Ansar Development Corporation v. Indus Development Corporation, 2015 ABQB 723

Court of Queen ’ s Bench of Alberta Citation: Ansar Development Corporation v. Indus Development Corporation, 2015 ABQB 723 Date: 20151118 Docket: 1501 10134 Registry: Calgary Between: Ansar Development Corporation Applicant - and - Indus Development Corporation Respondent _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice M.C. Erb _______________________________________________________ [ 1 ] Ansar Development Corporation is the registered owner of 160 acres of raw development land located at Leduc, Alberta.

In early June, 2015, Ansar engaged in negotiations for sale of the property with the Respondent, Indus Development Corporation. Ansar says that because of Indus’ failure to comply with terms and conditions of the agreement, the sale was not concluded so it sold the property to a third party shortly thereafter. [ 2 ] Upon hearing about Ansar’s position on the sale, Indus registered a caveat on the land to protect its interest on the basis that it had purchased the land for $3.65 million. [ 3 ] In these proceedings, Ansar seeks two things: (

i) a declaration that no agreement for sale was concluded and, (ii) an order compelling Indus to discharge its caveat. Ansar submits that in all the circumstances, Indus has no interest in the land and even if it does, its remedy is a claim for damages not specific performance of an agreement for sale. [ 4 ] Indus asks that the caveat remain on title on the basis that the transaction was concluded giving it an interest in the land therefore entitling it to specific performance given the uniqueness of the property.

The Property and the Parties [ 5 ] The subject property is raw development land located in Deer Valley, a district of Leduc. The land was part of a large development project proceeding in four phases. The first two phases have concluded. Ansar and Jahid Siddiqui each own 40 percent of Cypress Creek Development Deer Valley Inc. which developed those two Phases. Ansar owned the land for the original two Phases and

also the land designated for Phases 3 and 4. [ 6 ] Mr. Siddiqui appears to have served as a go-between for one or other of the parties on the negotiations for the sale of the subject lands for Phases 3 and 4 which are at issue in these proceedings (“subject lands”). The transaction involved the sale of Phase 3 land with an option to purchase Phase 4. The two Phases worked in tandem. The Phase 4 option was dependant on the Phase 3 land sale. [ 7 ] Pervez Nasim is the principal of Ansar. All three, Rahman, Siddiqui and Nasim have had some business history known to all of them.

It is not disputed that Indus was aware that Ansar owned the land for all four phases in the Deer Valley development at all material times. Governing Legislation [ 8 ] The parties agree with the legislative framework, specifically that the Land Title Act governs applications to discharge caveats.

Section 141(1) provides: In the case of a caveat filed, except a caveat filed by the Registrar, [the] applicant or owner may at any time apply to the court, subject to the Alberta Rules of Court, calling on the caveator to show cause why the caveat should not be discharged. (emphasis added) [ 9 ] Accordingly, this proceeding is a Show Cause Hearing. [ 10 ] The Alberta Court of Appeal; in Main v. Jeerh , 2006 ABCA 138 , confirmed the test required to be met in a show cause hearing and stated it this way: A claim must be based upon facts which if they are believed are complete and sufficient to justify the claim.

If the party seeking to maintain the caveat establishes an interest in the land then the test will have been met. [ 11 ] It is not the role of the court in a show cause hearing to weigh evidence or resolve issues of credibility. The facts simply need to show that a trial judge could infer that the caveator has an interest in the land. Actual inferences are for a trial judge to reconcile. [ 12 ] It is well established that the starting point is the agreement for sale, its terms and conditions and the positions of the parties.

During the negotiation process, neither party was represented by a real estate agent or broker. No lawyers were involved at that time either. The Disputed Agreement for Sale [ 13 ] The salient clauses of the proposed transaction are these: 1.3 Legal Description: Plan part of 4-25-49-33-SE All lands to the west & north of phase 2 up to south of Deer creek (DV phase 3) in title 092 100 059 100 059+1, excluding already subdivided parcels and land to the north of Deer Creek (DVC phase 4) +/-38.24 acres (per

Schedule B). 2.2 Other than the Deposits, the Buyer shall pay the Purchase Price by certified cheque, lawyer’s trust deposit, bank draft or other agreed value as follows: $ 50,000 Initial Deposit $ 50,000 Additional Deposit $ 3,550,000 Balance Owing $ 3,650,000 Purchase Price (excluding GST) 3.1 All Deposits shall be delivered in trust to Purchaser’s lawyer.

Unless otherwise agreed in writing, the initial Deposit shall accompany the offer within 48 hours of final acceptance. 3.2 The initial Deposit shall be deposited no later than the second Business day following the day that final signing occurred (as per clause16.1). Additional Deposits shall be deposited no later than the second Business Day following the day the Additional Deposit is received by the brokerage. 3.3 Any additional deposits shall be delivered as follows:____________________. 7.1 All time periods, deadlines and dates in the Contract shall be strictly followed and enforce.

All times will be Alberta time unless otherwise stated. 8.6 All deposits shall be releasable to the seller and non-refundable upon removal of buyer’s conditions. Before 9 p.m. on the “Condition Day” 13.2 For the purposes of giving and receiving any notice referred to in this Contract, and for acceptance of an offer to purchase, communication must be in writing and must be delivered to the address or faxed to the number described below. A notice sent or received by a Representative is proper notice for the purposes of this Contract. Seller’s Information:

Seller’s Address provided along with telephone and fax numbers. Seller’s Representative: Pervez Nasim. Buyer’s Information: is not provided Similar information is not provided: 14.1 The Buyer offers to buy the Property for the Purchase Price according to the terms of this Contract. 14.2 This offer/counter offer shall be open for acceptance in writing until 5 p.m. on 9 th day of June, 2015. The Applicant’s Position and Evidence . [ 14 ] It is Ansar’s position that: (

i) there is no agreement between the parties; (ii) Alternatively, Indus breached important conditions of the agreement regarding the mode of acceptance specified in the proposed agreement and regarding payment of deposits. As a result, it repudiated any agreement that might have been concluded; (iii) If an agreement was successfully made, damages not specific performance is the remedy so there is no entitlement to a caveat. [ 15 ] Ansar’s version of what took place is extracted from the Applicant’s brief filed in these proceedings and Counsel’s submissions: (

i) According to Mr. Nasim’s affidavit, on June 5, 2015, Mr. Rahman directed Mr. Siddiqui to send Ansar two offers to purchase the land: one for Phase 3 and one for Phase 4, conditional on each other in that if the Phase 3 land sale failed, there would no longer be an option to purchase Phase 4; (ii) On June 7, 2015, Ansar made a number of changes to the terms of the offers received from Mr. Rahman and sent the revised offers by email to Mr. Siddiqui to pass on to Mr. Rahman.

The counter-offers indicated that they would expire on June 9, 2015 at 5 p.m. and that notice of acceptance must be delivered or faxed to Ansar’s office or given to a “representative” of Ansar. Mr. Nasim was listed as Ansar’s “representative”; (iii) On June 8, 2015, Ansar sent Mr. Siddiqui revised versions of the counter offers, as Mr. Sidddiqui had told Ansar that Indus would not accept the changes that Ansar made to purchase and sale agreements; (iv) On June 9, 2015, Mr. Siddiqui and Mr. Rahman drove to Leduc to view the Land and meet with engineers involved in the development; (

v) In his affidavit evidence, Mr. Nasim says he called Mr. Siddiqui to ask whether Mr. Rahman was going to respond to the counter offers. Mr. Siddiqui told Mr. Nasim that he would call Mr. Nasim back later. Mr. Rahman and Mr. Siddiqui were still in Leduc at that time. No call was received. (vi) In his affidavit evidence, Mr. Rahman says he signed the counter offers at 2 p.m., on June 9, 2015; (vii) After Mr. Rahman signed the counter offer, neither Mr. Rahman nor Mr. Siddiqui sent signed copies to Mr. Nasim or had any other contact with Mr. Nasim until the morning of June 10, 2015, when Mr.

Siddiqui sent the signed copies to Mr. Nasim; (viii) While Mr. Rahman and Mr. Siddiqui were in Leduc on June 9, 2015, Mr. Rahman asked Mr. Siddiqui three times to call Mr. Nasim to tell him that he had accepted the counter offers. Mr. Rahman has admitted that he knew Mr. Siddiqui did not call Mr. Nasim or otherwise inform Mr. Nasim before 5 p.m. on June 9 that Mr. Rahman had signed the counter offers. (ix) For the purposes of this Application, Ansar acknowledges that Indus initialled the handwritten revisions on the documents and initialled the final signing section.

However, Ansar states that no one informed Ansar by sending copies to either Ansar at its fax number or delivered anything to its office or told Mr. Nasim that the counter offers had been accepted. (

x) Mr. Nasim called Mr. Siddiqui on June 10, 2015 and asked him to tell Mr. Rahman that since Indus had not accepted the counter offers before they expired, the transaction did not conclude; (xi) On June 12, a lawyer for Indus sent letters to Ansar stating that he was holding cheques for the initial deposits in his trust account; (xii) On June 15, 2015, Ansar sent a letter to Mr.

Rahman with a copy to Indus’ lawyer that no agreement had been concluded because Indus had not accepted the counter offers prior to their expiry on June 14, 2015 with a closing date set for October 31, 2015. [ 16 ] Ansar relies also on Mr. Rahman’s responses during cross examination on his affidavit that a binding agreement would not be concluded until Indus initialled changes in Ansar’s counteroffers, signed the agreement and provided copies of them to Mr. Nasim as Ansar’s designated representative. Mr.

Rahman was aware that to complete the transaction, an agreement had to be signed and Ansar would have had to receive a signed copy. [ 17 ] Mr. Nasim denies that Mr. Siddiqui had any authority to act on behalf of Ansar The Respondent’s Position and Evidence [ 18 ] Indus seeks to maintain its caveat citing in support, its concluded agreement with Ansar and the uniqueness of the property

entitling it to specific performance since damages, in its view, would be an inadequate remedy. Indus relies on the following extracts from the Respondent’s brief filed in these proceedings and Counsel’s submissions: (

i) On June 5, Indus directed Mr. Siddiqui to send two offers by email to Ansar, one for the purchase of land designated for Phase 3 and one for Phase 4 and set the acceptance deadline at 5:00 pm on June 8;; (ii) On June 7, Ansar responded by returning counter offers to Indus with an acceptance set for 5:00 pm on June 9; (iii) On June 7 or 8, Indus responded by communicating to Ansar that it would accept some of the terms of Ansar’s counter-offers, but only if other terms were removed; (iv) On June 8, Ansar responded by agreeing to Indus’ terms and providing revised, initialled documents to Indus reflecting those terms on the morning of June 9; (

v) Indus initialled the hand written revisions on the documents and initialled the final signing section. [ 19 ] It is Indus’ position that paragraph (iii) constitutes d counter offer by Indus which Ansar then accepted by revising its documents accordingly. Indus takes the position that an oral agreement was concluded at that point. Its position is stated in the Respondent’s brief: “It was an acceptance of Ansar’s counter-offer with respect to price, but on conditions that were inconsistent with terms different than those contained in Ansar’s counter-offer.

Indus’ terms were communicated to Ansar, and Ansar accepted them and communicated that acceptance by delivering revised forms of agreement to Indus.” [ 20 ] Indus further takes the position that Mr. Siddiqui was actually Ansar’s representative given his business history with Mr. Nasim. Despite Mr. Nasim’s name appearing in the purchase agreements as Ansar’s designated “Representative”, Indus submits that there is nothing in the document restricting the parties to a single Representative. Indus cites the following additional reasons as stated in the Respondent’s Brief: (

i) Mr. Siddiqui had a financial interest along with Mr. Nasim in the development of Phases 1 and 2 of the Cypress Creek joint venture in the same general development project; (ii) Mr. Nasim met with Mr. Siddiqui and the other joint venture participants before deciding to sell the land; (iii) Mr. Nasim specifically identified Mr. Rahman as a potential purchaser; (iv) Mr. Siddiqui took the land purchase opportunity to Mr. Rahman with Mr. Nasim’s knowledge; (

v) Mr. Rahman did not approach Ansar; (vi) Siddiqui suggested that Indus should increase the price it was prepared to offer for the land; (vii) Unlike the negotiations in 2013 in which Mr. Nasim dealt directly with Mr. Rahman, Mr. Nasim directed all communication including Ansar’s counter-offer to Mr. Siddiqui to take to Indus knowing that Mr. Rahman knew that Mr.

Siddiqui was connected with the development of the land; [ 21 ] Indus also takes the position that the contract for sale was concluded when Ansar removed the terms Indus had disputed and returned it initialled and signed the next morning since Ansar was at that point responding to Indus’s counter offer.

The formalities came the next day in the form of the full completed documents. [ 22 ] Indus also disputes Ansar’s argument that it failed to deliver the additional deposits saying that no time deadline for payment was specified in the Agreement and references to payment of deposits is ambiguous. [ 23 ] Indus also argues that it is entitled to maintain its caveat because Phase 4 is an option to purchase which by definition creates an interest in land.

At the same time, Indus acknowledges Phase 3 and Phase 4 agreements were conditional upon each other, not stand alone agreements. [ 24 ] Indus relies on the tandem or conditional nature of the phases to support its further argument that it is entitled to specific performance on the basis of “uniqueness”, a requirement for specific performance in real estate transactions. In particular, Indus argues that replacement is not readily available for the Phase 3 land capable of allowing for a segue into the Phase 4 option to purchase.

Analysis [ 25 ] The parties spent considerable effort on whether an agreement was concluded between them. However, as Counsel both acknowledged, a caveator in a show cause hearing is only required to adduce sufficient evidence which, if believed, would be complete and sufficient to justify the claim. The party seeking to maintain the caveat must establish an interest in land.

If it does, then the test will have been met. [ 26 ] Indus seeks a finding that it had a completed contract for sale as at June 8 when Ansar demonstrated acceptance of its counter offer and provided revised, initialled documents to Indus on the morning of June 9. This was then followed up with Indus signing the documents at 2 p.m. that same day even though no communication about this was provided to Ansar. Mr. Rahman and Mr. Nasim both demonstrated awareness of the need to comply with the communication deadline set for 5 pm on June 9. Mr. Rahman did so by repeatedly asking Mr.

Siddiqui whether Ansar had been informed that he had completed his end of the transaction. Mr. Nasim demonstrated the same understanding by having phoned Mr. Sidiqqui about the status of matters, being told he’d get a call back. He didn’t. [ 27 ] Indus attaches no particular importance to the deadline, taking the position that everything changed during the negotiations

over certain terms. However, there was no evidence adduced by either party about a change in the formal method of communication of acceptance. On the matter of the deposits, Ansar relies on

section 3.1 of the P:uirchase and Sale Agreement which required that all deposits be delivered in trust to the Purchaser’s lawyer unless otherwise agreed in writing with the initial deposit to accompany the offer, within 48 hours of final acceptance. The language in the Agreement regarding the payment of additional deposits is a bit of a jumble but does indicate that additional deposits were to be paid. The additional deposit process is clarified by

section 8.6 requiring that “All deposits shall be releasable to the seller and non-refundable upon removal of buyer’s conditions” which is stated as before 9 p.m. on the “Condition Day.” Court was advised that the Condition Day was July 30. [ 28 ] I agree with Ansar’s position that the additional deposit was to have been paid sometime prior to that date. While Indus’ lawyer advised that the initial deposits on the sale were in his trust account, the additional deposits were never paid. Ansar takes this as

an act of repudiation by Indus of whatever transaction might have been arrived at prior to that date, without conceding that any agreement was in fact concluded. [ 29 ] Indus takes the position that the Purchase and Sale Agreement is not clear about when the additional deposits should be paid. On a common sense basis, that position is an oblique suggestion that it didn’t have to be paid at all or until closing.

That position would be inconsistent with the concept of real estate deposits as a protection for land owners until the transaction is finalized with the presentment of the purchase price in full. [ 30 ] In addition to the problems with the Agreement process, Ansar submits that to maintain its caveat on the lands, Indus must satisfy this Court on an evidentiary basis that damages would not be an adequate remedy in the particular facts and circumstances. Counsel cites the Alberta Court of Appeal in 1 244034 Alberta Ltd. V.

Walton International Group Inc. 2007 ABCA 372 ; “Alberta law is well settled that on an application to discharge a caveat based on an agreement for the purchase and sale of land, a finding that damages would be an adequate remedy is sufficient to discharge the caveat.” [ 31 ] Counsel further cited the Court of Appeal in 365733 Alberta Ltd. v. Tiberio

(2008) ABCA 341, for the proposition that real estate development is not unlike other development projects which are focussed on acquisition of property for the ultimate profit to be had. [ 32 ] It is well established that specific performance will not be granted simply because the subject matter is real estate. There must be evidence that the property is unique as the Court of Appeal has indicated in Walton and 410675 Alberta Ltd., v. Trail South Development Inc., 2001 ABCA 274 .

When damages are calculable, any uniqueness of the property, if proven, would ordinarily be reflected in the price of the lots for home development once the development is completed. There is no suggestion that the Phase 3 and Phase 4 lands were part of the development project for any other reasons than investment and profit purposes. [ 33 ] Evidence proffered by Indus focusses on the desirable location from a development perspective in that it is close to shopping, an international airport, major highway, other developed areas and is already partly serviced. Mr.

Rahman in his cross examination conceded that the reason he values those kinds of characteristics in his search for development land is because profits are easier to calculate. Conclusion [ 34 ] In the final analysis, Indus has failed to adduce evidence to show that it has an interest in land because the terms of the agreement itself were not complied with as to the formal requirements for acceptance and payment of deposits.

The evidence in this Courts view does not support a prima facie case for an interest in land required to sustain a caveat which would tie up the land. [ 35 ] Even if there is evidence that if believed could support an interest in land, specific performance is not the appropriate remedy in all the circumstances of this dispute. The property is not unique. It is land sought to be acquired for development in the usual way: buy the land, develop it, service it, sell lots to home builders and make a profit. Profit in such circumstances can, without difficulty, be calculated in the form of a damages claim.

A damages claim represents an adequate remedy. [ 36 ] Accordingly, the Application to remove the caveat from the subject lands is granted. [ 37 ] If the parties cannot agree, costs may be spoken to within a reasonable period of time. Heard on the 30 October 2015 Dated at the City of Calgary, Alberta this 16 th day of November 2015.

M.C. Erb J.C.Q.B.A. Appearances: C. Smith and Darren J. Reed, Blake Cassels & Graydon LLP, for the Appllcant Kevin S. Burron, Dentons Canada LLP for the Respondent