Balderston v Faul, 2014 ABQB 762

Court of Queen ’ s Bench of Alberta Citation: Balderston v Faul, 2014 ABQB 762 Date: 20141216 Docket: 1304 00283 Registry: Grande Prairie Between: Christopher Darren Herbert Balderston Plaintiff - and - Murray Joseph Faul, Dennis Isaac Derksen and Wanda Marie Derksen Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.M. Bensler _______________________________________________________ I. Introduction and Facts [ 1 ] This matter came before me as a

summary trial, that procedure having been consented to by all parties. The issues to be resolved in this

summary trial were agreed and I will set them out below. The evidence to be placed before this Court was agreed to be limited to affidavits from various parties, the exhibits thereto and the transcripts of questioning thereon. The basic facts of this case are largely undisputed; it is their import that is at issue. [ 2 ] The case concerns a purported sale of two quarter sections of land. The first is NE 15-72-5 W6 and is owned by the Defendant, Murray Faul (the “Faul Land”). The second is SE 15-72-5 W6 and is owned jointly by the Defendants Dennis Derksen and Wanda Derksen (the “Derksen Land”).

I will refer to the Faul Land and the Derksen Land collectively herein as the “Lands”. Ms. Derksen is Mr. Faul’s daughter and Mr. Derksen is Ms. Derksen’s husband. [ 3 ] On March 20, 2011, Mr. Faul, Mr. Derksen and Ms. Derksen agreed to sell the Lands with an asking price of $1,550,000. Mr. Derksen signed a listing agreement effective March 30, 2011 to September 1, 2011 with Mr. Larry Vavrek, a Grande Prairie realtor. [ 4 ] Mr. Derksen stated in questioning on his affidavit that the Defendants had agreed amongst themselves that if the Lands were sold for the list price, the Derksens would get $1,200,000 and Mr.

Faul would get $300,000. He also stated, however, that he and Mr. Faul later were unable to agree on the amount that each was to receive for his land.

[ 5 ] Mr. Derksen also acknowledged that Mr. Faul had signed a document in 2011 saying: To Whom It May Concern I, Murray Joseph Faul, give Dennis/Wanda Derksen permission to act on behalf of myself on the sale of NE-15-72-5-W6M with Exit Realty [Larry Vavrek] as the realtor. [ 6 ] The listing agreement with Mr. Vavrek was extended twice, but expired on June 30, 2012. [ 7 ] On February 18, 2013, the Plaintiff Christopher Balderston made an offer to purchase the Lands. [ 8 ] On February 19, 2013, Mr. Balderston, Mr. Derksen and Ms. Derksen executed a document entitled “Agricultural Real Estate Purchase Contract”.

I will refer to this document as the “Purported Contract”. The Purported Contract was a pre-printed form from the Alberta Real Estate Association with various blanks filled in with handwriting. [ 9 ] The Purported Contract provided for a purchase price for the Lands of $1,500,000. An initial deposit of $50,000 was to be paid on March 1, 2013, followed by an additional deposit of $450,000 upon removal of certain conditions. Clause 4.1 of the Purported Contract states that the “Completion Day” is May 7, 2013.

However, clause 7.5 sets out “Additional terms” in handwriting and provides that the closing date for the Faul Land is May 7, 2013 and the closing date for the Derksen Land is 30 days after development application approval by the County of Grande Prairie or December 1, 2013. [ 10 ] Other “Additional terms” set out in clause 7.5 of the Purported Contract are as follows: - Buyer has the right to farm said lands as his own. - Seller will provide “1 st ” Right of Refusal on Land/property owned by Murray Faul around Clairmont Lake for 2 years. - All costs regarding subdivision is cost of Buyer. [ 11 ] In addition, clause 8.1(

d) of the Purported Contract sets out “Additional Buyer’s conditions” as “conditional to Buyer’s lawyer seeing & approving of this offer”. Similarly, clause 8.2 of the Purported Contract sets out “Seller’s Conditions” as “conditional to Sellers’ lawyer seeing & approving of this offer”. Both of these conditions were to be met before 9 p.m. on March 1, 2013 (the “Condition Day”). [ 12 ] Clause 13.2 of the Purported Contract provides that Mr. Vavrek is the Representative for both the Sellers and the Buyer. [ 13 ] Each of Mr. Balderston, Mr. Derksen and Ms. Derksen initialled every page of the Purported Contract.

In addition, the initials of these three parties appear in various other places on the Purported Contract where changes or notes were made in handwriting. However, on the last page of the Purported Contract, the full signatures of only Mr. Balderston and Mr. Derksen appear. Ms. Derksen initialled in the margin beside the line marked “Signature of Seller”, but did not place her full signature there. In his affidavit, Mr. Faul acknowledged that Mr. Derksen and Ms. Derksen were authorized to negotiate the sale of the Faul Land. He also stated that the Purported Contract was signed by Mr.

Derksen on his behalf. [ 14 ] In his affidavit, Mr. Vavrek swore to the following: When the Derksens initialled this final amendment to the Offer on February 18, 2013, Dennis Derksen indicated that the deposit had to be non-refundable. He said that he considered this to be a “done deal” and told me to advise Chris Balderston that if Chris backed out of the deal for any reason, the deposit was going to be “in his pocket”. He asked me to tell Chris Balderston this, and I did so. [ 15 ] By February 20, 2013, copies of the Purported Contract had been forwarded to the parties’ lawyers, Mr. Roy Carter, QC for Mr.

Balderston and Mr. Gerry G. Dobko for the Defendants. [ 16 ] On February 21, 2013, Mr. Carter emailed Mr. Dobko as follows: Maybe we can talk on this Offer tomorrow. Think we need to re-write and make some sense of it. [ 17 ] On February 22, 2013, Mr. Dobko sent the following email to Mr. Carter: I spoke to my clients last night. We propose 3 separate deals: 1. NE 15 - $300,000 – sale closes on May 7/13 2. SE 15 - $1,200,000 – option to purchase until December 1/13. $200,000 option consideration payable on May 7/13, balance on exercise of option.

My client retains possession and continues with lease to Head for 12/13 crop year. 3. Right of first refusal on Faul lands adjoining Clairmont Lake (please advise which ones your client wants) – condition on closing of NE 15. I’m leaving for Edmonton at 11, back on Sunday [ 18 ] On February 27, 2013, Mr. Carter responded by email as follows: I have now conferenced with my clients and they are fine with what is set out below. As for the terms of the ROFR they are seeking a ROFR (apply to any future sale or future lease) of the following parcels they have given me:

• NW 18 •

Section 19 • W ½ 20 • SE 29 • SE 30 The above are all of -72-5 W6. My clients would like an option to leave the above ROFR parcels once current leases expire on the same terms as existing leases. If this is not acceptable, I assume a ROFR if leased to another party may suffice. Please let me know. [ 19 ] On March 1, 2013, Mr. Vavrek met separately with Mr. Balderston and with the Derksens to have them sign documents entitled Notice (re: Waiver/Satisfaction of Conditions). As with the Purported Contract, these were pre-printed forms from the Alberta Real Estate Association. The Notice signed by Mr.

Balderston contains a handwritten note indicating that the condition being waived is “Conditional to Sellers’ lawyer seeing and approving of this offer”. The Notice signed by Mr. Derksen and Ms. Derksen contains a handwritten note indicating that the condition being waived is “Conditional to Buyer’s Lawyer seeing and approving of this offer”. It also contains a handwritten note initialled by Mr. Balderston and stating “Note: Sellers’ lawyer is supplying amended offer to purchase which is accepted by Seller and Buyer”. Mr. Vavrek explained to Mr.

Balderston and to the Derksens that the purpose of this note was to allow the total purchase price to be split between the Derksens and Mr. Faul. [ 20 ] Mr. Balderston then took a number of steps to advance his plans for the Lands: 1. He filed applications for change in land use and subdivision. Mr. Derksen signed consents for right of entry to the Lands in connection with those applications. 2. He signed agreements to purchase three quarter sections of land adjacent to the Lands with the intention of developing all of the land at the same time. 3.

He purchased seed, chemicals and fertilizer to seed the Faul Land. [ 21 ] On March 25, 2013, Mr. Dobko responded as follows to Mr. Carter’s February 27, 2013 email: I finally caught up with both clients yesterday. The allocation of the purchase price between the two parcels hasn’t been agreed upon between them. What I had sent you was only one client’s version. This will get nailed down today I am advised. The closing of the Faul quarter in May and the option on the Derksen quarter until December is okay. Faul wants to discuss his capital gains exemption with his accountant today.

Derksen will not provide ROFR on his remaining land – sale or lease. Faul will provide 2 ROFR – sale only. My apologies for the delay in getting this to you. I should be able to provide the allocation later today or in the morning. [ 22 ] Mr. Dobko then emailed Mr. Carter as follows on March 26, 2013: Instructions from clients: N.E. 15-72-5-W6 (Sale) Sale price: $500,000 Deposit: $50,000 Closing date: May 7, 2013 N.E. 20-72-5 W6, Pt. N.W. 20-72-5-W6, Pt. S.W. 20-72-5-W6, Pt. N.E. 19-72-5-W6 and S.E. 29-72-5-W6 (ROFR) Sale only. Expires on May, 2015 or death of Faul, whichever first occurs.

Neither ROFR or Caveat to be filed. S.E. 15-72-5-W5 (Option) Option price: $1,000,000 Option consideration $50,000 payable May 7, 2013. Balance: December 1, 2013. Notice period: 30 days All three transactions must proceed concurrently. Please review with your client and advise. [ 23 ] Following receipt of this email, there was a conference call participated in by Mr. Dobko, Mr. Carter and Mr. Balderston. Thereafter, Mr. Carter sent Mr. Dobko the following email: Below are 2 options that Chris has thrown out.

Your email of March 26 th , 9:49 am would be acceptable if your clients agree to one of the following: - We receive a full ROFR in relation the land around the lake (not 2 years or subject to death)

- We receive a ROFR to lease as requested (we would even exempt out existing tenant from any renewals as we understand they liketheir existing tenant) Given the delays in going back and forth and given the changes in information going to the bank we now see June 25th as the soonestpossible closing date. Once you hear from your client in the morning please get back to me. [24] On March 27, 2013, Mr. Dobko emailed Mr. Carter as follows: I passed on the contents of your e-mail yesterday afternoon to my clients.

I have now been instructed by them to advise that they are notprepared to sell or provide ROFRs on any of their lands at this time. [25] On April 2, 2013, Mr. Dobko again emailed Mr. Carter: After numerous discussions, my clients have instructed me to advise that they are not prepared to sell to your client at this time. [26] On April 3, 2013, Mr. Faul signed an agreement to sell the Faul Land to Abe Neufeld for $500,000. On April 4, 2013, theDerksens signed an agreement to sell the Derksen Land to Mr. Neufeld for $1,050,000. [27] On April 23, 2013, Mr. Balderston filed caveats against the Lands. II.

Issues [28] Simply put, the threshold question in this case is whether there is an enforceable agreement between Mr. Balderston and theDefendants for the sale of the Lands. The simplicity of that question, however, belies the complexity of the contractual issues that arisehere. III. Analysis [29] Counsel for Mr. Balderston in his submissions before me enumerated a number of what he referred to as “sub-issues”.Consideration of each of these is necessary to a determination of whether the Purported Contract constituted an enforceable agreementbetween the parties. A.

Statute of Frauds [30] I begin with what is perhaps the most straightforward issue. As noted above, while Ms. Derksen’s initials appear in variousplaces on the Purported Contract, her full signature does not.

The Defendants take the position that the Purported Contract is not anenforceable agreement because it does not comply with s 4 of the Statute of Frauds 1677, 29 Car 2 c 3, which provides: No action shall be brought whereby ... to charge any person ... upon any contract for sale of lands ... unless the agreement upon whichsuch action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith,or some other person thereunto by him lawfully authorized. [31] In support of their position, the Defendants rely upon the comments of the Court of Appeal in Austie v Aksnowicz, 1999ABCA 56, 232 AR 118 at paras 43-45: Surely the defendant’s merely having written his name is not enough to constitute signature.

Not even the mere fact that he wrote it inthe usual appearance and form of his usual signature. What if he had been trying out a new pen on what was then a blank sheet, andpractising his signature? What if a memorandum were later written above an existing signature in an autograph book or guest register?What if the defendant signed as witness to another’s signature? ... The cases show that the signature must have been affixed with some intent to agree to or authenticate the document ... The signature must do two things.

It must be so placed as to show that it was intended to relate and refer to, and in fact relate and refer to,every part of the instrument said to be a memorandum; it must govern every part of the instrument, and show that the signature wasintended to show that every part of the instrument emanates from the defendant ... [32] For his part, Mr. Balderston asserts that the requirement of signature has been interpreted flexibly and refers to the finding ofthis Court in Moojelsky v Rexnord Canada Ltd, (AB KB), [1989] 96 AR 91 at para 54:

The signature requirement contained in the Statute of Frauds has been broadly interpreted. For instance, what constitutes a signature isindicated in a passage from the judgment of McPhilips J.A. in Gibb et al. v. Canadian Northern Construction Co., (BCCA), [1918] 3 W.W.R. 396 (B.C.C.A.) at p.400: We find this statement in Chalmers’ Sale of Goods, 7th ed., 1910, under the heading “Formalities of the Contract” at pp. 23-24: Signature is the writing of a person’s name on a document for the purpose of authenticating it.

If the name appears in an unusual place itis a question of fact whether it was intended as a signature. ... Signature by mark, initials, or stamp is sufficient. ... The signature to atelegram form suffices ..., so too does the signature of an agent in his own name, for then evidence is admissible to charge the principalthough not to discharge the agent. ... [Citations omitted.] [33] Mr.

Balderston also cites Harvie v Gibbons (1980), 1980 ABCA 38 , 12 Alta LR (2d) 72, in which the Court ofAppeal stated at para 19: It is also well established that several documents may be connected to each other by reasonable inference, with parol evidence ifnecessary, to constitute a sufficient memorandum. This principle has been stated in a series of cases commencing with Long v. Millar(1879), 4 C.P.D. 450 (C.A.), and has been adopted in Canada. In Stammers v.

O’Donohoe (1884), 1884 CanLII 4 (SCC), 11 S.C.R. 358,the court looked at 18 letters which had passed between the parties to see if together they made a sufficient memorandum. [34] Mr. Vavrek’s evidence was that both Mr. Derksen and Ms. Derksen told him they wanted to accept Mr. Balderston’s offer. Hestated that Ms. Derksen read over the Purported Contract carefully, that he told her where to initial and sign and that she told him that shehad. It was not until much later that he realized Ms. Derksen had not placed her full signature on the Purported Contract. [35] In his affidavit, Mr.

Derksen notes that the Purported Contract does not bear Ms. Derksen’s signature; that, of course, isapparent on the face of the document. In questioning on his affidavit, Mr. Derksen stated that he did not remember Ms. Derksen tellingMr. Vavrek that she had signed the Purported Contract and that he did not know at the time whether she had signed it or not. He did,however, acknowledge that he had heard her say she wished to accept the offer. [36] I am satisfied that the Purported Contract meets the requirements of the Statute of Frauds.

I agree with the statement made bythe Court in Standard Realty Co v Nicholson [1911] 24 OLR 46 (HCJ) at para 30 that “...it must never be forgotten that the Statute ofFrauds does not deal with the validity of the transaction but only with the evidence to prove an agreement.” [37] All of the evidence before me in this case is consistent with the conclusion that Ms. Derksen wanted to accept Mr.Balderston’s offer to purchase the Lands and intended to do what was necessary to do so. Both Mr. Vavrek and Mr. Derksen heard Ms.Derksen say she wished to accept the offer.

To be sure, it is hearsay; nevertheless, it is consistent with the other evidence before me.Further, as there is no direct evidence from Ms. Derksen, these statements are uncontroverted. [38] I find that Ms. Derksen’s initials on the Purported Contract are sufficient to signify her intention to accept and authenticate it.In arriving at this conclusion, I am mindful of the Court of Appeal’s caution in Austie that even a full signature may not satisfy thepurposes of the Statute of Frauds if it is not intended to do so. In my view, however, the converse is also true.

Initials or something elseless than a full signature may suffice if the intention is clear, as it is here. [39] Even if that were not so, I find that the other documents signed by Ms. Derksen, taken together with the Purported Contract,are sufficient to satisfy the Statute of Frauds. The extension of the listing agreement, signed contemporaneously with the PurportedContract and the Notice/Waiver signed thereafter consistently speak to Ms. Derksen’s intention to enter into an agreement with Mr.Balderston. B. Agency [40] The next issue is intertwined with the last.

The Defendants argue that the authority granted by Mr. Faul to sell the Faul Landhad to be exercised jointly by Mr. Derksen and Ms. Derksen. Given their position that Ms. Derksen did not execute the PurportedContract, the Defendants assert that it does not bind Mr. Faul. [41] In light of my finding above that Ms. Derksen’s initials were sufficient to constitute execution of the Purported Contract, thesimple answer to this argument is that, even if both Mr. Derksen and Ms.

Derksen needed to sign the Purported Contract to bind Mr.Faul, that is what occurred. [42] Moreover, it is not clear from the evidence before me that both signatures were in fact required. Mr. Derksen stated in hisquestioning on affidavit that it was his understanding that both he and Ms. Derksen had to act together on behalf of Mr. Faul. However,he also stated that he prepared the authorizing document, that there was no discussion about the use of the term “Dennis/Wanda” thereinand that Mr. Faul told him he wanted to accept Mr. Balderston’s offer. Mr.

Derksen also acknowledged that it “was understood” that hehad authority to do so on Mr. Faul’s behalf. Significantly, Mr. Faul swore in his affidavit that the Purported Contract is “an offer whichwas signed by Dennis Derksen on my behalf”. [43] Accordingly, I find that the Purported Contract was sufficiently executed on behalf of Mr. Faul and this argument fails. C. Condition Precedent / Waiver [44] As noted above, the Purported Contract is expressly made subject to the lawyers for both the buyer and the sellers “seeing andapproving offer”.

It is common ground that this condition had to be satisfied or waived by March 1, 2013. [45] As set out in the Facts above, Mr. Vavrek met separately with Mr. Balderston and with the Derksens on March 1, 2013 and

had them sign documents entitled Notice (re: Waiver/Satisfaction of Conditions). However, the Notice signed by Mr. Balderston purports to waive the condition “Conditional to Sellers’ lawyer seeing and approving of this offer” while the Notice signed by Mr. Derksen and Ms. Derksen purports to waive the condition “Conditional to Buyer’s Lawyer seeing and approving of this offer”. [ 46 ] Therefore, the Defendants assert that this condition precedent was never waived by them. As there is no serious dispute that Mr.

Dobko did not “approve” the Purported Contract by March 1, 2013, the Defendants take the position that the Purported Contract never became unconditional and is not enforceable. [ 47 ] The Plaintiff argues that this Court can consider parol evidence to resolve the ambiguity on the face of the waivers. Alternatively, the Plaintiff submits that there has been an obvious mutual mistake and that the waivers can be rectified to reflect the parties’ true intentions at the time of signing. [ 48 ] Evidence in respect of the purported waivers was given in the affidavits of Mr. Balderston, Mr. Vavrek and Mr.

Derksen and all three were questioned on that affidavit evidence. Not surprisingly, their evidence conflicts. [ 49 ] In his affidavit, Mr. Balderston stated: I signed the “Notice” marked as Exhibit “E” removing this condition as the Buyer. It was not until April, 2013, when the Sellers were trying to get out of the Interim Agreement, that someone pointed out to me that there might be an error in the text of the Notice because it referred to “Sellers” rather than “Buyer”, even though the word “Buyer” was circled beside my signature.

When I signed this Notice, I understood that I was giving the “Buyer’s Condition” in my favour regarding Mr. Carter’s “seeing and approving” the Interim Agreement. [ 50 ] The relevant excerpt from Mr. Balderston’s questioning is as follows: Q ... Would I be right that you considered that, as a result of signing that document, you were indicating that the conditions you had as a prerequisite to this deal going ahead had been satisfied or waived? A Yes. [ 51 ] In his affidavit, Mr. Vavrek states: I met separately with the Derksens and Mr.

Balderston on March 1, 2013 to have each of them sign “Notices (Re: Waiver/Satisfaction of Conditions)” with respect to the conditions in clauses 8.1(

d) and 8.2 of the Interim Agreement with respect to their lawyer’s “seeing and approval” of the Interim Agreement. ... As indicated above, when I spoke to the Derksens and Mr. Balderston concerning Exhibits “P” and “Q” respectively, I advised each of them that the waiver they were signed [sic] was with respect to the condition in the Interim Agreement regarding the “seeing and approving” of the Offer by their lawyer, and that waiving these conditions would make the Interim Agreement binding on all parties. [Emphasis in original.] [ 52 ] By contrast, this exchange appears in the questioning of Mr.

Derksen on his affidavit: Q Okay. I’m going to show you the originals that Mr. Vavrek has provided to me from his file of plaintiff’s document 40 which is dated March 1 st , 2013. That document has been signed by you at the bottom of the page beside the word seller which is circled. A Yes. Q And immediately below your signature is the signature of your wife, Wanda, who has signed just beside the word seller that has been circled. A Yes.

Q Now, I think you told me earlier that you understood that in the Offer to Purchase and Interim Agreement there was a clause which said that the Offer to Purchase and Interim Agreement was subject to the condition that your lawyer, Mr. Dobko, see and approve the offer. Right? A Yes. Q And that that condition had to be satisfied or the deal would be off. A That was said at every time I met him. Q Okay. And when you signed this document, plaintiff’s production number 40, did you understand that this document dealt with that condition? A Dealt with it how?

Q Well, did you understand that this document indicated that the condition had been waived or satisfied? A No. Q Why did you sign that document?

A Because I thought I was signing something that released it to my lawyer for approval. Q Did Mr. Vavrek give you an explanation as to what this document was about? A That’s – I don’t recall. Q Do you recall what Mr. Vavrek said to you about this document, plaintiff’s production number 40, before you signed it. A No, not specifically. Q Well, did you have it in your mind when you signed this document that there was a condition in the Offer to Purchase and Interim Agreement which said, in effect, that Mr. Dobko had to both see and approve the Offer to Purchase and Interim Agreement? A Yes. Q Okay.

And you understood that if he didn’t see and approve the interim agreement, the sale would be off. A Yes. Q There would be no deal. A Correct. ... Q So I am asking you – you knew that there was the condition. This condition was in the agreement requiring – the Offer to Purchase and Interim Agreement – requiring Mr. Dobko to see the Offer to Purchase and Interim Agreement and to approve the Offer to Purchase and Interim Agreement. A Yes. Q And he was your lawyer. A Yes. Q Right? So your lawyer had to see the offer and had to approve the offer. A Correct.

Q Now – and you knew that some form had to be signed by March 1 st to deal with that issue or the deal would be off. A I would have to say yes to that. [ 53 ] The Defendants take the position in their brief that rectification is not available given Mr. Derksen’s evidence that he was not intending to signify that the Sellers’ conditions had been satisfied or waived. In oral argument, counsel for the Defendants questioned whether I can decide this issue in the face of conflicting evidence, given that this is a

summary trial. [ 54 ] It strikes me as disingenuous for the Defendants to consent to the

summary trial process and then assert that I cannot address certain issues because they require an assessment of credibility that is inappropriate to that process. If that is the Defendants’ position, they ought to have objected to the

summary trial process on that ground rather than consenting to it. They cannot have it both ways. [ 55 ] At all events, I am satisfied that conflicting evidence is not necessarily a bar to deciding a matter in a

summary process. In Pecek v Fedun , 2007 ABQB 133 , 427 AR 356, Wachowich CJQB (as he then was) held as follows at para 13: Despite the Defendants’ arguments to the contrary, the courts have often allowed actions to proceed by

summary trial despite the presence of conflicting affidavit evidence. In my view, a

summary trial is appropriate in the face of conflicting evidence provided that the Court is presented with a factual matrix on which it can justly prefer one party’s evidence over that of the other... [ 56 ] Similar comments were made by Poelman J in Manson Insulation Products Ltd v Crossroads C&I Distributors , 2013 ABQB 702 at para 24 :

Summary trial is not necessarily precluded even where there are conflicting affidavits and the need to make findings on credibility and reliability of witnesses – although that need would be a negative factor to be considered.

Where there is conflicting evidence, there must be a factual matrix on which the court would be enabled to justly prefer one party’s evidence over the other. [ 57 ] In addition, Erb J commented on this in some detail in SHN Grundstuecksverwaltungsgesellschaft MBH & Co Seniorenresidenz Hoppegarten-Neuenhagen KG v Hanne , 2012 ABQB 624 , 550 AR 129, aff’d 2014 ABCA 168 at para 21 (add’l reasons at 2014 ABCA 245 , leave to appeal to SCC refused [2014] SCCA No 349): The Court of Appeal in J.N. cited Compton Petroleum Corp. v.

Alberta Power Ltd. 1999 ABQB 42 , 242 AR 3 for the variety of ways a court may resolve issues of conflicting affidavit evidence in

summary trial proceedings (paras 42 and 43): Credibility findings are often crucial when there is conflicting affidavit evidence. However, rule 158.6 expressly provides that in a

summary trial the judge may grant judgment in the face of conflicting evidence. In Compton, supra , at para. 14, the court set out a variety of methods used by courts to resolve issues of conflicting affidavit evidence:

an inference can be drawn based on common sense; deponents of affidavits can be ordered to be cross-examined in front of the judge; the conflicting evidence does not need to be resolved to decide the case on its merits; there may be other admissible evidence that will make it possible to find the facts necessary for judgment; a witness’ evidence may be weighed in terms of consistency with other evidence. The court concluded at para. 15 that “given the express language in Alberta’s rule and the ability of the court to order cross-examinationof deponents and oral evidence before it” issues of credibility can be tried by way of

summary trial, unless the court is “unable, on thewhole of the evidence, to find the facts necessary to decide the issues of fact or law required or if it would be ‘unjust’ to decide thoseissues on the material before it.” The ability of the court to resolve the issues before it will depend on the nature and quality of thematerial before it... [Emphasis in original.] [58] In respect of this issue, I prefer the evidence of Mr. Balderston and Mr. Vavrek to that of Mr. Derksen for the followingreasons. [59] First, Mr.

Vavrek’s evidence is that he specifically explained the purpose of the Notice (re: Waiver/Satisfaction ofConditions) to Mr. Balderston and to the Derksens. Mr. Derksen does not deny this, but simply states that he does not remember. [60] Second, the title of the document itself indicates its purpose. This is particularly relevant given Mr. Derksen’sacknowledgement, as set out above, that he was well aware that the conditions had to be satisfied or waived by March 1, 2013. [61] Finally, as set out above, Mr.

Derksen’s evidence on questioning was that he thought what he was signing was something to“release” the Purported Contract to Mr. Dobko for approval. However, copies of the Purported Contract had been forwarded to Mr.Dobko and Mr. Carter by February 20, 2013. Further, Mr. Dobko’s initial email to Mr. Carter is dated February 22, 2013 and indicatesthat he had spoken to his clients about the matter. Clearly, then, the Purported Contract had been “released” to Mr. Dobko several daysprior to Mr. Derksen’s March 1, 2013 signing of the Notice (re: Waiver/Satisfaction of Conditions). [62] Accordingly, I find that Mr.

Derksen’s evidence on questioning is inconsistent with the other evidence before me in respect ofthis issue. [63] Therefore, I find that the parties intended to waive the condition in the Purported Contract regarding approval by theirlawyers. The references to the Sellers waiving the Buyer’s condition and the Buyer waiving the Sellers’ condition resulted from mutualmistake and sloppy paperwork. [64] Mr. Balderston refers to Centura Building Systems Ltd v Cressey Whistler Project Corp, 2003 BCSC 1227, 29 CLR (3d) 200,in which the Court made these comments at paras 48 and 55: In Bank of Montreal v.

Vancouver Professional Soccer Ltd. (1987), (BC CA), 15 B.C.L.R. (2d) 34 (B.C.C.A.), at 36,the Court of Appeal set out two requirements for rectification: Before rectification can be obtained, the applicant must establish: 1. That the written instrument does not reflect the true agreement of the parties; 2. That the parties shared a common continuing intention up to the time of signature that the provision in question stand as agreedrather than as reflected in the instrument. ... First, in my view the error in the signatory to the agreement is properly characterized as a mutual mistake.

This is not a situation in whichone party is trying to obtain rectification of an erroneous term that the other party claims is correct. The parties had a common intentionas to the identity of the parties to the settlement agreement: they intended the plaintiff to be a party. They now agree that because of themistake in use of Centura 2’s name in the settlement agreement, the plaintiff is not a party. None of them intended Centura 2 to be aparty to the settlement. Clearly, if the agreement is not rectified, neither party would try to enforce a settlement with Centura 2. [65] All parties acknowledge that only Mr.

Balderston could waive the Buyer’s condition and only the Defendants could waive theSellers’ condition. I have found that the parties’ common intention was to waive their respective conditions. The written instruments donot reflect that intention. Therefore, pursuant to Rule 1.3(2), I grant rectification of the two documents entitled Notice (re:Waiver/Satisfaction of Conditions) to reflect the parties’ intention as I have found it. [66] Accordingly, the Defendants’ argument that the Purported Contract never became unconditional fails. [67] As noted above, the Notice signed by Mr.

Balderston also contained a handwritten note with respect to an amended offer. Iwill deal with this further in these Reasons. D. Certainty of Terms [68] This brings me to the most difficult issue in this matter. I will set out each party’s position briefly, then consider this issue inmore detail.

[ 69 ] Mr. Balderston’s position is that the Purported Contract included all of the terms essential to the formation of a contract. In his brief, he asserts that the Purported Contract: (

a) identifies Mr. Balderston as the purchaser; (

b) identifies the Derksens and Mr. Faul as the sellers; (

c) identifies the Lands as the properties to be purchased; and (

d) provides for a purchase price of $1,500,000.00. [ 70 ] The Plaintiff argues that any ambiguities arose from Mr.

Vavrek’s drafting and are not in essential terms. [ 71 ] For their part, the Defendants assert that many aspects of the Purported Contract are fraught with uncertainty and that there was never an enforceable agreement among the parties. [ 72 ] The Defendants refer to the decision in Ko v Hillview Homes Ltd , 2012 ABCA 245 , 536 AR 93, in which the Court of Appeal took a strict view of certainty of terms, making these comments at paras 2, 27, 81, 88, 101 and 118: The overarching aim of contracts is to let two or more parties predictably govern themselves by their own self-imposed rules.

That aim fails if one cannot tell whether they have a binding contract or not... The test for

interpretation and for certainty of terms is objective; one party’s subjective views about the agreement, or how it would later work, not agreed to by the other side, are irrelevant. ... A supposed contract with an uncertain material term is not a contract, and not even an agreement, and is usually impossible to perform or enforce... Many cases hold a contract void for vague mention of a useful or necessary clause or document not about parties, property or price, such as terms of payment or performance... [Emphasis in original.] ...

Even uncertainty in other important matters beyond parties, property or price renders the supposed contract void. ... A number of Canadian decisions, especially in British Columbia, suggest reluctance to find a contract void for uncertainty. But one must be careful, and not misquote binding authority. A number of important cases confine that reluctance to contracts partly or fully performed, at least on one side. ... Other authorities seem to confine it to non-lawyer informal commercial contracts...

One should not confuse this reluctance with the general rule to interpret a contract, if possible, so as to make it work. [ 73 ] However, in light of the Court of Appeal’s decisions subsequent to Ko , it is clear that the analysis must be specific to the facts of the particular case. [ 74 ] Marquardt v Gray , 2013 ABCA 300 concerned the sale of a mobile home. On August 16, 2007, the parties executed a real estate purchase contract, but left the possession date blank.

The parties met again on September 14, 2007 and the seller asserted that they agreed at that time to a closing date of October 15, 2007 and a possession date of October 12, 2007. The buyer argued that neither the possession date nor the price was agreed. The Court of Appeal held as follows at paras. 28 and 29: The argument before us, and before the trial judge, proceeded on the basis that both the possession date and price are essential terms in this kind of contract. It is a basic principle of contract law that binding contracts require the parties to have reached an agreement on the essential terms.

Whether there was an agreement is determined objectively and does not depend on one party’s subjective views: [ Ko ] at para 27 . The trial judge correctly applied these legal principles to her factual findings, namely, that the parties came to an agreement on the possession date and purchase price on September 14, 2007.

As we have already concluded that there is no basis for interfering with the trial judge’s credibility findings, nor the fact findings she based them on, it follows that there is no basis for interfering with her conclusion that the parties agreed on the essential terms and created a binding contract. [ 75 ] In Pedersen v Soyka , 2014 ABCA 179 , the trial judge had found that Soyka and his company, Tax Back Ltd., breached an oral agreement with Pedersen.

The Court of Appeal dismissed the appeal and made these comments at paras 48, 49, 53, 54, 62 and 63: It would not have mattered whether they agreed on menial services by her, or promotional services, or executive services. They did agree on her services and she performed them. Nor did her title matter, nor was there any dispute about that. In any event, that issue is theoretical only. The two parties knew what kind of work the respondent had done for the appellants previously, and the deal was that she would “return to work with Tax Back”.

Furthermore, terms need not be certain; it is enough that they be ascertainable. These ones about employment were ascertained by past history and intervening conduct. ... How to value the shares or to treat the transaction for tax purposes, is surely not necessary to the validity of the contract. For example, “I will trade your bus business for my farm near Wainwright.” That is a valid contract. Filing income tax returns later may involve a lot of work, but that is no impediment to a valid contract.

The present contract was essentially buying out a competitor, and so could not yield easy-to-compute money prices for tax purposes. But the law of contracts does not require that. ... Even if there could be a legitimate dispute about certain aspects of how to compute a number such as profits, that is a mere problem of width or boundaries. That is not the same as a term uncertain and not ascertainable, which would make the contract void. For example, any non-arm’s length transaction is open to modification of its price in computing profits.

Every penny drawn as expenses by the controlling shareholder is a legitimate topic of scrutiny. But a contract involving a business’ accounting records cannot be void for uncertainty because of one $68 bottle of champagne expenses during the year. The remedy at most would be a small adjustment, not nullity. The trial judge found that the word “profits” could be given a reasonably certain meaning by the court.

That was a reasonable finding, and involved no error of law. [ 76 ] In addition, I take guidance from the Court of Appeal’s earlier comments in Omers Energy Inc v Alberta (Energy Resources Conservation Board) , 2011 ABCA 251 , 513 AR 292 at paras 33-35 : An oil and gas lease is a contract. A tribunal, interpreting such a contract, must search for the intention of the parties by examining the specific words used with regard to the whole contract and the demonstrated intention of the parties... Individual words or phrases may achieve a clear meaning when the entire document is read...

Where the words of the contract are unambiguous, the court should not deviate from its clear terms unless the contract is absurd, or has an effect clearly contrary to the intention of the parties... Where the words of the contract are ambiguous, extrinsic evidence can be relied upon as an interpretive aid. It is from the whole of the document coupled with the surrounding circumstances that the general intention of the party or parties is to be ascertained... [Citations omitted.] The search for the parties’ intentions is conducted on an objective basis.

What the parties believe their rights to be is not important, but what a reasonable person would infer them to be from the words used... In ATCO , at para 77, Fraser CJA adopted the language of Lord Hoffman in Jumbo King Ltd v. Faithful Properties Ltd , [1999] HKXFAR 279: The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean.

And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objectives which it was intended to achieve. Similarly, in Toll (FGCT) Pty Ltd v. Alphapharm Pty Ltd , [2004] HCA 52, (2004), 79 ALJR 129 the principle of objectivity by which the rights and liabilities of the parties are to be determined was described at para 40 as follows: It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations.

What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean.

That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. [ 77 ] Finally, in Mitsui & Co (Point Aconi) Ltd v Jones Power Co , 2000 NSCA 95 , 189 NSR (2d) 1, a case referred to by the Court of Appeal in Ko , these useful comments appear at paras 52, 53, 57, 62-65, 74, 81-82 and 88: I will briefly mention a second legal principle. It relates to Jones’ submission that the efforts to alter the MOU to make its meaning more precise tend to show that it fails for uncertainty.

However, an agreement does not fail for uncertainty simply because it may be difficult to interpret. To paraphrase Lord Wright, an agreement is unenforceable because of uncertainty only in those infrequent cases in which the words used by the parties, considered broadly and untechnically and with due regard to all the just implications, do not evince any definite meaning on which the court can safely act: see G . Scammell and Nephew, Ltd. v. Ouston (H.C. and J.G.) , [1941] A.C. 251 (H.L. (E.)) at 268. It is important not to equate difficulties of

interpretation with uncertainty in law. Jones argues that Mitsui prepared a draft change order that spelled out a

schedule of payments of the increased contract price and that this “...evinces an intention to make specific payment terms a part of the change order which was necessary to give effect to the MOU.” This argument is neither factually nor logically correct. The trial judge found that Mitsui was open to negotiating an accelerated payment

schedule but that in the absence of agreement, the payment provisions of the contract would govern. That finding is supported by the

evidence and is, as the judge pointed out, consistent with the wording of the MOU. Moreover, given that finding, Mitsui’s willingness toaddress the possibility of accelerated payment does not support the inference that such an accelerated payment was an essential term ofthe MOU. ... Jones also argues that the attempts by S&L to draft clarifications of the Principles 2 and 3 is “proof positive” that Mitsui and S&Lacknowledged that the definition of the scope of the work in the MOU was uncertain. I do not agree.

The trial judge found that therewere attempts after Jones’ repudiation of the MOU to make it acceptable to them. There was clear evidence, including from at least oneof Jones’ witnesses, that these efforts were expressly subject to Mitsui’s position that the MOU was binding. The trial judge did not err infailing to treat these attempts to clarify or change the MOU in those circumstances as any sort of admission of uncertainty orincompleteness. ... As Burchell J. pointed out in Mannesmann, where the parties intended to be bound, courts will favour a construction that the agreementis not conditional...

The parties’ intention to create legal obligations is also relevant to the question of certainty. As stated by Lord Wright in Scammell v.Ouston, supra, the court, if satisfied that the intention to contract existed, will do its best to give effect to that intention. The same principle applies to the issue of completeness. To be enforceable, an agreement must contain all essential terms. Thedetermination of what terms are essential, however, varies with the nature of the transaction and the context in which the agreement ismade. As Morden J.A. said in Canada Square Corp. et al. v.

VS Services Ltd. et al. (1981), (ON CA), 34 O.R. (2d)250 (C.A.) at 262, where the parties intended to create a binding relationship and were represented by experienced businessmen, “...acourt should not be too astute to hold that there is not that degree of certainty in any of its essential terms which is the requirement of abinding contract.” Therefore, with respect to all of Jones’ arguments concerning certainty and completeness, the fact that the parties to the MOU intended itto be a binding contract is highly relevant. ... A contract must contain all essential terms.

If any are absent, there is no completed, binding agreement. The terms of a contract mustalso be sufficiently certain. The question of whether terms are certain asks whether the court can give reasonably definite meaning towhat the parties have said. ... Where parties reach agreement, courts are reluctant to find that it cannot be given meaning. From early times, the common law hasaccepted the principle that, where possible, words should be understood so as to give effect to the agreement rather than to destroy it:verba ita sunt intelligenda ut res magis valeat quam pereat.

This principle was stated by Lord Wright in Scammell v. Ouston, supra at268: ...the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intentionlooking at substance and not mere form. It will not be deterred by mere difficulties of

interpretation. The question of certainty does not relate to the correct meaning of the words, but rather to whether the words are capable of being given areasonably certain meaning by the court... ... In my view, this submission confuses difficulties of

interpretation or proof with the sort of uncertainty that will result in an agreementbeing unenforceable. While it may be less than obvious what the words “those currently being discussed with Jones” were intended torefer to, they are simple words capable of being given a sensible and reasonably definite meaning. That an

interpretation is difficult orcontroversial does not mean the agreement fails for uncertainty. Similarly, the application of those words to the dealings between theparties may not be straightforward; there may be factual disputes about what was and what was not being discussed with Jones at therelevant time. That, however, is a problem of fact finding, not of legal uncertainty. [78] With all of this case law in mind, I turn to the analysis of the Purported Contract. [79] In my view, the parties had an enforceable agreement when the Purported Contract was executed in February 2012.

At thatpoint, in the words of the Court of Appeal in Omers Energy, the parties’ “demonstrated intention” was the purchase and sale of theLands. When the parties entered into the Purported Contract, the Derksens were as anxious to achieve this objective as was Mr.Balderston. The evidence before me makes clear that Ms. Derksen was enthusiastic about the deal, that Mr. Derksen was adamant that hewanted a “done deal” and that the $50,000.00 deposit was intended by Mr. Derksen to hold Mr.

Balderston to his bargain. [80] The Defendants make much of the emails exchanged between the parties’ lawyers subsequent to the execution of thePurported Contract and, in particular, of Mr. Carter’s comment that they needed to “rewrite and make some sense of it.” It is hardly

surprising that a contract written by laypeople would not be drafted as their lawyers would wish, but it does not follow that the contract is so uncertain as to be impossible to perform or enforce. [ 81 ] Only two issues remained to be resolved: (1) the allocation of the purchase price as between Mr. Faul and the Derksens and (2) the identification of the lands to be subject to the right of first refusal. This was confirmed by Mr. Derksen in the following excerpt from his questioning on affidavit. Q Okay.

Now, to the best of your recollection, you signed an Offer to Purchase and Interim Agreement on February 18 th . You knew that a proposal had been made by Mr. Dobko on your behalf. What issues did you understand were not resolved at that point? Was it just the split of the price between the two quarters and the land that would go to the right of first refusal? A There was lands being added to first refusals. Q Okay. But were those the only two issues that were being negotiated and that remained unresolved: the price of the two quarter sections of land and the land subject to the right of first refusal?

A Yes. [ 82 ] Similar evidence was given by Mr. Dobko in his questioning on affidavit: Q So there was some issues which, in your mind, had not been resolved in the Interim Agreement. A That’s correct. Q Would it be fair to say that those issues were the allocation of the purchase price between the northeast quarter and the southeast quarter? That was one of the issues that – A That would have been the issues and the identification of the land, the first refusal land. Q So the identification of the first refusal land was the second issue?

The first issue being the allocation and the second issue being the identification of the land subject to the right of first refusal, right? A That’s correct. [ 83 ] Contrary to the above evidence from Mr. Derksen and Mr. Dobko, the Defendants now argue that various terms of the Purported Contract were uncertain, including closing dates, time for payment of various amounts and the right to farm the Lands for the coming crop year. [ 84 ] I am satisfied that all of these matters are ancillary to the main thrust of the Purported Contract, which was the purchase and sale of the Lands.

While I am mindful of the Court of Appeal’s decision in Ko and of the well-established proposition that the Court cannot make a bargain for the parties, I also take guidance from Marquardt and Mitsui . Further, I find helpful Justice Côté’s comment in Pedersen that an agreement to trade a bus business for a farm near Wainwright would be a valid contract, notwithstanding that such a contract would leave much room for

interpretation. [ 85 ] The three terms set out above seem to me to lend themselves to reasonably certain

interpretation. The closing date for the Faul Land is clearly stated to be May 7, 2013. I find that the reasonable

interpretation of the closing date for the Derksen Land is the earlier of thirty days after development approval or December 1, 2013. The amounts payable were $50,000.00 on March 1, 2013, $450,000.00 upon removal of conditions, which was to occur by March 1, 2013 and $1,000,000.00 upon the latest closing date, being the earlier of thirty days after development approval or December 1, 2013. I reach this latter conclusion based on the evidence before me that establishes that the $500,000.00 payable on or before March 1, 2013 would have been sufficient to cover the allocation for the Faul Land, as discussed below.

Finally, the phrase “Buyer has the right to Farm Said Lands as his own” seems also to allow for reasonably certain

interpretation. The Buyer is, of course, Mr. Balderston. The “Said Lands” are the Lands, being the subject of the agreement of purchase and sale. And in my view, this term would have allowed Mr. Balderston to farm the Lands for the 2013 crop year in the usual manner that a reasonable person would understand and that the parties themselves would have understood, much as the parties in Pedersen would have understood what “return to work with Tax Back” meant. [ 86 ] The Defendants assert that there is no way to give meaning to the two terms acknowledged to be in need of resolution.

I disagree. [ 87 ] Turning first to the allocation of the purchase price between the Faul Land and the Derksen Land, it is important to remember that this would have been a matter of indifference to Mr. Balderston. He intended to purchase the Lands for the agreed price of $1,500,000.00. It would have made little difference to him how the Derksens and Mr. Faul agreed to divvy up the purchase price. I agree with the following statement cited by Mr.

Balderston from Moberg v Cleveland , 2010 BCSC 1303 , 97 RPR (4 th ) 201 at para 81 : There is no merit to the suggestion that the contract is unenforceable because it did not allocate the purchase price between the land and the business. What matters is whether there is sufficient certainty with respect to the parties, price and property. How a particular party chooses to allocate components of the total purchase price is a matter for them and does not affect the enforceability of the agreement.

Any difficulties that might arise concerning a failure to allocate between the land and the business relate to issues the parties might have with third parties such as the revenue authorities, but do not affect enforceability inter se . [ 88 ] Mr. Derksen’s evidence was that there was an agreement at some point that Mr. Faul would receive $300,000.00 for the Faul Land. Subsequently, it appears that Mr. Faul wanted more money and, ultimately, he sold the Faul Land to Mr. Neufeld for $500,000.00. However, the Lands were listed together, Mr.

Balderston intended to purchase both quarters and the allocation of the global purchase price as between the Defendants does not affect the enforceability of the Purported Contract as concerns Mr. Balderston.

[ 89 ] As discussed above, Mr. Balderston initialled a handwritten note on one of the documents entitled Notice (re: Waiver/Satisfaction of Conditions) that stated “Note: Sellers’ lawyer is supplying amended offer to purchase which is accepted by Seller and Buyer”. Mr. Vavrek’s evidence was that this was to allow the total purchase price of $1,500,000.00 to be split between the Derksens and Mr. Faul as they should agree. Again, however, this affects neither the total purchase price nor the enforceability of the Purported Contract insofar as Mr.

Balderston is concerned. [ 90 ] I find, too, that the right of first refusal issue was capable of resolution. That term of the Purported Contract provides that Mr. Balderston is to have a right of first refusal on land owned by Mr. Faul “around Clairmont Lake”. Counsel for the Defendants argues that the words “around Clairmont Lake” give rise to insurmountable uncertainty as they could mean anything from adjoining Clairmont Lake to within five miles of Clairmont Lake to within 200 miles of Clairmont Lake.

I find, however, that these words should be given their plain and ordinary meaning and that a reasonable person would have understood them to mean those lands owned by Mr. Faul adjoining Clairmont Lake. Interpreting this phrase in this way, identification of the lands to be subject to the right of first refusal becomes a simple matter of examining title documents.

As such, the meaning of this term becomes ascertainable as contemplated by the Court of Appeal in Pedersen . [ 91 ] In oral argument, counsel for the Defendants also asserted that the term “right of first refusal” was uncertain and offered various rather fanciful options for its definition. Again, I find that these words can be given a reasonable

interpretation.

Black’s Law Dictionary defines “right of first refusal” as: “Right to meet terms of proposed contract before it is executed; e.g. right to have first opportunity to purchase real estate when such becomes available, or right to meet any other offer.” In Re Brookside Farms Ltd (1988), CBR (NS) 162 (BCSC), the Court held as follows: By contrast, the party who grants a right of first refusal merely agrees that should he decide to enter a certain type of contract he will first offer to do so with the holder of the right of first refusal: Halsbury’s (4 th ) vol. 9, s. 236. [ 92 ] Thus, I find that the right of first refusal contemplated by the Purported Contract was sufficiently certain to allow for enforceability.

However, as discussed below, I also find that Mr. Balderston waived this right such that it is of no further effect. [ 93 ] For these reasons, I find that the Purported Contract was valid and enforceable at the time of its execution. What, then, is the effect of the subsequent negotiations? [ 94 ] It is certainly true that, after the Purported Contract was entered into, the Plaintiff and the Defendants went back and forth through their respective lawyers discussing different proposals. Contrary to the Defendants’ position, however, this does not mean that there was no deal in place. The Defendants argue that Mr.

Dobko’s opening salvo in his email of February 22, 2013 was an offer of three “new and distinct” deals, none of which was accepted by Mr. Balderston. This position is predicated on the assumption, given the Defendants’ arguments with respect to certainty of terms, agency and the Statute of Frauds , that there was no contract among the parties at that point.

As I have found that there was a contract extant among the parties once the Purported Contract was executed, the subsequent discussions must be characterized as attempts to arrive at a variation thereof. [ 95 ] In considering the parties’ later discussions, I have found it important to bear in mind the distinction between variation and waiver.

In his text, The Law of Contract in Canada, 5 th ed (Toronto: Carswell), Professor GHL Fridman, QC discusses these two concepts as follows at pp 561-2: Two important methods of changing the original duty to perform created by a contract are by variation of the contract and waiver of rights arising thereunder. These two methods must be carefully distinguished. In cases of variation, what happens is that, by mutual agreement, for the benefit or convenience of both parties, there is a later alteration of an original agreement.

Hence, a unilateral variation, even if permitted by the original contract, must be accepted by the other party with full knowledge and consent, and must be made for valid consideration, if it is to be valid. Where waiver is alleged to have occurred, however, the change is for the benefit or convenience of one party only, and the other party is said to acquiesce in such change in the original terms of their contract. In both situations there is a later agreement between the parties affecting their earlier transaction. [ 96 ] I find that Mr.

Balderston’s primary goal was to secure the Lands and he was prepared to agree to variation of the terms of the Purported Contract in respect of ancillary matters. I find that the email exchanges between the parties’ lawyers represent proposals and counterproposals for variation of the existing Purported Contract. [ 97 ] When it became clear that the Defendants were not prepared to give anything in return for their new requests, Mr. Balderston waived certain of his rights under the Purported Contract. In my view, this does not demonstrate that there was no contract, but simply speaks to Mr.

Balderston’s desire to get done the part of the deal that was most important to him. While he could have insisted upon his rights under the original terms of the Purported Contract, his priority was to secure the Lands for his intended development and I find that he was prepared to forgo certain other rights to achieve his primary goal expeditiously. E. Repudiation [ 98 ] Mr.

Balderston takes the position that the Defendants repudiated the Purported Contract; the Defendants’ position is that there was no contract to repudiate. [ 99 ] Given my findings above, it follows that the Defendants’ refusal to sell the Lands to Mr. Balderston in accordance with the Purported Contract amounts to repudiation. [ 100 ] When one party repudiates a contract, the other party may elect to accept the repudiation, freeing him from further performance, or to let the contract continue; see Fridman at p 620. If he elects the latter, the obligations under the contract continue on both sides.

In this case, there is no suggestion that Mr. Balderston accepted the Defendants’ repudiation. Accordingly, he was obliged to fulfill his obligations under the Purported Contract, namely to tender the funds to purchase the Lands.

[101] As noted above, the Purported Contract provides for payment of a “Further Deposit” of $450,000.00 upon removal of theconditions, which occurred on March 1, 2013. It is common ground that Mr. Balderston did not tender this sum on that date. Rather, hetendered this amount, less a small deduction for tax adjustments, on May 6, 2013. Mr. Balderston’s explanation for the later date wasthat, as of March 1, 2013, he thought the parties were still negotiating amendments to the original agreement.

He tendered the funds intime for the closing date for the Faul Land as contemplated by the Purported Contract. [102] I am satisfied that Mr. Balderston’s late tender does not detract from his position that he did not accept the Defendants’repudiation of the Purported Contract. In the circumstances, it is, at most, a minor breach that does not affect the enforceability of thePurported Contract. F. Specific Performance [103] Mr. Balderston seeks an Order of this Court for specific performance of the Purported Contract.

He points out that clause 9.3 ofthe Purported Contract provides as follows: 9.3 The Seller and Buyer agree that the property is unique and that, in the event of default by the Seller, the Buyer is entitled withoutlimiting any other remedies available in clause 9.1, to claim the remedy of Specific Performance. [104] Mr. Balderston acknowledges that, subsequent to the Supreme Court of Canada’s decision in Semelhago v Paramadevan, (SCC), [1996] 2 SCR 415, it is no longer presumed that specific performance will be granted in respect of contracts for thesale of land.

Instead, the onus is on the purchaser to establish that the land in question is unique and that, therefore, damages are not anadequate remedy. [105] The Defendants cite the Court of Appeal’s decision in 1244034 Alberta Ltd v Walton International Group Inc, 2007 ABCA 372,422 AR 189. The Court of Appeal considered Semelhago and made these comments at paras 2 and 6-8: The decision of the Supreme Court of Canada in [Semelhago] held that it should no longer be presumed that specific performance shouldalways be granted in the case of contracts dealing with the sale of land.

The Court did not conclude that specific performance will neverbe available in the case of property acquired for investment purposes. Rather, the relevant inquiry will be whether the property is“unique” or whether damages are an adequate remedy. It follows that specific performance remains a matter of discretion for the trialjudge. ... ...the Court must determine the true intentions of the plaintiff so as to avoid a speculative lawsuit for profit. The test for determining theuniqueness of commercial properties includes both subjective and objective elements. Professor La Forest explains (at pp. 23-24): ...

What is emerging is a ‘business rationale’ test for which the (subjective) business case for desiring the particular commercial propertyis examined through a due diligence (objective) appraisal by the court. Thus, the court will examine the nexus between the plaintiff’sbusiness plan and the amenities of the subject property. Specific performance may be granted if those amenities cannot readily be foundelsewhere. ...

The Appellant argues that where investment property is key to a development or where an adequate substitute is not readily available, orwhere calculation of damages is difficult or speculative, specific performance may well be a more appropriate remedy. The Respondents argue that the mere fact that a business opportunity involving the purchase of lands may be unique, will not in itselfjustify the granting of specific performance.

For example, the fact that the investment property has special attributes of location,favourable price or the possibility of further development, does not make the property “unique” in the sense required to found a basis forspecific performance... [106] However, Mr. Balderston argues that a commercial property may be unique where it is a key piece of a development plan and isin proximity to other properties owned by the purchaser. He refers to the decisions of this Court and of the Court of Appeal in Colvin vMinhas, 2009 ABQB 42, 468 AR 301, aff’d 2009 ABCA 404, 469 AR 250.

In this Court, these comments were made at paras 50-52 and54: By contrast, courts have taken a different approach in cases where the plaintiff has a longer-term development plan for the subjectproperty, or where the subject property makes a significant addition to other properties already owned by the plaintiff. In 532782 B.C.Inc. v. Republic Financial Ltd., 2001 ABQB 581, [2001] A.J. No. 855 (Alta. Q.B.) the plaintiff entered into an agreement to purchase amixed use building and two houses directly behind it for redevelopment.

McMahon J. allowed the plaintiff’s request for specificperformance on the following basis (at para. 27): The properties are an older mixed use apartment and commercial building plus two older multi-family units behind. Alone, the apartmentbuilding was not likely unique but it was at the seller’s insistence that the two buildings behind were added. They created a muchdifferent and greater value and the price rose accordingly. Those two buildings created a redevelopment potential on a larger piece of land that flowed from 17th Avenue through to 18th Avenue.

While awaiting redevelopment, the revenue producing houses provided auseful cash flow that bare land might not have. In that sense this group of properties were commercially unique and of particular value tothe buyer. In 2475813 Nova Scotia Ltd. v. Lundrigan, 2003 NSSC 48, 213 N.S.R. (2d) 53 (N.S.S.C.), the plaintiff was the owner of a 200-unitcondominium building. The plaintiff intended to convert the building into a long term care facility, and sought to acquire all of theindividually owned units. The defendant agreed to sell her unit, but ultimately refused to close the transaction.

The plaintiff requested anorder for specific performance. Edwards J. found that the property was “unique to the purchaser as a crucial component of a largerdevelopment plan in connection with lands already owned by the Plaintiff” and granted the order for specific performance (Lundrigan,para. 25).

The subject property in this case is part of a group of properties that, taken together, form a commercially unique opportunity for the Plaintiff. Her business plan includes the development of an apartment and commercial complex in the long term, with the use of the existing house on the property as a rental unit in the interim. The subject property is uniquely situated for the purposes of her plan, as it is in line with several other properties already owned by the Plaintiff and her husband. ... Moreover, there is a strong objective nexus between the subject property and the Plaintiff’s business plan.

While the Plaintiff could arguably develop six lots instead of seven, the addition of the seventh property provides her with an opportunity that cannot be reasonably duplicated. She cannot simply go out and purchase another property that would have the same value to her as the subject property. The Plaintiff is not merely engaged in a speculative lawsuit for profit.

The land in question is of particular and unique value to the Plaintiff, and for that reason damages are not an appropriate remedy in this case. [ 107 ] The Court of Appeal, in upholding the trial decision, stated as follows at para 14: The appellants do not argue that the trial judge articulated the incorrect test for specific performance. Rather, they argue, in essence, that the trial judge erred in applying the test because it is difficult for a purchaser to prove uniqueness when property is obtained for investment purposes and when the development could proceed with six lots instead of seven.

Furthermore, the appellants argue that the respondent’s business plan was not sufficiently real and substantial and enjoyed no evidentiary support save for an “isolated declaration”. These arguments are directed at the trial judge’s findings of fact. There was evidence to support his conclusion that the subject property was unique because it formed an integral part of a larger plan for re-development, the prospect of which would be enhanced by the addition of a seventh lot. The trial judge was aware that the plan might take years to evolve and that it was subject to planning and zoning requirements.

Nonetheless, he was satisfied that the test was met. Those findings do not display palpable and overriding error. [ 108 ] Mr. Balderston provided affidavit evidence respecting the significance of the Lands to him. He avers as follows at paras 30-37 and 48: SE 15 and NE 15 are adjacent to a 4 lane arterial highway, and a service road, and are near a number of industrial subdivisions near Grande Prairie. They are highlighted in pink on the map annexed as Exhibit “G” hereto and are prime lands for industrial development.

Obtaining subdivision approval at my expense was a condition under clause 7.5 of the Interim Agreement. After discussing Mr. Dobko’s February 22, 2013 e-mail (Exhibit “D”) with Mr. Carter, I believed the sale would be proceeding. I therefore requested Mr. Vavrek to contact the Sellers in late February, 2013 to assist in changing the land use of the property and to obtain preliminary subdivision approval for portions of the land.

I have been provided with the bundle of documents attached as Exhibit “H” hereto by my engineers, Beairsto Lehners Ketchum Engineering Ltd. (“Beairsto”) in connection with the land use amendment for SE 15 (the Derksen quarter) from agricultural to industrial and for preliminary subdivision applications. These documents include: (

a) An applicant’s authorization and right of entry authorization dated February 26, 2013 signed by Mr. Derksen; (

b) A preliminary subdivision plan for SE 15; (

c) My $1,850.00 cheque to the County of Grande Prairie with respect to this application; (

d) Invoices from Beairsto to me for $1,470.50 and $1,310.93. I have also received documents from Beairsto attached as Exhibit “I” hereto with respect to the proposed change of land use and partial subdivision of NE 15. These documents include: (

a) An applicant’s authorization and right of entry authorization dated February 26, 2013 signed by Dennis Derksen on behalf of Murray Faul; (

b) A preliminary plan of subdivision for NE 15; (

c) My $1,700.00 cheque to the County of Grande Prairie with respect to this application; (

d) Beairsto’s invoice for $420.00 with respect to this application. Relying on the Interim Agreement, and e-mails between Mr. Dobko and Mr. Carter (Exhibit “D”), I also made verbal offers on February 28, 2013 to purchase three quarter sections of land adjacent to the Sellers’ lands, which are highlighted in yellow on Exhibit “G” (NE 14- 72-5 W6 and S ½ 14-72-5 W6). These offers were signed on March 7, 2013 after the Notices (Exhibits “E” and “F”) were signed. A copy of the Certificate of Title for NE 14-72-5 W6 indicating it is now registered in the name of myself and my wife is annexed as Exhibit “J” hereto.

The sales of the other 2 quarters (S ½ 14-72-5 W6) are to close over the next 2 years. I had purchased these three quarter sections with the intention of developing them as industrial and/or country residential subdivisions. The Sellers’ delay in selling SE 15 and NE 15 have also delayed my ability to subdivide these lands. The logistics of servicing these three quarter sections, and the cost per acre of servicing these quarter sections, will increase significantly if the Sellers are able to renege on their agreement to sell SE 15 and NE 15 to me. ...

SE 15 and NE 15 are unique. They are lands which are well suited for an industrial subdivision with excellent access to a 4 lane highway which is very close to the City of Grande Prairie, and other industrial subdivisions and businesses on the outskirts of Grande Prairie. More importantly, they are now immediately adjacent to three quarter sections of land which I have agreed to purchase and which can be most conveniently and economically developed by me, as a single parcel under a single Area Structure Plan.

Permitting these lands to fall into the hands of a competing developer would result in delays and difficulties in developing my remaining lands. [ 109 ] Taking this evidence into account, I find that the Lands represent a unique opportunity for Mr. Balderston. The Lands are part of a larger plan for redevelopment. Their location, in proximity both to the City of Grande Prairie and to other lands Mr. Balderston has since acquired, and the ready access to roadways are amenities that cannot be readily replicated in other property. Damages will not permit Mr.

Balderston to seek an equivalent opportunity elsewhere and, therefore, do not provide an adequate remedy. [ 110 ] Accordingly, I find that specific performance is the appropriate remedy in this case. The terms of the Order will be set out below. G. Damages [ 111 ] Mr. Balderston requests that the Order for specific performance not preclude him from seeking damages as well. He deposes in his affidavit that he suffered damages as a result of his inability to farm the Lands for the 2013 crop year. [ 112 ] The Order of Mr. Justice Michalyshyn dated December 6, 2013 setting this matter down for

summary trial provides as follows at paras. 1(

c) and 2: (

c) Subject to paragraph 2 below, whether the Plaintiff is entitled to damages. 2. The quantum of any damages the Plaintiff may be entitled to shall be determined at a later date. The rights of the parties to additional document production and questioning are reserved, and the

Summary Trial Judge may provide directions in this regard. [ 113 ] In light of this Order, I will make no finding as to the damages, if any, to which Mr. Balderston is entitled in addition to the remedy of specific performance. The Order granting specific performance will not preclude a determination of any such damages. H. Order [ 114 ] In light of all of the foregoing, this Court orders that the Defendants are to convey title to the Lands to Mr. Balderston for the agreed purchase price of $1,500,000.00, subject to adjustments for a $50,000.00 deposit being held by Mr.

Vavrek and for property taxes as appropriate. The date for closing and possession shall be 60 days from the date of filing of the Order or, in the event the Defendants appeal this judgment, 60 days from the date such appeal is withdrawn or dismissed. The Court directs that the Registrar of Land Titles shall issue title to the Lands to Mr. Balderston upon receipt of an affidavit swearing that payment of the purchase price has been made. [ 115 ] Because, as noted above, Mr.

Balderston waived the Right of First Refusal contemplated by the Purported Contract, there will be no order in that respect. [ 116 ] As alluded to above, Mr. Balderston may continue to pursue a claim for damages in addition to specific performance should he so wish. The parties made no specific representations before me in respect of such a damages claim and I make no direction at this time as to such a claim. Mr. Balderston asked that he be permitted to hold back from the purchase price an amount to be set by the Court as security for this claim.

I do not consider it appropriate to do so when there has been no adjudication as to the merits of such a claim and Mr. Balderston’s request is denied. However, if Mr. Balderston intends to pursue a damages claim and the parties require directions as to procedure, the parties may appear before me to discuss this issue within 60 days of this judgment. [ 117 ] Mr. Balderston shall have his costs. As I see nothing in the conduct of this matter that would justify an award of solicitor-client costs, costs shall be payable on a party-party basis. Mr.

Balderston asked that he be permitted to hold back from the purchase price an amount to be set by the Court as security for these costs. I am not satisfied that it is appropriate to grant such an order and I decline to do so. [ 118 ] If the parties are unable to agree as to any of the foregoing terms, they may appear before me to argue their positions within 60 days of the date of this judgment. Heard on the 25 th day of April, 2014. Dated at the City of Calgary, Alberta this 10 th day of December, 2014. S.M. Bensler J.C.Q.B.A.

Appearances: Brian P. Kaliel, QC and Emma Johnston Miller Thomson LLP for the Plaintiff Murray L. Engelking Engelking Wood for the Defendants