is not clear as to whether he meant she was buying the shares of the corporation operating the bar, or whether she was buying the items within the bar. However, he insisted it was a share sale. [ 22 ] Moreover, he continued to insist that when the deal was written up, “there’s nothing new, we had a deal”. Later in cross- examination, he testified that he could not recall if the price was discussed prior to the January 5, 2005 meeting.

That makes no sense: if there was a deal in place, certainly the price would have been discussed. [ 23 ] Another significant issue turned on a red folder with certain documents allegedly given to Melissa Cousineau. Mr. McKiel testified in chief that he attended a meeting after January 5, 2005 at the Smokin’ Joe’s bar at Hermitage in north Edmonton where she was given a red folder containing an insurance transfer, share transfer, and everything he believed was necessary “to finish up”.

However, in cross-examination although he confirmed that she was given a red folder, he was not certain of the date off the top of his

head, but he stated that it was given to her before January 5, 2005. [ 24 ] When asked at the start of cross-examination if his memory was as good as it was 10 years ago, Mr. McKiel was very quick to acknowledge that certain things were foggy but some things stood out, such as the red folder. He was being cross-examined at that point, there was no mention of the red folder and he volunteered that information.

Further on in his cross-examination, when he was asked about the meeting at the house on January 5, 2005 after acknowledging he could not remember the number of shares, or Ron Cousineau coming and going from the meeting, he started to raise the matter of the red folder and then quickly stopped.

It was obvious that he realized that he was at risk of contradicting himself. [ 25 ] Accordingly, with respect to those matters of whether a deal was in place as of the time of the January 5, 2005 meeting, whether it was a sale of shares or assets and whether she received a red folder, I put little weight on his evidence. [ 26 ] I also note that Mr. McKiel’s anticipated role as at the January 5, 2005 meeting was that he was to be co-manager with Melissa Cousineau. This did not transpire, and after a brief hiatus, Mr. McKiel took up employment with Mr. Vandal elsewhere.

Some of his evidence seemed to be an attempt to justify his lack of involvement as co-manager, as initially anticipated. [ 27 ] As set out below, Mr. McKiel’s evidence on other matters was generally reliable. D Darrin Huculak [ 28 ] Mr. Huculak presented, and proved to be, a credible and reliable witness. [ 29 ] He was mistaken on one point, in that he testified he had managed the bar for approximately one year prior to January 7, 2005. Although nothing turns on it, a reasonable conclusion from the whole of the evidence would be that he had managed it for a term of three months more or less.

He did acknowledge that he did not hire Melissa Cousineau, which on the evidence occurred in August 2004. [ 30 ] Mr. Huculak was consistent in his evidence and made no effort to reconstruct when he did not remember or offer explanations for matters which seemed unusual. [ 31 ] He had a detailed memory of Melissa Cousineau snorting cocaine on the top of the safe while at work in the bar. His evidence is accepted on this point, as observing such unusual conduct would be a memorable event. His evidence on this point is accepted over Melissa Cousineau’s denial.

E Melissa Cousineau [ 32 ] Unless otherwise noted, Melissa Cousineau was not a credible witness. Mr. Doherty suggested in argument that she was so untruthful that she could be considered a liar. [ 33 ] That is too harsh. My perception was rather that, in terms of business experience, she was completely out of her element. Further, her memory has clearly been affected. It is impossible to determine whether this arises from her health problems, her previous drug use, the passage of time or a combination of all of these factors.

However, it is clear that her memory is not reliable from the number of inconsistencies between her responses on Questioning and her testimony at this trial. [ 34 ] For example, she was asked at her Questioning to identify the owner of the house referred to in the January 5, 2005 agreement. She replied “I am”. However, she had transferred the house to her mother a mere three months earlier.

At trial, she explained that she thought her name was on title, and she apologized for her error. [ 35 ] Equally telling was that when she was shown the transfer (Exhibit 2, Tab 3), she was unable to discern from the face of the document that she had signed it on November 9, 2006. She also signed affidavits of records under oath and then testified at trial that she did not know what they meant. [ 36 ] In fairness, a number of these inconsistencies between her evidence at trial and responses on Questioning can be attributed to the passage of time and her lack of sophistication in legal matters.

However, whether the problems with her evidence stem from lack of credibility or lack of reliability, I am not prepared to give any weight to her evidence unless otherwise noted. [ 37 ] Melissa Cousineau testified that she and her father discussed the purchase of the bar before January 5, 2005. She is credible on that point. Mr. Vandal confirmed that he was discussing matters with Ron Cousineau, Melissa’s father, and Ron Cousineau also testified he was helping Melissa by having discussions with Mr. Vandal. F Dean Vandal [ 38 ] Dean Vandal presented as a credible witness with respect to the order of events.

He was also credible with respect to what he intended in terms of a sale of shares rather than a sale of assets. [ 39 ] He admitted to having difficulty remembering the details both from 2005 and from his Questioning. To his credit, however, he did not attempt to be definitive on matters of dates, such as the meeting he had with Melissa Cousineau at or about the end of January or early February 2005. [ 40 ] Mr. Vandal willingly admitted the problems with the drafting of the January 5, 2005 purchase agreement even though those admissions might have been prejudicial to his effort to enforce the agreement.

He admitted that the wording was not clear, and that incorrect words were used. It was not written with clear legal terms and it is not a clear legal document. He testified that the words “until

final deal signed off” should not have been used.

He stated that the words “closing date” would have been a better choice. [ 41 ] He also admitted that at times he simply did not know what he was saying in the January 5, 2005 agreement, in particular, where he inserted the words “final sale to be completed with the closing cash” (Exhibit 7, line 8). [ 42 ] I accept his evidence that he had run into problems at the north end Smokin’ Joe’s by taking control before completing his documentation with the Alberta Gaming & Liquor Commission (AGLC), and therefore he knew that he had to be careful not to run afoul of AGLC in the transaction with Melissa Cousineau. [ 43 ] Mr.

Vandal was credible in denying that he received cash from the bar after the locks were changed. He was a meticulous record-keeper with respect to the cash, as shown on the deposit summaries, copies of which were entered as Exhibit 12, 15 and 20. It makes no sense that he would take the cash and not put it into the new account he had set up for the operating corporation.

If he did not deposit funds, he would run the risk that the AGLC would not be paid, which would affect his reputation with AGLC, he would risk having AGLC call on his letter of credit, the VLT agreement for 672 could be lost, and in the overall result he would not be paid for his sale. [ 44 ] There is no supporting evidence for the Cousineaus’ position that Mr. Vandal or anyone on his behalf attended regularly and took cash. Melissa and Ron Cousineau claimed that a blue ledger detailed the cash Mr. Vandal took. On balance, the evidence does not establish there was any such ledger.

It was not produced in this action in either of the two affidavits of records of Melissa Cousineau. Counsel for Ms. Cousineau pointed out that the issue of Mr. Vandal taking cash did not arise until after she had sworn her affidavit of records and a supplemental affidavit of records, all of which was done before she advanced a counterclaim for cash taken by him. That is an insufficient explanation. The blue ledger was clearly a relevant document when the action was commenced. Accordingly, I accept Mr.

Vandal’s evidence that he attended at the bar only two or three times after January 7, 2005, and that he did not take cash on those occasions. [ 45 ] Mr. Vandal, however, did share some of the same problems as Melissa Cousineau, with respect to a lack of understanding as to how he ought to go about selling the bar. In addition to admitting that some of the words in the agreement were incorrect, he also placed

interpretations on some words which simply made no sense, as outlined below. [ 46 ] I accept Mr. Vandal’s evidence, which is supported by Melissa Cousineau, that they did have a meeting in late January or early February. However, Mr. Vandal’s evidence is so garbled with respect to what was in the red folder that it is impossible to rely upon his evidence as to what it contained, if indeed there was such a folder. Examination of Exhibit 2, tab 8, in particular, and his evidence with respect to those documents leaves one completely baffled when compared to his evidence at Questioning.

The best that can be said is that he has no memory of what documents he gave to Melissa Cousineau, or how he passed them to her, other than the application to have her appointed as an approved board manager. G Ron Cousineau [ 47 ] Ron Cousineau was credible with respect to his contention that he wanted the sale to be a sale of assets.

I accept that he had an understanding from his previous business experience that a share purchase could result in unwanted corporate liabilities and he considered the asset purchase to be the preferred manner in which to proceed. [ 48 ] He testified that he was in and out of the January 5, 2005 kitchen table meeting. This was corroborated by Dean Vandal and Melissa Cousineau. He was, as he testified, checking in on her two young children who were upstairs while the meeting was in progress. [ 49 ] Mr. Cousineau’s evidence that he wanted to be a witness to the agreement was not credible.

Nor is it credible that words were added to the purchase agreement while he was out of the room. He testified that the words “purchase agreement”, and the signature line as well as lines 4, 22 and 26, of Exhibit 7 were added while he was out of the room. I do not accept his evidence on that point. He would have had no way of knowing this, short of reading over Mr. Vandal’s shoulder while he was typing the agreement on his computer. There is no evidence that he was reviewing the document as it was being typed in electronic form on the computer.

I do accept, however, that he wanted to review the document before Melissa Cousineau signed it. I also accept that she signed it in his absence without allowing him to review it. Accordingly, I find that he wanted to review the document, not necessarily to sign it as a witness. [ 50 ] I also accept Mr. Cousineau’s evidence that Mr. Vandal used the word “outline” before the meeting. Mr. Vandal indeed used that word during his testimony: he wanted to “outline” what they had agreed. [ 51 ] Mr. Cousineau testified he ran out after Mr.

Vandal and called out to him after he returned to the kitchen and saw that Melissa Cousineau had signed the agreement. I put no weight on Mr. Cousineau’s evidence that Mr. Vandal replied to him at that time that it was an outline that should be taken to his lawyer to have a final agreement drafted. Counsel for Mr. Cousineau breached the rule in Browne v Dunn (1893), 6 R 67 (HL). He argued that he had put to Mr. Vandal the issue as to whether he had any other conversations with Mr. Cousineau regarding the agreement. To rely on such a general question would require Mr.

Vandal to connect that questioning to the allegation that Mr. Cousineau ran out of the house to speak to him while Mr. Vandal was preparing to drive away. This is not fair; Mr. Vandal ought to have had it drawn to his attention that Mr. Cousineau allegedly called out to him outside of the house while Mr. Vandal was entering his vehicle. Counsel for Mr. Cousineau was given an opportunity to have Mr. Vandal return to the stand if counsel so desired, to allow him to put this to him. It is not clear whether counsel for Mr. Vandal overlooked this or decided not to do so, but it did not occur. [ 52 ] I accept Mr.

Cousineau’s evidence that he picked up a box of documents from Kelly McKiel after Mr. McKiel left the bar. At that time, Mr. Cousineau was beginning to become more involved in helping out Melissa Cousinea with the bar, and picking up documents from Mr. McKiel to assist him in his recordkeeping makes sense and would be a memorable event. [ 53 ] I also accept that Mr. Cousineau did not tell Mr. Vandal on February 16, 2005 that all was fine, and the deal was going to close. It is clear from the evidence that all was not fine at that time, and the parties were nowhere near being able to finalize the sale.

VI Facts [ 54 ] Having addressed the weaknesses in the witnesses’ evidence, I will now set out the facts as I have found them. [ 55 ] The Plaintiff, Dean Vandal, is a 50-year-old businessman. He graduated from the University of Alberta in 1992, with a Bachelor of Commerce degree. He planned to work towards being a chartered accountant but did not pursue it as his interest in business took him in another direction. [ 56 ] Mr. Vandal owned various businesses relating to the sale of liquor in and about the city of Edmonton.

In early 2004, he owned, through his various corporations, Smokin’ Joe’s Roadhouse at the Hermitage Plaza in north Edmonton. [ 57 ] Mr. Vandal related the manner in which he acquired Smokin’ Joe’s in the west end. He had noted an advertisement for the sale of the Better Be Rock bar located at 8214 - 175 th Street in west Edmonton, Alberta. He contacted the owners and after observing the bar on a number of occasions he decided to purchase it. He had experience from previous purchases and knew that it would be easier in dealing with AGLC to purchase the shares rather than the assets.

He purchased the shares for what he thought was “a steal” at $15,000. He believed the price was low because the parties holding the shares in the corporation were unable to negotiate a new lease. It is not clear from the evidence when the actual transfers of shares took place. The minute book is by no means complete in that regard. [ 58 ] Mr. Vandal’s intention was to buy the bar, refurbish it and redevelop it for sale. As of April 15, 2004, he took possession of and operated the bar. As part of the redevelopment, Mr. Vandal named the bar Smokin’ Joe’s Roadhouse.

Pursuant to a written agreement dated July 27, 2004 between 672 and AGLC, AGLC agreed to install VLTs in Smokin’ Joe’s Roadhouse. [ 59 ] His original manager in the bar was a man by the name of Kevin Remple. By August 5, 2004, the manager was Kelly McKiel. Mr. McKiel hired Melissa Cousineau as a bartender/waitress that day. [ 60 ] Melissa Cousineau had a high school education, having graduated in 1997. Her work history was primarily as a clerk or a temporary clerk typist until she took a bartending course and worked in a couple of other bars before taking up employment at Smokin’ Joe’s Roadhouse.

She had no experience in operating a business. She was, however, a reliable employee who ordinarily worked afternoons and nights and was relied upon to provide her cash-out reports and close up the bar. She proved to be a very capable employee. [ 61 ] Melissa Cousineau was the registered owner of, and resided at, 18229 - 107 th A Street in Edmonton (the Land). Her father had built the house. He was in the home construction business at the time and he and Melissa Cousineau’s mother, Mary Cousineau, assisted her in obtaining title to the home.

She lived there as a single mother with her two children aged 2 and 3 as of January 2005. She was 24 years old on January 5, 2005. [ 62 ] Towards the end of 2004, Mr. McKiel left the Smokin’ Joe’s west end bar. A new manager, Darrin Huculak, took over the management of the bar. Mr. Vandal was very pleased with Mr. Huculak’s work. Melissa Cousineau continued to work there, although at times she had disagreements with Mr. Huculak and on one occasion ended up with a one-day suspension to cool off. During this time, Melissa Cousineau would drink while working at the bar and at times she used cocaine.

Indeed, on one occasion, Mr. Huculak surprised her and found her in the office ingesting cocaine from the top of the safe. Nevertheless, she remained an employee. [ 63 ] Mr. McKiel talked to Melissa Cousineau about purchasing the bar. Mr. McKiel and Ron Cousineau had discussions about possibly buying the bar from Mr. Vandal. Mr. McKiel and Melissa Cousineau also developed a romantic relationship which they did not make obvious to Mr. Vandal, as Mr.

McKiel thought it might cause some problems. [ 64 ] Melissa Cousineau testified that she had discussions with her father and Kelly McKiel about purchasing the west end Smokin’ Joe’s Roadhouse. Melissa’s father, Ron Cousineau, was interested in purchasing a bar and had discussions with Mr. Vandal. Originally, he was interested in purchasing the bar in north Edmonton, but the price asked by Mr. Vandal was too high in his view. [ 65 ] The evidence is not clear on the number of discussions or exactly who was involved on each occasion, but discussions occurred between Mr. Vandal, Mr. Cousineau and Mr. McKiel.

Melissa Cousineau for the most part relied upon her father to speak with Mr. Vandal and relay information to her. She made it clear in her evidence that the two of them were working together on the project, as he was helping and advising her and she relied upon him. [ 66 ] By January 5, 2005, the parties were in agreement that Melissa Cousineau would purchase the west end Smokin’ Joe’s Roadhouse bar. [ 67 ] Mr. Vandal states, and I accept, that up until that time he wanted to sell the shares of the operating corporation 672. However, Mr.

Cousineau had experience in business and from his experience he considered it best to buy assets, and this is what he wished to do. I accept that this was his intention with regard to the sale. By January 5, 2005, Mr. Vandal considered that there was an agreement in place that the shares would be sold to Melissa Cousineau. Melissa Cousineau denies this and said it was always an asset sale. [ 68 ] I have noted my concerns regarding Melissa Cousineau’s credibility and reliability.

There is no doubt that she and her father discussed the purchase of the bar, and I accept that he advised her that she should not be buying shares but rather assets, such as the liquor licence, and taking over the lease with the landlord. However, it is clear from her evidence that Melissa Cousineau was uncertain of what she was buying other than Smokin’ Joe’s Roadhouse in the west end. Her use of the word “assets” comes from what she has learned since January 5, 2005. At the time, her main concern was obtaining a liquor licence so that she could carry on the business of the bar at that location. [ 69 ] Mr.

Vandal, acting on his understanding, called Melissa Cousineau on January 5, 2005, advising that he wished to meet with her. There is no evidence that the parties had reached a consensus and had decided to

schedule a meeting to put their agreement in

writing. On this point, I accept the evidence of Melissa Cousineau that she was at home in her pajamas when she received the call from Mr. Vandal. I also accept that she had to call her father away from a worksite to come and meet with Mr. Vandal. These were unusual and memorable events in that she was taken somewhat by surprise that Mr. Vandal wanted a meeting. Accordingly, I accept her recollection of those events of the morning of January 5, 2005. [ 70 ] Ron Cousineau left what he was involved in at the time and proceeded to the meeting.

On that afternoon, he, Kelly McKiel, Melissa Cousineau and Dean Vandal met in the kitchen of Melissa Cousineau’s residence where Mr. Vandal set up his computer and a printer on the table. Thereafter, Mr. Vandal began to put in writing what he understood was the agreement regarding the sale of the bar. Melissa Cousineau and Mr. Vandal agree that Ron Cousineau left the meeting on occasion to look in on Melissa Cousineau’s two children who were upstairs. The various estimates of the length of the meeting are from about 1 hour to 2 hours. Mr.

Cousineau thought he was out of the meeting for about 1/3 of the time whereas Mr. Vandal thought it was somewhat less. [ 71 ] In any event, Mr. Vandal typed up the document (Exhibit 1, Tab 1). There is no evidence that anyone but Mr. Vandal had input into the physical drafting of the agreement. He prepared the agreement based on the discussions which had gone on between the parties. [ 72 ] At least twice during Mr. Vandal’s testimony, he used the word “outline” with respect to the document. Mr. Cousineau also recalls that Mr.

Vandal mentioned to him before the meeting that he wished to “outline the agreement”. [ 73 ] While Ron Cousineau was out of the room, Mr. Vandal printed out the document and presented it to Melissa Cousineau.

She was aware that her father had been advising her and that he wished to see the document before she signed it. [ 74 ] The document provides: PURCHASE AGREEMENT JAN 5 2005 SALE OF LOUNGE SMOK’N JOE’S ROADHOUSE LOCATED AT 8214 178ST SELLER DEAN VANDAL & OR NOMINEE BUYER MELISSA COUSINEAU & OR NOMINEE SHARE SALE OF ALL ASSETS OF 677290 ALBERTA LTD SALE PRICE $100,000.00 FOR ALL EQUIPMENT & ASSETS STOCK, FLOATS, DEPOSITS @ $25,000.00 NEW OWNER WILL TAKE OVER OPERATIONS ON JANUARY 7, 2005 FINAL SALE TO BE COMPLETED WITH CLOSING CASH.

BUYERS CONDITIONS: TRANSFER OF LIQUOR LICENCE TRANSFER OF BUSINESS LICENCE TRANSFER OF LEASE TANSFER OF VLT’s TRANSFER OF INSURANCE ALL GST, OPERATING BILLS, REVENUE CANADA, INSURANCE. ALL LEGAL LIABILITIES ARE THE PREVOUS OWNERS RESPONSIBILITY UP TO AND INCLUDING JANUARY 6 TH 2005. SELLERS CONDITIONS ARE: $10,000.00 DEPOSIT $5,000.00 TO BE RETURNED UPON APPRAISEL OF HOUSE LOCATED AT 18229-107A ST ABOVE $240,000.00 DAILY BOOKS AND DEPOSITS UNTIL FINAL DEAL IS SIGNED OFF. JOINT SIGNING OF COMPANY CHEQUES & VLT ACCOUNTS UNTIL FINAL DEAL SIGNED. OPERATING PARTNERSHIP UNTIL TRANSFER OF SHARES.

PROPERTY ADDRESS AT 18229-107A ST EDMONTON ALBERTA, IS TO BE SOLD BY MAY 17 2005. AFTER THIS TIME IT BECOMES THE SOLE PROPERTY OF DEAN VANDAL AND OR NOMINEE. ASSUMPTION OF MORTGAGE AND TITLE. ALL MORTGAGE PAYMENTS AND TAXES WILL BE UP TO DATE. MELISSA COUSINEAU IS STATED TO BE THE FOLLOWING: 1 BOARD APPROVED MANAGER 2 SHARE HOLDER 3 100% OWNERSHIP UPON CLOSING CASH. SELLER DEAN VANDAL [ signed ] BUYER MELISSA COUSINEAU [ signed ] [ 75 ] Melissa Cousineau testified, and I accept her evidence on this point, that Mr.

Vandal had advised her during the meeting that he wished to proceed with determining whether or not she was serious, because if she was not serious he would move on and sell the bar to someone else. I accept that he said this, as he testified that he had considered that if the house which was referred to in the agreement was not appraised at $240,000, he might still return the $5,000 which Ernesto Sanchez had loaned to Melissa Cousineau and the parties would talk because he really wanted to sell the bar. I am satisfied that he was making it clear to Ms.

Cousineau that if she did not want the bar, he would look for another purchaser. This is also in keeping with his initial intention of buying the bar to redevelop and sell it. [ 76 ] With this in mind, Melissa Cousineau signed the document when Ron Cousineau was not present. He did not witness it or have a chance to review it before she signed it. During the meeting, the parties discussed the date on which Melissa Cousineau and Kelly McKiel would take over the management of the bar. Mr.

Vandal was not prepared to turn over the operation of the bar to Melissa Cousineau, but he gained some confidence in that he believed Kelly McKiel was going to be involved, probably as a manager. [ 77 ] Kelly McKiel and Melissa Cousineau did have discussions about working together in the bar. In fact, they did work together, but as at January 5, 2005 they had not reached, nor did they ever reach, any agreement as to their business relationship with respect to the bar. [ 78 ] An inventory of the liquor was taken January 6, 2005, by Mr. McKiel and Mr. Vandal.

On January 7, 2005, a locksmith came and changed the locks, and keys were provided to Mr. McKiel and Ms. Cousineau. Mr. Vandal provided Mr. McKiel with a record of employment dated January 28, 2005, indicating that the last day for which he was paid was December 26, 2004. Melissa Cousineau’s employment was terminated effective January 6, 2005, as set out in a record of employment dated January 28, 2005 (Exhibit 1, Tab 19). [ 79 ] Mr.

Vandal testified that although he initially intended to show Melissa Cousineau the proper way to run a bar, he did not show her how to run the bar at any time after January 7, 2005. [ 80 ] Melissa Cousineau informed the employees that she was going to be paying them cash as she was managing the bar. From the evidence, I am persuaded on balance that she told them that she was in the process of buying the bar and advised them that they were now working for her. [ 81 ] She did not incorporate a company.

The evidence does not establish that she took any steps with respect to employment insurance, income tax deductions, Canada Pension Plan or any other matters relating to the employment of staff as would be done in the ordinary course of a business. [ 82 ] Mr. Vandal understood that the cash from the bar each day would be given to him to deposit into the bank account of 672. There is no evidence that he undertook to continue to pay the employees from the bank account of 672. This would mean that he would have to arrange for deductions for income tax and other remittances.

It is clear from the evidence that he did not want to have that burden. Therefore, I accept Melissa Cousineau’s evidence that he told her to pay the employees with cash and it would be sorted out later. [ 83 ] From the evidence, I take that to mean that he was expecting her to shortly arrange for a payroll company to pay the employees as he had done, and taxes and remittances could be eventually sorted out.

That never happened. [ 84 ] Melissa Cousineau also received keys to the video lottery terminals (VLTs) which keys had not been in her possession prior to January 7, 2005, and she changed the combination of the safe. [ 85 ] Dean Vandal took some steps by opening a bank account for 672 and transferring deposits with respect to the ATM machines to it, as well as arranging for insurance payments and payments to AGLC to come out of that account.

He also spoke to the landlord and obtained a lease renewal for 672, but he could not confirm that he ever told the landlord that he was selling the shares of the corporation to Melissa Cousineau. Nor did he obtain consent from the landlord for the change of control of 672. The

schedule of rules and regulations attached to the lease (Exhibit 27) provided that the tenant was not to grant any concessions, licenses or permission to any third parties to sell or take orders for merchandise or services in the demised premises without the prior written approval of the landlord. Further,

article 8.7 of the lease (Exhibit 1, Tab 29) provided that the tenant was not to assign the lease or sublet without the written consent of the landlord. Mr. Vandal also arranged for a letter of credit for 672 supported by a GIC of one of his corporations. The letter of credit was necessary to allow 672 to continue with the operation of the VLTs. [ 86 ] Mr. Vandal contended that he found it very difficult to communicate with Melissa Cousineau and that she would not keep appointments. On the other hand, Melissa Cousineau asserted that she had great difficulty contacting Mr. Vandal regularly, often being

told he was very busy. [ 87 ] However, the two did have one meeting in late January or very early February 2005, at which time Melissa Cousineau signed an application Mr. Vandal forwarded to AGLC to have her appointed as a board approved manager of 672. He did this because it would assist in having AGLC approve the change of control of 672 from himself to Melissa Cousineau. Melissa Cousineau was approved by AGLC on February 10, 2005 as a board approved manager. [ 88 ] Mr. Vandal also testified that he provided her with a red folder with other documents.

For the reasons which I have set out with respect to credibility, it is impossible on a balance of probability to find that he provided the red folder to her with the documents. He contended that these documents were to help her deal with AGLC in order to become approved with respect to the liquor licence and to obtain an agreement regarding the VLTs. [ 89 ] After these preliminary steps by both parties, they seem to have virtually ignored each other with respect to steps necessary to effectively close the deal. [ 90 ] Mr.

Vandal maintained control of the bank account of 672 and the two never managed to meet to arrange for Melissa Cousineau to be added as a signing authority on the account. The employees were no longer paid through the payroll company which Mr. Vandal had used prior to January 7, 2005. Instead, Melissa Cousineau paid the employees from the cash taken in during the operation of the bar. [ 91 ] The corporation 672 was struck from the Corporate Registry on April 2, 2005. [ 92 ] By April 2005, Mr.

Vandal was concerned that the parties had not been able to bring the matter to a conclusion, and he prepared two documents entered as Exhibits 10 and 11. [ 93 ] Exhibit 10 notes what Mr. Vandal considered to be some of the matters which were completed and those yet to be done by Melissa Cousineau. Exhibit 10 also set out calculations of amounts he had paid on behalf of the corporation. He placed under the heading Dean Closing the words “closing agreement”. [ 94 ] He testified that he had “closing agreement” in mind when he prepared Exhibit 11.

He testified that he had discussed this information with Ron Cousineau and prepared the document entered as Exhibit 11, which is also titled “Purchase Agreement” and is dated April 11, 2005. [ 95 ] Mr. Vandal testified that before preparing Exhibit 11 he had discussions with Ron Cousineau to the effect that Mr. Cousineau would arrange to have Melissa Cousineau’s house transferred to him, subject only to the CIBC mortgage, in full satisfaction of all that Mr. Vandal was owed. This would occur rather than having Mr.

Cousineau and Melissa Cousineau sell the house in order to recover $10,000 in equity, more or less, as set out in the January 5, 2005 agreement. [ 96 ] Mr. Cousineau denies that any such agreement was ever made, and when the Purchase Agreement of April 11, 2005 was presented to him, it was not signed by Melissa Cousineau. [ 97 ] The parties did not enhance their communications but rather each went to a lawyer to obtain advice. Counsel for each party exchanged some correspondence with respect to a possible closing of the transaction, but it was not finalized. In particular, Mr.

Vandal’s lawyer sent correspondence dated May 12, 2005 stating that the Land was to be sold by May 17, 2005 or transferred to Mr. Vandal. [ 98 ] On May 19, 2005, 672 was revived at the Corporate Registry. [ 99 ] Mr. Vandal’s lawyer sent correspondence on May 26, 2005 with the 672 Minute book, a transfer of Class “A” voting shares, and a release of Mr. Vandal on trust conditions to provide an executed transfer of the Land or the sum of $115,000. Later correspondence from Mr.

Vandal’s lawyer dated May 27, 2005 indicated the sum outstanding was $120,000 due to the return of the $5,000 deposit to Ernesto Sanchez. [ 100 ] Mr. Vandal filed a caveat on June 2, 2005 against the Land, claiming an interest based on the January 5, 2005 agreement. [ 101 ] On June 5, 2005, Mr. Vandal drove by Ron Cousineau’s residence and saw him loading bottles in the back of his pick-up truck. Mr. Vandal approached Ron Cousineau. The parties began a discussion which became heated and Mr. Vandal began to climb up into the box of the truck.

A physical altercation occurred between them which resulted in Ron Cousineau being hospitalized after he fell out of the truck. The police were called, but no charges were laid. [ 102 ] On June 14, 2005, Mr. Vandal issued a Statement of Claim against Melissa Cousineau. [ 103 ] On July 11, 2005, the VLT terminals were disabled for lack of payment. The liquor licence expired at the end of July 2005, 672 having failed to renew it, and the bar ceased to operate after July 28, 2005. On August 10, 2005, the landlord seized all goods and took possession of the premises for non-payment of rent by 672.

VII Law [ 104 ] Although counsel provided me with case law, neither referred to the Court of Appeal’s decision in Seong Yun Ko v Hillview Homes Ltd , 2012 ABCA 245 , leave denied [2012] SCCA No 445, which summarizes the law with respect to uncertainty of contract: 1. The test for

interpretation and for certainty of terms is objective; a party’s subjective views about the agreement or its implication not agreed to by the other side are irrelevant (para 27).

2. If there is no agreement, objectively determined, then there is no contract (para 75). 3. If the parties held differing views as to what the offer meant, the court takes the version of what a reasonable bystander would understand. If the reasonable bystander can make no sense of it or it is contradictory, there is no contract. It is void ab initio for mistake (para 76). 4. As the court is ordinarily asked to provide a remedy for breach of contract or non-performance, it is necessary to ascertain the obligations under the contract. The duty to perform must be clear (para 77). 5.

An alleged contract with an uncertain material term is neither a contract nor even an agreement and is usually impossible to perform or enforce (para 81). 6. The terms must show with a reasonable degree of certainty what the parties meant (para 86). 7. It the parties considered they needed a term and included it in the agreement, but it is too vague, the contract will be void. This includes terms beyond identifying the parties, property or price (para 90). 8.

Whether a term is essential depends on the type of the contract, for example, a contract to purchase a piece of machinery may require less specific details than a contract to build a house (para 91). 9. It is irrelevant whether one party’s attitude to negotiating an uncertain term was unfair or unreasonable (para 92). 10. An agreement which calls for a future formal contract is enforceable if all of its terms were originally fixed (para 109). 11.

Although a court may be reluctant to find a contract void for uncertainty which has been partly or fully performed at least by one side, there should be no general reluctance to find a contract void for uncertainty (para 118). 12. Whether the parties thought they had a contract is irrelevant, particularly where the contract is not performed (para 119). 13. Uncertainty of terms may be saved if: a. A specific manner of ascertaining the term has been given by reference to a published or to be published price or set of standards; b.

A third party arbitrator or valuator, or even one of the parties acting unilaterally, has been authorized to fix the term; c. An established custom of the trade is implied as having been incorporated into the contract, e.g., when and where sales might close or that debts will be paid. d. A term is implied because it is

i) so obvious to the bystander; ii) implied by law, e.g., the use of Canadian currency or concurrent tenders of conveyance and price (para 120). 14. A party alleging an uncertain term need not complain immediately, as it is not improper to later raise invalidity arising from uncertainty (para 121). 15. If no valid contract initially existed, the later conduct of the parties (short of a new contract) is irrelevant. As unenforceability for uncertainty is a question of law (although this proposition must now be reconsidered in light of Sattva Capital Corp v Creston Moly Corp , 2014 SCC 53 , [2014] SCJ No 53), even an admission that there is a contract is not binding (para 121).

16. A duty to negotiate seems incompatible with the adversarial nature of negotiation between parties dealing at arm’s length (para 136). [ 105 ] If a contract has been reduced to writing, extrinsic evidence is inadmissible to modify the writing: The Law of Contracts , 6th ed (Toronto, Ont: Canada Law Book, c2010) at 320. This would include evidence of the parties’ subjective intentions: Sattva at paras 57, 59.

However, where there is ambiguity in a written agreement, parol evidence is admissible to resolve the ambiguity: Morrison v Rod Pantony Professional Corp , 2008 ABCA 145 at para 16 , 429 AR 259 (CA), Guaranty Properties Ltd v Edmonton (City) , 2000 ABCA 215 at para 23 , 261 AR 376. [ 106 ] Further, in Sattva , the Supreme Court clarified that evidence of the surrounding circumstances or background facts at the time of the execution of the contract is always admissible. These are facts that were or reasonably ought to have been within the knowledge of both parties at or before the date of contracting.

Courts rely on background facts in the interpretive process in order to understand the mutual and objective intentions of the parties as expressed in the words of the contract. VIII Analysis [ 107 ] The following are the basic relevant surrounding circumstances and background facts. Mr. Vandal was an experienced businessman who owned Smokin’ Joe’s Roadhouse in the west end of Edmonton. He had purchased that bar around April 15, 2004 for $15,000 and developed an intention to sell it in January 2005 for around $100,000. [ 108 ] At the relevant time, Melissa Cousineau was a young single mother of two small children.

She had no business experience. She had tended bar at Smokin’ Joe’s since August 2004. She had a substance abuse problem, and this was known to management. [ 109 ] Both individuals signed a document drafted by Mr. Vandal on January 5, 2005. Both approached this document with an intention to put down words that would allow Melissa Cousineau to purchase the bar. Melissa Cousineau gave Mr. Vandal $10,000. [ 110 ] Mr. Vandal and Melissa Cousineau did not plan to use lawyers to document or close the transaction. [ 111 ] Despite his practical business background, Mr.

Vandal lacked expertise in drafting legal documents, and Melissa Cousineau lacked the expertise to fully understand the document she signed on January 5, 2005. A Rectification [ 112 ] The Plaintiff has asked for rectification of the January 5, 2005 document entitled “Purchase Agreement” to correct the address of Smokin’ Joe’s Roadhouse to 175 Street and the name of the numbered company in question to 672290 Alberta Limited rather than 677290 Alberta Limited. [ 113 ] Melissa Cousineau testified that Mr. Vandal tricked her and indeed she used the word “fraud” once.

This appeared to be in reference to the error with respect to the name of the numbered company, in that Mr. Vandal was trying to sell her something that did not exist. In my view, this was simply an attempt by her to retrospectively bolster her position. The allegation of trickery or fraud is unsupported by the evidence. [ 114 ] Ultimately, counsel for the Defendants took no issue with the request for rectification and the agreement is rectified accordingly. B Uncertainty [ 115 ] The parties muddled along after January 5, 2005. When their difficulties came to a head, they involved lawyers. Mr.

Pozniak, counsel for Melissa Cousineau, did not allege the contract was void for uncertainty in his correspondence in April 2005. However, he did raise the issue in his May 27, 2005 correspondence after having reviewed documents provided on May 12 and 26, 2005 in response to a request on May 2, 2005. Further, the initial Statement of Defence alleged that the Defendant did not agree to purchase the shares in 672.

The Statement of Defence filed by Ron and Mary Cousineau alleged that the document signed on January 5, 2005 was a letter of intent, and that the parties were not ad idem . [ 116 ] The Court in Ko held that a defendant is entitled to raise uncertainty of contract at any time.

Therefore, even accepting that there was any delay in raising this issue, the Defendants are not foreclosed from raising the matter at trial. 1 Subject Matter of the Sale [ 117 ] For ease of reference, I will refer to the version of the January 5, 2005 document entered as Exhibit 7, as the numbered lines assist in providing clarity with respect to these reasons. [ 118 ] I would note at the outset that it is irrelevant whether one of the parties’ attitudes to negotiating an uncertain term was unfair or unreasonable. [ 119 ] As stated in Ko , if the parties held differing views as to what the contract meant, the court takes the version of what a reasonable bystander would understand.

[ 120 ] Mr. Vandal thought he was selling shares. Mr. Vandal’s counsel submitted that the agreement can be read as a sale of both shares and assets. [ 121 ] Melissa Cousineau, on the advice of her father, wanted to buy assets, although she understood at a certain point that Mr. Vandal was going to sell her his “business number”.

Her counsel submits that the evidence supports a finding that after January 5, 2005, she was essentially managing the bar in anticipation of the “final deal” referred to in the document signed on January 5, 2005. [ 122 ] Given the differing views of the parties in this case, the test for certainty of terms is objective. If the reasonable bystander can make no sense of a material term, or it is contradictory, there is no contract. [ 123 ] Mr. Vandal acknowledged that some of the wording is incorrect or unclear. For example, he asserts that this was a sale of shares.

With respect to line 5 of Exhibit 7 (SALE PRICE $100,000.00 FOR ALL EQUIPMENT & ASSETS), Mr. Vandal acknowledged that he typed the words in and intended that they be part of the agreement, but it was “wrong wording” for a share sale. Given Mr.

Vandal’s acknowledgement that the wording is wrong, it is no stretch to conclude that a reasonable bystander would be confused as to whether this was intended to be a sale of 672’s shares or its assets. [ 124 ] Further, the reasonable bystander in this case would find an obvious internal contradiction in line 4 (SHARE SALE OF ALL ASSETS OF 677290 ALBERTA LTD) as well as between that line and line 5 (SALE PRICE $100,000.00 FOR ALL EQUIPMENT & ASSETS) .

Line 6 (STOCK, FLOATS, DEPOSITS @ $25,000.00) is also confusing, as it appears to attribute a value to assets which presumably are included in “ALL EQUIPMENT & ASSETS”. [ 125 ] This general confusion is exacerbated by the provisions for transfer of the liquor licence, business licence, lease, VLTs and insurance which would be unnecessary if it was a share sale. Further, the liquor licence and VLTs could not be transferred if it were a sale of assets. [ 126 ] The reasonable bystander would be even more perplexed by line 22 (OPERATING PARTNERSHIP UNTIL TRANSFER OF SHARES).

This appears to be inconsistent with line 7 (NEW OWNER WILL TAKE OVER OPERATIONS ON JANUARY 7, 2005) and line 16 (ALL LEGAL LIABILITIES ARE THE PREVOUS OWNERS RESPONSIBILITY UP TO AND INCLUDING JANUARY 6TH 2005). Furthermore, if this was a sale of shares, 672 would remain the owner throughout. [ 127 ] A term may be implied because it is so obvious to the bystander (the “oh, of course” test). With respect to whether the property sold was the shares or the assets, the reasonable bystander would be left completely perplexed by lines 4, 5, 6, and 10 through14.

The bystander would be unable to say “of course it was a sale of shares” or “of course it was a sale of assets”. [ 128 ] Without question, the subject matter of the contract – whether shares or assets - is a material term. Exhibit 7 would leave the reasonable bystander just as likely to obtain a correct answer by flipping a coin.

The document is ambiguous as to what exactly the parties agreed upon, whether a sale of shares or a sale of assets, and neither the context nor the parol evidence adduced at trial clarifies the matter. 2 Operating partnership [ 129 ] Line 22 refers to an OPERATING PARTNERSHIP UNTIL TRANSFER OF SHARES which appears to be inconsistent with line 7 (NEW OWNER WILL TAKE OVER OPERATIONS ON JANUARY 7, 2005) and line 16 (ALL LEGAL LIABILITIES ARE THE PREVOUS OWNERS RESPONSIBILITY UP TO AND INCLUDING JANUARY 6TH 2005). [ 130 ] There can be no doubt that these are material terms as they refer to the relationship between the parties, either immediately or until a transfer of shares.

With respect to the partnership, there is nothing in the agreement which would enable the Court to ascertain who might be involved in this partnership or what it was to entail. [ 131 ] The assets belonged to 672. However, 672 is not a party to the agreement. [ 132 ] Perhaps Dean Vandal would operate a partnership with Melissa Cousineau until the sale was completed. However, he testified that she was not his partner during the relevant time. Further, the evidence was that Mr. Vandal gave up physical access to the bar after the locks were changed. Finally, it is not clear how a partnership between Mr.

Vandal and Melissa Cousineau would interface with 672. [ 133 ] Or perhaps Dean Vandal would operate as a partner of 672 until Melissa Cousineau had purchased the shares of 672 or the assets? [ 134 ] If Melissa Cousineau was to take over operations more or less immediately, as appears to be indicated, what was the effect of the “operating partnership”? There is no indication as to how the profits were to be shared, or the timeline involved, except for a reference to transfer of shares.

There is no indication of any adjustments on the closing date resulting from the partnership. [ 135 ] This material matter of a partnership is utterly uncertain, being devoid of any details which would assist the Court in determining what was meant by this term.

No reasonable bystander could make any sense of the words “operating partnership” or what effect it was to have with respect to implementation of this agreement. 3 Obligations relating to the Land [ 136 ] As noted in Ko , an alleged contract with an uncertain material term is neither a contract nor even an agreement and is usually impossible to perform or enforce. The contract will be void if the parties considered they required a term - even beyond the parties, property or price - and included it in the agreement, but it is too vague. [ 137 ] From the evidence, it is clear that Mr.

Vandal intended that he be paid some amount, secured by the transfer of the house

referred to in paragraph 22, being Melissa Cousineau’s residence. Indeed, he testified that although he had a small deposit of $10,000, hewas willing to “finance” Ms. Cousineau and Mr. McKiel because he was secured by having Melissa Cousineau’s house transferred tohim in the event that he did not receive the $100,000 plus $25,000 more or less for adjustments. [138] Mr. Vandal seeks specific performance by way of transfer of the Land to him. If the Court were to provide specific performancewith respect to the house, it would have to be able to ascertain the obligations under the contract.

I have already found that the agreementin this case is not clear with respect to a number of materials terms and therefore specific performance is not available. 4 Future formal contract [139] Lines 20 and 21 of Exhibit 7 contain the words “UNTIL FINAL DEAL IS SIGNED OFF” and “UNTIL FINAL DEALSIGNED”. The Court in Ko cited law to the effect that an agreement which calls for a future formal contract is enforceable if all of itsterms were originally fixed.

Upon examining the agreement, it is clear that this principle is of no assistance. [140] Indeed, this wording itself would simply add to the confusion of the reasonable bystander. Does it require a final contract to beprepared? The words in lines 20 and 21 appear to require a further document, but the matter is left completely uncertain as to the natureand substance and timing of the document. [141] Mr. Vandal testified that the words refer to closing. Exhibit 10 is a subsequent document created by Mr.

Vandal in April 2005which sets out matters which were completed and those yet to be done by Melissa Cousineau as well as calculations of amounts Mr.Vandal purported to have paid on behalf of the corporation. He placed under the heading Dean Closing the words “closing agreement”. [142] Mr. Vandal testified that he had “closing agreement” in mind when he prepared Exhibit 11 which, significantly, is also titled“Purchase Agreement” and is dated April 11, 2005.

It contains terms similar to those contained in the agreement of January 5, 2005, butinstead of stating “NEW OWNER WILL TAKE OVER OPERATIONS ON JANUARY 7, 2005”, it states “NEW OWNER WILLTAKE OVER AS OWNER ON MAY 11, 2005”. He testified that he had discussions with Ron Cousineau and prepared the documententered as Exhibit 11. He described it as a “new agreement” contemplating exchange of the Land for the shares of 672. [143] Page 1, line 12 of Exhibit 11 speaks of a transfer of lease whereas page 2, line 11 speaks of an assumption of lease obligationsby 672. Mr.

Vandal testified that he interpreted the first to mean that Ron Cousineau and Melissa Cousineau were to becomeshareholders and directors of the corporation. This makes no sense on the face of the wording, to say nothing of the fact that nowhere inthe January 5, 2005 document or in any of the evidence does Ron Cousineau seem destined to become a shareholder or director of thecorporation. [144] Mr. Vandal’s evidence with respect to the April 2005 “Purchase Agreement” supports a finding that the January 5, 2005document was a letter of intent, which anticipated a further formal contract.

This is consistent with the evidence to the effect that hedescribed the January 5, 2005 agreement as an “outline”. Up until he prepared that document in April 2005, he was at all times the soledirector of 672 and had sole control of the 672 bank account, the VLTs, the ATM and the lease. [145] As noted by Slatter J. (as he then was) in Darnley v Tennant, 2006 ABQB 575 at para 14, 408 AR 261, whether a letter ofintent forms a binding contract depends on the wording used and all of the circumstances. In some cases, a contract will be held to exist,especially where the contract has been partly performed.

However, in other cases, courts have held that no legal relationship exists due tothe existence of a true condition precedent requiring that a formal agreement be signed, or because the arrangement is too uncertain to beenforceable. [146] As noted in Ko, contemplation of a final document is of no assistance when the terms are uncertain in the document in whichthe words “final deal” appear.

The bottom line in this case is that the terms are not sufficiently fixed in the January 5, 2005 document. [147] If the January 5, 2005 agreement was a letter of intent, I find that it did not constitute a binding, enforceable contract.

There wasuncertainty and no consensus ad idem on many material terms, including the property in question, the operating partnership, and the finaldeal. 5 Part Performance [148] The Court in Ko held that although a court may be reluctant to find a contract void for uncertainty which has been partly or fullyperformed at least by one side, there should be no general reluctance to find a contract void for uncertainty. [149] A number of cases are cited in Ko in support of the proposition that courts ought to be reluctant to strike down contracts partlyor fully performed, at least on one side.

A review of those cases, however, satisfies me that the case of Kelly v Watson (1921), (SCC), 61 SCR 482, 57 DLR 363 at 364 placed limits on that discretion. The Court is not to create a new agreement when theevidence as to the intention of the parties is not clear, notwithstanding part performance of the contract. The Court should not make anew agreement for the parties as to which they were never ad idem.

In this case the parties were never ad idem with respect to theproperty to be sold, the terms of the operating partnership or the final deal. [150] If a written agreement involving land is unenforceable, the Statute of Frauds, [1677] 29 Car 2, c 3, s 4 is a statutory bar in theabsence of part performance.

To invoke the doctrine of part performance in relation to land, the party claiming to have performed a validcontract must demonstrate: (1) detrimental reliance and (2) that the acts of part performance sufficiently indicate the existence of thealleged contract such that the party alleging the agreement is permitted to adduce evidence of the oral agreement. The acts of both partiesto the alleged agreement may be considered.

Significantly, the acts of part performance must be unequivocally referable in their ownnature to some dealing with the land: B & R Development Corp (cob Abbey Lane Homes) v Trail, 2012 ABCA 351, 539 AR 157, leavedenied [2013] SCCA No 34, Mountain v Mountain Estate, 2012 ONCA 806, 299 OAC 66. [151] Mr. Vandal took some steps subsequent to January 5, 2005 to organize the affairs of 672. He opened a bank account for 672 and

transferred deposits with respect to the ATM machines, arranging as well for insurance payments and payments to AGLC to come out ofthat account. Mr. Vandal also arranged for a letter of credit for 672 supported by a GIC of one of his corporations to allow 672 tocontinue with the operation of the VLTs. He also spoke to the landlord and obtained a lease renewal for 672. [152] Mr. Vandal also transferred the daily operation of the bar to Melissa Cousineau. An inventory of the liquor was taken January 6,2005, by Mr. McKiel and Mr. Vandal.

On January 7, 2005, a locksmith came and changed the locks, and keys were provided to Mr.McKiel and Ms. Cousineau. Both Mr. McKiel and Melissa Cousineau were terminated as employees in January 2005. MelissaCousineau also received keys to the VLTs which had not been in her possession prior to January 7, 2005, and she changed thecombination of the safe. [153] Although Mr.

Vandal said in Questioning that he had communicated with an employee at Iron Management (owned by thelandlord) about the change in control, he did not obtain any written consent from the landlord. [154] Melissa Cousineau informed the employees that she was in the process of buying the bar and advised them that they were nowworking for her and she was going to be paying them cash as she was managing the bar. The employees were no longer paid through thepayroll company which Mr. Vandal had used prior to January 7, 2005.

The evidence does not establish that Melissa Cousineau took anysteps with respect to employment insurance, income tax deductions, Canada Pension Plan or any other ordinary matters relating to theemployment of staff as would be done in the ordinary course of any business. [155] In late January or very early February 2005, Melissa Cousineau signed an application which Mr. Vandal forwarded to AGLC tohave her appointed as a board approved manager of 672. He said he did this because it would assist in having AGLC approve the changeof control of 672 from himself to Melissa Cousineau.

Melissa Cousineau was approved by AGLC on February 10, 2005 as a board-approved manager. [156] Melissa Cousineau never incorporated a company. There was no transfer of shares or assets to Melissa Cousineau. She testified,and I find, that she was doing no more in relation to the business than she would have done if she was a manager. The January 5, 2005agreement stated that the new owner would take over operations on January 7, 2005. The April 11, 2005 agreement, which she neversigned, stated that the new owner would take over as owner on May 11, 2005. [157] Mr.

Vandal wrote cheques on behalf of 672 for rent until July 2005. He maintained control of the bank account of 672. Hemade arrangements for certain payments to be made out of the 672 account. This might make sense if Melissa Cousineau was going to begiven signing authority over the account, however signing authority was never arranged for Melissa Cousineau.

On his list which isExhibit 10, he included “close bank account balances”. [158] Again, transfer of the liquor licence, business licence, lease, VLTs and insurance would be unnecessary if it was a share sale,and the liquor licence and VLTs could not be transferred if it were a sale of assets. [159] Mr. Vandal testified that sometime after January 5, 2005, he had discussions with Ron Cousineau to the effect that Mr.Cousineau would arrange to have Melissa Cousineau’s house transferred to him, subject only to the CIBC mortgage, in full satisfaction ofall that Mr. Vandal was owed.

This would occur rather than having Mr. Cousineau and Melissa Cousineau sell the house in order torecover $10,000 in equity, more or less, as he says is contemplated in the January 5, 2005 agreement. On the list he created in April 2005(Exhibit 10), Mr. Vandal wrote “sign over house”. Mr. Cousineau denies that any such agreement was ever made, and when the draftPurchase Agreement of April 11, 2005 was presented to him, it was not signed by Melissa Cousineau. [160] On three occasions after Mr.

Vandal presented the unsigned April 11, 2005 Purchase Agreement (April 21, April 25 and May 2,2005), Melissa Cousineau’s lawyer requested corporate documents and the lease agreement for review. [161] Mr. Vandal’s lawyer finally sent correspondence dated May 12, 2005, enclosing a copy of the document signed on January 5,2005, and a copy of the original lease, and stating that the Land referred to in the document was to be sold by May 17, 2005 ortransferred to Mr. Vandal. [162] Two weeks later, Mr.

Vandal’s lawyer sent correspondence on May 26, 2005, enclosing the 672 Minute book, a transfer ofClass “A” voting shares, and a release of Mr. Vandal on trust conditions to provide an executed transfer of the Land or the sum of$115,000. [163] On May 27, 2005, Melissa Cousineau’s lawyer returned the documents and expressed the opinion that the parties had notreached a final agreement. [164] Mr. Vandal did not file a caveat against the Land until June 2, 2005, after the parties failed to execute the April 11, 2005agreement. That caveat claimed an interest based on the January 5, 2005 agreement.

The January 5, 2005 document referred to sale ofthe Land by May 17, 2005. Had it been sold by that date or at any time prior to June 2, 2005, there would have been nothing on titleindicating an interest in the Land in favour of Mr. Vandal. He did not take the most obvious step referable to the Land until June 2, 2005. [165] There is no evidence regarding an appraisal of the house in 2005. [166] In BCE Development Corp v Cascade Investments Ltd (1987), (AB KB), 80 AR 386, [1987] AJ No 824(QB), a case referred to by counsel, the Court found several important ways in which the contract had been partially performed.

TheCourt was able to go on by examining the words of paragraph 6 of the agreement to determine an expiry date. That is not the case here. [167] The steps taken by the parties in this case are consistent with a finding that a future formal contract was anticipated. In effect,although her responsibilities had been increased, Melissa Cousineau was involved in no more than management duties. Generally, Mr.Vandal organized the affairs of 672 which he solely controlled, while voluntarily washing his hands of the daily operations, despite theJanuary 5, 2005 document referring to an “operating partnership”.

[ 168 ] The steps taken by the parties do not clarify the terms of the January 5, 2005 document. They do not clarify whether it was a sale of shares or of assets. They do not clarify what was intended by “operating partnership”. They do not clarify what adjustments were to be made to determine the final cash to close. 6

Summary [ 169 ] I have found that the January 5, 2005 agreement is uncertain with respect to a number of material matters, including: the subject matter of the agreement, the operating partnership, the obligations relating to the Land and the terms of a future formal contract. Further, the alleged acts of part performance do not resolve the uncertainty in the terms of the agreement. [ 170 ] In sum, I conclude that Mr.

Vandal entered into an uncertain arrangement, drafted by himself, following which he retained control of 672, but effectively relinquished control of the daily business of the bar to the management of Melissa Cousineau. The initial January 5, 2005 document contemplated a final deal, however the parties failed to negotiate that final deal. Mr. Vandal took no steps in relation to the Land until the parties failed to conclude the final deal, at which point he filed a caveat relying on the initial document.

The Court cannot determine what the final deal would have entailed given the uncertainty in the January 5, 2005 document, as outlined above. [ 171 ] Given my conclusion, it is unnecessary to address other issues raised, including whether the buyer’s conditions and seller’s conditions are true conditions precedent, whether they were waived or fulfilled, and whose responsibility it was to fulfill the conditions. Nor is it necessary to address whether or not the contract is a violation of Alberta statutes or regulations with respect to the Gaming and Liquor Act , RSA 2000, c G-1 .

IX Conclusion [ 172 ] For the reasons which I have set out, the claim and counterclaim are dismissed. [ 173 ] The Plaintiff’s caveat on the Land will be discharged. X Costs [ 174 ] If the parties are unable to agree on the matter of costs within the next 45 days, they may arrange to appear before me to settle the matter. Heard on the 8 th through the 19 th days of September, 2014. Dated at the City of Edmonton, Alberta, this 4 th day of November, 2014. E.J. Simpson J.C.Q.B.A. Appearances: Brian Doherty Doherty Schuldhaus LLP for the Plaintiff Bruce E. Mintz

MintzLaw for the Defendants