Parsonage v Operations North, 2014 ABQB 675

Court of Queen ’ s Bench of Alberta Citation: Parsonage v Operations North

(1999) Ltd, 2014 ABQB 675 Date: 20141106 Docket: 1103 13910 Registry: Edmonton Between: Cathy Parsonage and Shane Parsonage Plaintiffs - and - Operations North

(1999) Ltd Defendant _ ________________________________________ ______________ Reasons for Judgment of the Honourable Madam Justice D.L. Shelley _________________________________________ ______________ Background [ 1 ] In 2009, the Defendant became the owner of a parcel of land in Red Earth Creek, Alberta, which is now the subject of this lawsuit (the “Parcel”).

At the time it was purchased, there was a heated shop with electrical service and a rundown house (the “House”) located on the approximately six acre Parcel. [ 2 ] After the Defendant had purchased the Parcel but before it had entered into discussions with the Plaintiffs, the Defendant had applied for subdivision of the Parcel into six lots of approximately 1.5 acres and had received conditional approval for the proposed subdivision. Around the time of its discussions with the Plaintiffs, in January of 2010, the Defendant had applied to amend its original subdivision application, changing it into three lots.

Approval to the amendment was granted January 26, 2010, permitting subdivision into three 2.12 acre lots.

[ 3 ] In January 2010, Mr. Parsonage discussed the potential purchase of a portion of the Parcel with the Defendant’s Principal, Mr. North. The Plaintiffs were interested in buying the approximately 2.12 portion acre of the Parcel which contained the House and the shop (the “Lot”). They initially discussed a purchase price of $40,000.00, but subsequently the Defendant was persuaded by a third party to reduce the price to $30,000.00.

However, shortly after those discussions, the Defendant learned the estimated cost of surveying and subdividing the Parcel, which would be required to permit the sale to the Plaintiffs. As a result of these costs, the Defendant advised the Plaintiffs that the purchase price would be $40,000.00. The Plaintiffs agreed. [ 4 ] Sometime around January 2010, but prior to the parties agreeing on a $40,000.00 purchase price, the Defendant permitted the Plaintiffs to move some of their belongings onto the Lot.

On or about February 12, 2010, the Plaintiffs paid a $5,000.00 deposit (the “Deposit”) to the Defendant in relation to their purchase of the Lot. That Deposit has been retained by the Defendant since that date, either in a separate account or in its lawyer’s trust account. [ 5 ] Around March 29, 2010, the Plaintiffs applied for a development permit to renovate the House. Around August 12, 2010, they applied for a second development permit to create a separate access to the Lot which would result from the proposed subdivision. Both applications were signed by Mr.

North on behalf of the Defendant, because the registered owner was required to sign them. [ 6 ] The Defendant had ordered a survey of the Parcel in February 2010, and it was completed between March 24 and 30 of that year. In April 2011, the Defendant paid for the survey and finalized its subdivision application. On May 19, 2011, titles were issued for the three new lots, including the Lot. [ 7 ] In May of 2011, the Plaintiffs were advised by the Defendant’s office assistant (“Cindy”) that the subdivision had been completed.

The legal description assigned to the Lot as a result of the subdivision was Lot 18, Block D, Plan 1122637. In August, the Plaintiffs contacted Mr. North to discuss completing the purchase of the Lot. Mr. North advised the Plaintiffs that he now wanted $66,000.00 for the Lot or, alternatively, he would return the Deposit and require the Plaintiffs to vacate the Lot and remove the House from it. [ 8 ] Between their original discussions in January 2010 and Mr.

North’s advice in August 2011, the Plaintiffs had done considerable work on the House (renovations and an addition), had moved considerable personal property (including large sheds) onto the Lot, and had completed other work on the Lot. [ 9 ] The Plaintiffs have resided in the House since approximately November of 2010. The cost of materials supplied to complete the renovations and the addition was approximately $40,000.00. This does not include the Plaintiffs’ labour and that of their friends (who are tradesmen) who worked on it over a period of approximately eight months.

They submit that, as a result of these improvements, the appraised value, as of April 29, 2010, was estimated at $255,000.00 once completed (although on that date the contemplated work was only about 24% complete). [ 10 ] On March 14, 2013, the Plaintiffs requested a statement of adjustments in connection with the purchase of the Lot. At no time did they tender purchase funds to the Defendant, nor at any time did the Defendant tender closing documents to the Plaintiffs. [ 11 ] At all times the Defendant has paid the property taxes on the Lot. The Plaintiffs have paid the utilities.

Legal Issues [ 12 ] The main issues are: 1. Issues raised by both parties concerning evidentiary matters which they argue impugn the credibility of the other party’s witness or its case; 2. Did the parties enter into a binding agreement of purchase and sale in respect of the Lot; 3. If the parties did enter into a binding agreement, have the Plaintiffs breached the agreement; and 4. If there is a binding agreement but the Plaintiffs have not breached it, what is the appropriate remedy?

Summary of the Position of the Parties [ 13 ] The Plaintiffs take the position that they entered into a binding agreement of purchase and sale in respect of the Lot pursuant to their January 2010 discussions, which resulted in an agreement that they could purchase the approximately 2.12 acre Lot containing the House and the shop for a purchase price of $40,000.00. They submit that the agreement has been partially performed.

They argue that they are entitled to specific performance of that agreement. [ 14 ] The Defendant takes the position that the parties did not enter into a binding agreement of purchase and sale in relation to the Lot or, in the alternative, that if they did so, the Plaintiffs breached the agreement by failing to tender the purchase price. The Defendant argues, in the further alternative, that if there was a binding agreement and the Plaintiffs did not breach it, specific performance is not a remedy available to the Plaintiffs. Analysis

1. Preliminary matters related to credibility and evidentiary issues [ 15 ] The Defendant asks that I draw a negative inference because Mr. Parsonage did not testify at trial. Such failure, it argues, is supportive of its contention that Mr. Parsonage had relevant conversations with Mr. North about the formation of the agreement and the specifics of its terms. Furthermore, some of Ms. Parsonage’s evidence was based on her discussions with her husband.

This hearsay evidence should be accorded little weight. [ 16 ] The Plaintiffs raise issues concerning some of the documentary evidence on which the Defendant relies. The Plaintiffs submit that a “Sales Receipt” dated February 13, 2010, in respect of “Sale Number 3”, which confirms their payment of the $5,000.00 Deposit to the Defendant in relation to the “North 2.2 acres of land known as 401B Forestry Road” is authentic and was issued to the Plaintiffs when they paid the Deposit to the Defendant. They dispute the authenticity of the two versions of Invoice 1447 produced by the Defendant.

The version of Invoice 1447 which is marked “void” indicates that $30,000.00 is “due upon receipt”. The other version of Invoice 1447 indicates both that it is “due upon receipt” and that “payment is due by the end of each month”. Both Invoices are dated February 17, 2010. [ 17 ] Invoice 1481 is also dated February 17, 2010. It indicates a purchase price of $40,000.00, to which the $5,000.00 Deposit has been credited, leaving a balance of $35,000.00. This Invoice also indicates both that it is “due upon receipt” and that “payment is due by the end of each month”. Ms.

Parsonage testified that she and her husband received this Invoice in the mail in April 2010. She had no explanation for its reference to monthly payments, nor was she aware of any discussions relating to monthly payments. [ 18 ] Invoice 1481 also contains the legal description of the Lot which resulted from the registration of the plan of subdivision, a legal description that did not exist until approximately 15 months after the date on the Invoice. Neither Ms. Parsonage nor Mr.

North explained how a legal description was included on an Invoice issued before that legal description came into existence. [ 19 ] When asked to explain the creation, delivery and, in one case, voiding of these Invoices, Mr. North testified that Cindy had done so and that the various discrepancies were mistakes on her part. Mr. North also testified that this employee no longer works for him and they are no longer on good terms. Cindy was not called to testify about any of the mistakes attributed to her. [ 20 ] I found Ms. Parsonage to be a credible witness.

Unfortunately, while she had personal knowledge of many of the matters at issue in this trial, there were matters on which she was relying on her husband’s advice and not her personal involvement. For the most part, this is not a problem, since the essential terms of the agreement can be established largely on Mr. North’s own testimony, which was in those respects consistent with Ms. Parsonage’s. [ 21 ] There is one issue, however, on which Mr. Parsonage’s testimony would have been beneficial, and that is the terms of payment of the balance of the purchase price. On this key issue, I had difficulty accepting Mr.

North’s evidence. Not only did he have contradictory and confusing documentation on that point, but his explanation for these inconsistencies was less than satisfactory. Furthermore, his testimony on several points is at odds with the parties’ actions. While I will deal with this further below, I conclude that it is the actions of the parties which have the greatest evidentiary value in this case, where there is either uncertainty or disagreement with respect to an issue. 2.

Did the parties enter into a binding agreement of purchase and sale in respect of the Lot? [ 22 ] I have no difficulty concluding that the parties agreed on the essential terms of an agreement for the purchase and sale of the Lot. The identity of the parties is clear-the Plaintiffs as purchaser and the Defendant as vendor. The purchase price was $40,000.00, the amount both Ms. Parsonage and Mr. North acknowledged had been agreed to after Mr.

North concluded that the costs of subdivision were higher than he had anticipated at the time that he had been coaxed by a third party into agreeing to a $30,000.00 purchase price. Mr.

North further confirmed the conclusion of the agreement when he testified that the only reason he agreed to a sale price of $40,000.00, which he described as a “loss”, was because he had a large credit card bill and was desperate for money at that time. [ 23 ] It is clear from the testimony, as well as from the description of the Lot contained on the Sales Receipt and Invoice documents, that the property was a piece of land of approximately 2.12 acres containing the House and the shop, for which a Land Titles Certificate was issued on May 11, 2011, as Title Number 112135366.

I also conclude that both parties were aware that the sale could not be completed until the subdivision plan was registered and a title was issued for the Lot. In order for that to occur, both parties were also aware that the Defendant would have to have the parcel surveyed in order to have the subdivision plan finalized for registration. [ 24 ] I reject Mr.

North’s suggestion that the $5,000.00 payment which was paid immediately following their agreement on the $40,000.00 purchase price was “money in earnest” provided by the Plaintiffs only to prevent him from selling the Lot to anyone else before he concluded an agreement with them. This position is in conflict with much of the other testimony and, more importantly, with his own documentation. Each of them, which Mr.

North confirmed were prepared on behalf of the Defendant, reference the $5,000.00 payment as either a “deposit” or a “down payment” in respect of the Lot and one of them is on a document called a “Sales Receipt” in relation to “Sale Number 3”. [ 25 ] Although the Defendant plead the Statute of Frauds by way of amendment to its Statement of Defence, this defence must fail. Although the number and conflicting provisions of the various Sales Receipt/Invoice documents raise other issues that must be addressed, these documents clearly evidence a sale by the Defendant to the Plaintiffs in respect of the Lot.

If, by virtue of the conflict between these documents, they do not on their own satisfy the requirements of the Statute of Frauds , the parties’ part performance of the agreement does so. There are many aspects of this part performance, which are not consistent with any other type of arrangement between the parties in respect of the Lot (for example, they are not consistent with a lease): Booth v Knibb Developments Ltd , 2002 ABCA 180 , 312 AR 173. The $5,000.00 payment was characterized as either a deposit or down-payment. The Plaintiffs expended

considerable funds and a tremendous amount of labour in improving the House, the shop, and the land itself. For example, their renovations and addition to the House affixed it to the land, rendering what was formerly a chattel into a fixture. In that regard, I reject the Defendant’s assertions that the House was affixed and renovated without its knowledge and consent or that it is still capable of being moved easily without damaging it.

The evidence does not support these assertions. [ 26 ] In addition, the Plaintiffs’ application for development permits is consistent with their purchase of the Lot, as is their removal of trees and levelling of ground, installation of gravel and other work on the land. One of the development permits was obtained to permit the construction of a second access to the Lot. I find that both the type of improvements undertaken by the Plaintiffs, and their magnitude, were consistent with the Plaintiffs’ agreement to purchase the Lot, and were undertaken as part performance of that agreement. [ 27 ] Similarly, Mr.

North’s execution of the development permits on behalf of the Defendant is consistent with part performance of the Defendant’s agreement to sell the Lot to the Plaintiffs. Not only does Mr. North’s testimony confirm that the Defendant had reached agreement with the Plaintiffs to sell the Lot for $40,000.00 as a result of their discussions in January 2010, his documentation (albeit contradictory) is evidence of that sale.

His actions in having the property surveyed and registering a subdivision plan consistent with what he had shown the Plaintiffs was also in performance of the Defendant’s agreement to have the Parcel subdivided so that the Plaintiffs could complete the purchase of the Lot. Importantly, Cindy, an employee of the Defendant, contacted the Plaintiffs in May of 2011 to advise them that the subdivision had been completed. This occurred while Mr. North was in China.

This call and this advice are also consistent with part performance of the agreement of purchase and sale, a sale which both parties knew could not be completed until the subdivision plan had been registered. [ 28 ] I am satisfied that there is only one term of the agreement about which there is some uncertainty, namely the date upon which the sale was to be completed. Although the mechanics of closing were not specifically discussed or agreed to, I am satisfied, from the testimony of Mr. North and Ms.

Parsonage, that both parties were familiar with conveyancing practice in Alberta, expected to have their lawyers involved in that process, and would have contemplated closing of the transaction in accordance with customary conveyance practice in Alberta. The issue, then, is what was the closing date to be? I will deal with this under the next heading, as this is the important area of dispute between the parties and, in my view, the only potential reason that the agreement might either be uncertain or the Plaintiffs might have breached the agreement. 3.

If the parties did enter into a binding agreement, have the Plaintiffs breached the agreement? [ 29 ] Whether the parties entered into a binding agreement and whether the Plaintiffs breached such an agreement really hinge on the same issue-are the payment terms for the balance of the purchase price too uncertain to be enforceable or, if certain, did the Plaintiffs fail to pay the balance as required under the agreement? [ 30 ] The Defendant argues, relying partially on the Sales Receipt/Invoice documentation and partly on discussions Mr. North says he had with Mr.

Parsonage, that at least part of the purchase price was payable before Mr. North arranged for the Parcel to be surveyed. Mr. North also testified that, while he was on a trip to China, he suggested by phone to Cindy that she contact the Plaintiffs and ask them to make payments, although on cross-examination he also indicated that reference to monthly payments on his documentation was only a “suggestion”, not a requirement. Mr.

North also testified that, following his suggestion to Cindy that she ask the Plaintiffs to make payments (the dates and amounts of which he did not specify), he concluded that the deal was “dead”, based on Cindy’s advice that the Plaintiffs had not been co-operative. This is completely at odds with his subsequent signing of the two development applications. Notwithstanding his testimony that he had no intention of dealing with the Plaintiffs any further, he signed the development applications after that, giving the reason that he didn’t bother reviewing them.

I do not accept that he signed applications permitting considerable renovations to his property, including the installation of a second access road, without having any idea of the contents of the applications. [ 31 ] I also do not accept that he believed the transaction was over prior to the signing of the development permit applications because he hadn’t received the balance of the purchase price in late February 2010. Mr. North’s testimony on these points is not credible and is at odds with his actions.

It is also inconsistent with his decision to retain the Deposit (which I do not accept he arbitrarily converted into a damage deposit, as he suggested) and with Cindy having contacted the Plaintiffs on registration of the sub-division plan. Rather, his action (perhaps more accurately his inaction) in not issuing a demand for payment in support of his contention that the money (or at least some unspecified amount of it) was payable as of February 2010, is more consistent with his testimony that he expected his lawyer to become involved in the closing. It is also consistent with Ms.

Parsonage having advised him that she couldn’t get bank financing until title was issued for the property, leading Cindy to advise the Plaintiffs as soon as this occurred. [ 32 ] I am satisfied that the parties had an agreement for the Plaintiffs to buy the Lot from the Defendant and that they anticipated completion of the transaction once the subdivision plan had been registered and a title issued for the Lot. While this occurred in May, Mr. North was away and I accept that the Plaintiffs expected that they would hear from him on his return.

When they did not, they contacted him requesting closing documents, at which point he demanded an increase to the purchase price from $40,000.00 to $66,000.00. I accept Ms. Parsonage’s testimony that she had arranged to borrow money from friends in order to complete the purchase at that time. [ 33 ] I do not consider the Plaintiffs’ failure to tender to be a breach of the agreement, given the Defendant’s demand for an increase to the purchase price and its clear indication that it would not close unless the price was increased as requested. As in Dove Homes

(1999) Ltd v Fountain Creek Estates Ltd , 2012 ABQB 1 , and the cases cited therein, it is not necessary for purchasers to tender in circumstances where it is clear that the vendor will not close the transaction. In this case Mr. North, on behalf of the Defendant, had made it clear that the Defendant would not close unless the Plaintiffs agreed to pay an additional $26,000.00, 65% more than the price they had agreed to. [ 34 ] What date, then, ought the transaction to have closed, had the Defendant not made it clear that it would not accept the agreed upon purchase price? Is this term a material term on which there had not been agreement, thereby rendering the agreement

unenforceable? I have concluded that it is not. [35] The parties had generally agreed on closing-that it would follow registration of the subdivision plan and issuance of title forthe Lot. In Ko v Hillview Homes Ltd, 2012 ABCA 245, Leave to appeal ref’d [2012] SCCA No 445, our Court of Appeal referred tosome of the recognized ways that uncertainty of terms can be saved. This included reference to established custom of a trade, specificallymentioning “when and where sales will close”.

In this case, closing would have occurred, in the normal course pursuant to Albertaconveyancing practice (a practice with which both parties were familiar), within a couple of weeks of title having issued. However, Mr.North was out of the country and did not contact the Plaintiffs on his return. It was not unreasonable for them to have given him anopportunity to do so, since both contemplated the involvement of his lawyer in the closing of the transaction. I therefore conclude that,had Mr.

North not taken the position he did when the Plaintiffs contacted him in August to discuss closing, the transaction likely wouldhave closed on or about September 1, 2011. This is a reasonable date which can be inferred from the circumstances and customaryconveyancing practice and therefore is the date from which interest should be calculated and the Plaintiffs’ liability for payment of taxesshould arise. 4. If there is a binding agreement but the Plaintiffs have notbreached it, what is the appropriate remedy? [36] Since the Supreme Court of Canada decision in Semelhago v.

Paramadevan, (SCC), [1996] 2 SCR 415,136 DLR (4th) 1, specific performance is not automatically available as the remedy for breach of contracts related to land. Prior toSemelhago, the Courts generally considered land to be unique and therefore that damages were not an adequate remedy. Semelhago, andnumerous cases since it was decided, recognized that, in the modern world, much development involves the mass production ofproperties which often leads to an abundance of similar properties.

Therefore, damages will generally be adequate compensation unlessthe specific property is found to be unique, in the sense that a substitute is not readily available. See Semelhago at para 22 and a reviewof other cases set out in Neher v Marathon Homes Inc, 2011 ABQB 92, and Dove Homes

(1999) Ltd. [37] I have concluded that the Lot satisfies the test that must be met to conclude that it is unique. The evidence establishes thatthere were no other similar parcels available for sale in the area other than the two others being sold by the Defendant. Mr. Northadmitted as much when he testified that, although there were other lots in the area, perhaps they were not for sale. He expressed his viewthat it was possible that the owners of these lots, which were not listed for sale, might have sold their lots to the Plaintiffs if they hadbeen approached by the Plaintiffs.

There is no legal requirement on purchasers in these circumstances to drive door to door askingproperty owners if they might consider selling their non-listed property. Furthermore, Mr. North admitted that he did not know whetherother properties could have been used to operate a business, which Mr. Parsonage could and intended to do on the Lot. [38] It is clear that the Lot satisfied the Plaintiffs’ requirements that would not have been satisfied by any other lots that were forsale in that area. The Lot’s location and size, and the presence of the House and the shop, satisfied the Plaintiffs’ particular needs.

Inparticular, the Plaintiffs wished to be located in or near Red Earth, needed a parcel of sufficient size to locate their sheds and equipment,and saw the presence of the run-down House and shop as positives. The latter would afford an opportunity for the Plaintiffs to acquiretheir own home through the “sweat equity” they would build by doing a lot of the renovation work themselves, one from which Mr.Parsonage could operate a business. [39] Since the Lot is unique, I conclude that the Plaintiffs are entitled to specific performance.

However, it is clear that thePlaintiffs would be unjustly enriched by the Defendant having paid the property taxes on the Lot between the date when it ought to havebeen transferred to the Plaintiffs and when it will be transferred to them pursuant to this Judgment. Accordingly, in addition to paymentof the balance of the purchase price ($35,000.00), the Plaintiffs will be required to reimburse the Defendant for the amount of taxes itpaid in respect of the Lot since September 1, 2011.

The Defendant shall provide the Plaintiffs with proof of any amounts so paid withintwo weeks of the date of issuance of these Reasons for Judgment. The Plaintiffs will pay the amount of such taxes when they pay thepurchase price. The total of these amounts, together with pre-judgment interest on them, shall be paid to the Defendant, in care of itssolicitor, less any interest earned on the Deposit since it was paid to the Defendant and any costs payable by the Defendant to thePlaintiffs, within one month of the date of issuance of these Reasons.

The Defendant’s solicitor shall hold such funds in trust until title tothe Lot has been transferred to the Plaintiffs. Prejudgment interest on the balance of the purchase price shall be calculated fromSeptember 1, 2011, and on the amount of the taxes shall be calculated from the date(

s) of payment by the Defendant of any such taxes.

Conclusion [40] For the above reasons, judgement is awarded in favour of the Plaintiffs, who are entitled to specific performance of theagreement of purchase and sale which I have found was concluded with the Defendant. [41] In the result, title to the Lot will be transferred to the Plaintiffs immediately upon their payment to the Defendant of thebalance of the purchase price of the Lot and taxes related to the Lot as specified in paragraph 39 above, together with interest on thoseamounts from the date specified above to the date paid pursuant to the Judgment Interest Act, less any interest earned on the Depositwhile in the hands of the Defendant and any costs which may be owing by the Defendant to the Plaintiffs in respect of this action. [42] If the parties are unable to agree on the amount of costs to which the Plaintiffs, as successful parties in this action, areentitled, they are to contact my assistant within 30 days of the issuance of these Reasons to arrange a time at which the matter of costsmay be addressed. [43] If the parties are unable to agree on the mechanics of the payment by the Plaintiffs and the transfer of title by the Defendant,they are to contact my assistant within 30 days of the issuance of these Reasons to arrange a time to seek further clarification anddirection in that regard.

Heard between February 5 th and 6 th , 2014. Dated at the City of Edmonton, Alberta this 6 th day of November, 2014. D.L. Shelley J.C.Q.B.A. Appearances: Neil Fenna Neil Fenna Professional Corporation for the Plaintiffs Kevin I. Peddie West Edmonton Law for the Defendant