Studio Homes Ltd v Carter, 2015 ABQB 741

Court of Queen ’ s Bench of Alberta Citation: Studio Homes Ltd v Carter, 2015 ABQB 741 Date: 20151123 Docket: 1303 14306 Registry: Edmonton Between: Studio Homes Ltd. Plaintiff - and - M. Roy Carter, Carter Lock Horrigan, Kevin Szakacs, Louis Joseph Albinati, Darrel Gunderson and Signature Land Corp Defendants And Between: Louis Joseph Albinati Plaintiff by Counterclaim - and - Studio Homes Ltd. Defendant by Counterclaim _______________________________________________________

Reasons for Judgment of R. P. Wacowich , Master in Chambers _______________________________________________________ Introduction [ 1 ] This is an application for

summary dismissal of a claim brought by Studio Homes Ltd. (Studio) against the defendant, Louis Joseph Albinati (Albinati), and also an application by Albinati by way of counterclaim for

summary judgment seeking a declaration of an interest in land. This is also an application for

summary dismissal of the claims against the defendants, Signature Land Corp. (SLC), Kevin Szakacs, (Szakacs) and Darrel Gunderson (Gunderson) by Studio. [ 2 ] The action includes claims against the defendants, M. Roy Carter (Carter) and the law firm, Carter Lock Horrigan (CLH). These defendants are not parties to the applications before the Court. Background [ 3 ] Studio seeks to enforce rights of Elaborate Developments Inc. (Elaborate) concerning an Agreement for Sale of October 8, 2004, between Albinati and Elaborate for Elaborate to purchase 145.89 acres of Albinati land in Grande Prairie, Alberta.

Studio is acting under Elaborate’s interest pursuant to a Court Order. [ 4 ] The allegations in the statement of claim are that Elaborate’s lawyer, Carter and CLH, the lawfirm Carter worked with, had been retained by Elaborate to represent it in the land purchase which was the subject of the Agreement for Sale. The lands are in dispute. Carter acted for both Elaborate, the purchaser and Albinati, the vendor with the consent of both parties. [ 5 ] The offer for the Land comprised a portion of a quarter

section of land owned by Albinati under one certificate of title, excepting out a portion between 11 and 11.75 acres (the “Albinati Acreage”) that Albinati retained for his own use. As all of the lands owned by Albinati under that certificate of title were not subject to the Agreement for Sale, no caveat was registered. [ 6 ] Pursuant to the terms of the Agreement for Sale, Albinati was entitled to subdivide the Albinati Acreage. By way of a survey conducted in 2004, the size of the Albinati acreage was determined to be 11.12 acres.

Thus, the number of acres sold to Elaborate was 146.13 acres, and the purchase price was $3,982,042.50. [ 7 ] The Agreement for Sale provided that, among other things, Elaborate was required to pay two $100,000.00 deposits, and payments on May 25 of each year in an amount equivalent to the greater of $272,500.00, or $27,250.00 per acre for each acre that Elaborate held. Elaborate was also obligated to pay the property taxes for the Land. The Agreement for Sale expired October 8, 2011, when all payments were due.

All payments were not completed by October 8, 2011, [ 8 ] Elaborate made the two $100,000.00 deposits, and made payments in 2006, 2007 and 2009 which exceeded the minimum amount due under the Agreement for Sale due to a number of acres sold by Elaborate through development which allowed Elaborate to make higher payments than the required minimum. [ 9 ] Manjit Nagra, also known as John Nagra (Nagra) was the sole director and shareholder of Elaborate and was the principal of a number of other related companies (the Elaborate Group). [ 10 ] The Elaborate Group, including Elaborate, started experiencing financial difficulties in 2008. [ 11 ] According to Albinati, in June 2010 Nagra verbally agreed with Albinati to cancel the Agreement for Sale, and to relinquish Elaborate’s interest in the remaining land to Albinati, on the condition that Albinati release Elaborate from further liability under the Agreement for Sale.

Albinati would release Elaborate’s payments due and there would be no actions by Albinati against Elaborate. [ 12 ] On or about February 2, 2011, Nagra on behalf of Elaborate signed a written agreement between Elaborate and Albinati (the Quit Claim and Settlement Agreement) which, among other things: (

a) Terminated and rendered null and void the Agreement for Sale as of February 2, 2011; (

b) Relinquished and transferred all of Elaborate’s rights under the Agreement for Sale to Albinati; (

c) Granted Albinati the right to use all engineering and infrastructure completed by Elaborate on the Land; (

d) Absolved Elaborate from its obligation to pay all taxes and money owing under the Agreement for Sale, including Albinati’s right to recover the costs of any legal proceedings to do so.

[ 13 ] Carter’s defence alleges on behalf of he and CLH: 19. These Defendants did not provide any legal advice or assistance whatsoever to either Albinati or Elaborate in relation to the Settlement Agreement. These Defendants did not even see a copy of the written Settlement Agreement at any time prior to the commencement of this action. 20. Prior to signing the Settlement Agreement, Elaborate obtained advice from at least two other law firms. [ 14 ] One of the many issues raised by Elaborate is that Carter failed to register a caveat on Albinati’s lands.

As indicated, there was a reason for it and in any event, in my view, it has no bearing on Elaborate’s loss of its interest in the land. [ 15 ] Elaborate incurred infrastructure development costs of about 1.028 million dollars in costs to develop the lands as a residential subdivision (The Signature Falls Development-SFD). [ 16 ] Contrary to Carter’s defence, the plaintiff’s position is that Carter was aware of all aspects of the SFD. Further, he advised Elaborate, through Nagra, to keep quiet about the Agreement for Sale particularly with the Receiver of Elaborate.

More will come of that. [ 17 ] So Elaborate’s position is that Carter told Nagra that Elaborate should keep quiet about the Agreement for Sale and execute the Quit Claim. Carter also, Nagra deposes, offered to help Elaborate/Nagra/Studio or whatever company was next incorporated by Nagra, to reacquire the land that he gave up through the Quit Claim. [ 18 ] Albinati’s evidence is that Carter told him he could act for neither Albinati or Elaborate, subsequent to the initial Agreement for Sale.

It is also clear that Nagra consulted two lawyers other than Carter or CLH as to whether he should sign the Quit Claim. [ 19 ] Studio seeks in this action to enforce rights of Elaborate Developments concerning the Agreement for Sale of October 8, 2004, between Albinati and Elaborate. [ 20 ] Pursuant to the Agreement for Sale between Albinati and Elaborate, Elaborate was to make certain payments and pay taxes on the property. The Agreement for Sale states: 2.2 The Purchase Price shall be $27,250.00 per acre.

Unless otherwise agreed in writing in addition to the purchase price the Buyer will pay any Goods and Services Tax on the purchase price. The Buyer also agrees to pay the cash in lieu of municipal reserve charge on the 11 – 11.75 acre subdivision on behalf of the Seller. The Purchase Price of $27,250.00 per acre (plus GST) to be paid as follows:

a) A deposit of $100,000.00 cash or Irrevocable Letter of Credit shall be due upon signing of this agreement and shall be held in trust by Carter, Lock & Horrigan and released to the Seller upon removal of conditions. The Deposit shall be forwarded within 3 business days of when this Contract is accepted and executed by both the Buyer and Seller.

b) A further $100,000.00 shall be paid to the Seller upon removal of conditions. c) $272.500.00 or $27,250.00 per acre (whichever is greater) shall be paid to the Seller upon registration of the first subdivision and in any event no later than 1 year from the date of removal of conditions (the “Anniversary Date”). d) $27,250.00 per acre upon registration of any subsequent subdivision. Such per acre payments shall be credited against the annual minimum cumulative payment of $272,500.00 which are due on the Anniversary Date in each and every year thereafter.

e) The balance of the purchase price shall be due on the 7 th Anniversary Date at which time the balance of the land will be transferred to the Buyer 2.7 Items which are normally adjusted for, including the entire 146.25 acres or the remainder of, such as real estate taxes or levies against the remainder of the 146.25 acres, as a result of the development, will be assumed by the Buyer and paid when due and payable even though they may be assessed against the Seller.

All adjustable items are the Seller’s responsibility for the entire day of each Closing. [ 21 ] Albinati’s uncontradicted evidence is that he became aware in June 2010, that Elaborate was in financial difficulty. Both a lawyer (not Carter or anyone with CLH) and his accountant advised Albinati that Elaborate was in financial difficulty and he should protect his interest in the land.

He had discussions June 2, and June 6 with Nagra where he proposed a Quit Claim by Elaborate of its remaining interest in the land. [ 22 ] Albinati attempted on many occasions to have Nagra sign a Quit Claim by Elaborate on its interest in the land from June 2010 until February 2, 2011 when the Quit Claim was properly executed by both parties. [ 23 ] Albinati prepared a Quit Claim/Release on June 6, 2010. [ 24 ] It states: John Nagra, June 6, 2010

Dear John, Re: Agreement of Sale of SE 18 71 R5 W6 between Elaborate Developments and Louis J Albinati Subsequent to our meeting of June 1st, and my letter of June 2nd, I have had some advice from my Lawyer and my Accountant, and they say that since the account is in arrears, we have no alternative but to take legal action against you to declare the Agreement 'of Sale to be Void, and to recover outstanding money to be paid in lieu of development.

They also advised that in your precarious financial condition, a legal action of this proportion could bring down your organization by loss of confidence by your Sub Trades and suppliers and jeopardize the Security of your position. They said that as soon as legal action is started everyone who has receivables with you will jump in and file claims so they will not be left out. There is also the possibility that they will attach the agreement and tie us both up from any further development for several years.

With this in mind it is suggested that if you voluntarily relinquish all rights you may have in the agreement now while your position is still relatively secure, we will agree not to sue you for the outstanding money which is to be paid in lieu of development, and we wave [sic] the outstanding debt to this date.

In turn we would have access to all engineering, infrastructure and right to access any Engineering done on said lands to date With this in mind it is suggested that if you voluntarily relinquish all rights you may have in the agreement now while your position is still relatively secure, we will agree not to sue you for the outstanding money which is to be paid in lieu of development, and we wave [sic] the outstanding debt to this date. In turn we would have access to all engineering, infrastructure and right to access any Engineering done on said lands to date.

It is therefore hereby agreed that by signing this document you agree to dissolve the Agreement of Sale on SE 18 71 R5 W6, between Elaborate Developments and Louis J Albinati. And hereby relinquish all rights provided in Said Agreement. and said agreement will become Null and Void as of this date. In return Louis J.

Albinati will absolve you from any Taxes, money owing in lieu of failure to develop Phases in arrears at this time, and the cost of a lawsuit to recover these moneys. [ 25 ] Nagra, an experienced developer, admits that he signed the settlement agreement; that he vaguely recalls reading it over before he signed it and that he understood that it was a Quit Claim of the Land.

He also admits that after the settlement agreement was signed he understood that Albinati owned the Land and that Elaborate no longer had any interest in the Land. [ 26 ] There is a dispute as to whether Elaborate carried out its duties under clause 2.2 in that it failed to make the minimum payments for May 25, 2008 and May 25, 2010. There is a dispute over the

interpretation of the Agreement for Sale. Albinati interprets it as requiring a minimum payment of $272,500.00 each year whereas Nagra interprets it as requiring payments that aggregate to a minimum of $272,500.00 per year. If Albinati’s

interpretation is correct Elaborate failed to make the required payments due May 25, 2008 and May 25, 2010. If Nagra’s

interpretation is correct Elaborate was never in breach of its obligations to make minimum payments. In my view, Albinati’s

interpretation is correct as this is the clear wording of the Agreement for Sale. Albinati would have had to waive the payments. He did not. Elaborate breached the agreement. [ 27 ] In any event, as counsel for Albinati rightly points out there clearly was a failure to pay taxes with respect to the land in 2009 and 2010. There was further consideration for the Quit Claim including the fact that there was an agreement by both parties to agree that there would be no actions against either party. Albinati also gave up Elaborate’s outstanding debts to him.

Finally, when the Agreement for Sale expired on October 8, 2011, all payments due had not been made. [ 28 ] There are some conflicts in the evidence, but for the most part, at least as between Albinati and Studio there is no significant dispute. [ 29 ] It is well known that the economy in Alberta and throughout North America suffered a downturn in 2008-2010. The result was that Elaborate was unable to pay its debts as they became due. This resulted in Elaborate being the subject of a Receivership Order on February 22, 2011.

The Quit Claim was dated June 6, 2010, but the evidence is that it was executed on February 2, 2011, twenty days before the Receivership Order The Execution of the Settlement Agreement [ 30 ] Natalie Gunderson (Natalie) is Albinati’s daughter. She is a library technician employed by the Grande Prairie Public School District. She had been appointed under an October 20, 2004 Power of Attorney as her father’s attorney to conduct business on his behalf while he and her mother were away.

He spent his winters in the Phoenix, Arizona area. [ 31 ] In late January, 2011, Natalie received a telephone call from her father who was in Phoenix. He requested that she meet with Nagra to sign the agreement prepared. She received an e-mail on February 1, 2011, from her father with the unsigned settlement agreement attached. Her father did not tell her the purpose of the settlement agreement, just that Nagra was expecting her, and that she should take it to him to have him sign it with a witness present. [ 32 ] Natalie made arrangements to meet with Nagra over the noon hour on February 2, 2011.

She asked her husband, the Defendant Gunderson to attend with her to witness the settlement agreement. The settlement agreement was properly executed by both Elaborate, through Nagra and Albinati through his daughter who signed for him as his Power of Attorney.

The meeting was brief. [ 33 ] Nagra alleges in an Affidavit that before he signed the settlement agreement, he had discussed the Agreement for Sale with Carter; that Carter had advised him to "keep quiet about his rights under the Agreement for Sale in hopes of retaining them or re- acquiring them" and that he "signed the settlement agreement in reliance on Carter's advice" [ 34 ] Nagra also alleges that when Natalie Gunderson attended to Elaborate's office to have the Settlement Agreement signed

“Natalie Gunderson told me that the settlement agreement had been prepared by Carter as a method of keeping Elaborate's interest in the Agreement for Sale out of the receivership". [ 35 ] Natalie Gunderson has sworn that: "This statement is not true. I never made this statement or said anything like this." [ 36 ] She has sworn that her father told her he had prepared the settlement agreement and that she believed he had done so and that no one had indicated Mr. Carter might have had any involvement in the settlement agreement; that Mr.

Carter's name never came up when the settlement agreement was signed, and that she had very little knowledge of her father's dealings with Nagra or Elaborate and was not aware of the terms or background of either the Agreement for Sale or the settlement agreement. [ 37 ] When she was questioned about this allegation, Natalie stated: Q Okay. Is it possible that you assumed the document that was attached to your father's email had been prepared by Roy Carter? A No. Q And is it possible that you said to Mr. Nagra that it had been prepared by Roy Carter? A No. Q And how can you be sure of that?

A Because I assumed it had been prepared by my dad. Q Why? A Because of the wording in it. It was long sentences and long paragraphs and that’s - didn’t seem like it was a legal document. I would have had no reason to think it was prepared by anyone other than him. [ 38 ] Nagra admitted at his questioning that Natalie may not have mentioned Mr. Carter when they met. Q. Your’re aware that Natalie Gunderson has sworn that she didn’t say anything to you about Mr. Carter? A. Basically it was just a quick meeting.

I’m advised to come around here, quickly sign this before we – before everything else becomes loose, yeah. Q Well, I’m going to suggest to you that Natalie Gunderson may not have said anything to you about Mr. Carter you met with her. Would you agree, sir that she may not have said anything to you at all about Mr. Carter? A She may not use – at the time, she may not use Carter, the word Mr. Carter, but ...

Q Okay, that’s fine. [ 39 ] Nagra also indicated that no final decision about receivership had been made when he signed the Quit Claim. [ 40 ] Nagra also admitted that Carter had told him to consult with another Grande Prairie lawyer about the settlement agreement. Studio Homes Involvement [ 41 ] At this juncture it is necessary to indicate the particulars of how Studio Homes became a Plaintiff on Elaborate’s action. Nagra, on behalf of Elaborate signed the Quit Claim on February 2, 2011. A Receiver was appointed for Elaborate by Court Order on February 22, 2011.

The law firm for Studio Homes in this action was also counsel for Elaborate through the receivership. It negotiated with the Receiver to obtain a Consent Order from the Court of Queen’s Bench. [ 42 ] Studio Homes asserts its right to bring this action pursuant to the Consent Order of the Court of Queen’s Bench on October 7, 2013 wherein all of Elaborate’s rights and causes of action with respect to the 2004 Albinati’s lands were transferred and assigned to, Studio Homes.

The Order stated: The Signature Fall’s claims be and are hereby transferred to Studio and Studio has full right, power and authority to pursue, settle and compromise the Signature Fall claims and retain the benefit thereof for their own account. [ 43 ] This order expressly transferred to Studio Elaborate’s claims with respect to the lands which were the subject of the Agreement for Sale. It is by virtue of this order that Studio brings this action against Carter and CLH for breach of contract, breach of fiduciary duty and conspiracy. This conspiracy is alleged to include Albinati, Szakacs, Gunderson and SLC.

This Order was obtained the same day this action was filed. [ 44 ] While I would have expected the Order to have had more particulars as to contemplated actions for Studio to pursue, in my view, the width of the Order granted allows for this action by Studio. Effect of Quit Claim and Release

[ 45 ] Both Albinati and Nagra were experienced in the real estate business with Nagra being experienced in development of land. It is clear that Nagra hoped to use the Agreement for Sale to develop the land for a considerable profit for Elaborate. Unfortunately for Elaborate, the economy turned against that interest. As such, by 2010 Elaborate was in financial difficulty. This was known in the community and certainly to Mr. Albinati.

For that reason he spoke to Nagra in June of 2010 to attempt to nullify the Agreement for Sale and was successful in doing so. [ 46 ] Nagra indicated that he entered into the Quit Claim because he did not want to have the land enter into the Receivership process.

He hoped to subsequently acquire the land from Albinati after the Receivership. [ 47 ] Ironically, in 2013, through the Receivership process, Studio purchased 101 lots from the Receiver which had been part of the Signature Lands’ development and subject to Elaborate’s previous interest in the land. [ 48 ] There was an indication that Albinati was to give Nagra/Elaborate an opportunity of first right of refusal on any sale of the land. While Nagra, through Studio, takes the position that the Quit Claim was part of the Carter conspiracy it is clear that he entered it freely and willingly.

He indicated in the correspondence with Albinati that he recognized the Agreement for Sale was no longer viable and on that basis he made offers in 2013 to Albinati for the purchase of Albinati’s interest in the land for $40,000 per acre. He had a right to offer and he knew that there was an offer of $50,000 per acre on behalf of SLC. He did not match that offer. Studio failed to make a competitive offer for Albinati’s land. Conspiracy [ 49 ] The elements of conspiracy are:

a) an agreement between two or more persons

b) concerted action taken pursuant to the agreement

c) if the action is lawful, there must be evidence that the conspirators intended to cause damage to the plaintiff;

d) if the action is unlawful, there must be at least evidence that the conspirators knew or ought to have known that their action would injure the plaintiff (i.e. constructive intent); and

e) actual damage suffered by the plaintiff. Mraiche Investment Corp. v. Paul 2012 ABCA 95 at para. 40 ; [ 50 ] A plaintiff advancing a conspiracy claim is not required, in opposing a

summary dismissal application, to establish that no inference other than conspiracy is possible from the facts. "In oral argument, the applicants submitted that for Mr. Kent to defeat their

summary judgment applications, he must show that the facts do not fairly admit of any inference other than an agreement to injure the plaintiff or commit an unlawful act, relying upon the Queen's Bench decision in Murphy Oil Co. v. Predator Corp. In my view, that case cannot stand for that proposition, even though one sentence of the judgment, read in isolation, might support it." ... Furthermore, as stated above, to succeed at trial a plaintiff must establish all the elements of conspiracy on a balance of probabilities. Circumstantial evidence, at least in civil cases, is treated like any other form of evidence.

Its weight depends on the strength of the inference that can be drawn from it, which is a task for the trier of fact. The test urged by the applicants would impose a greater burden on Mr. Kent than he would face at trial. Thus, as in all

summary judgment applications, the question is whether there is a genuine issue for trial on the elements of conspiracy, as set out in the evidence before me. Where Mr. Kent relies on circumstantial evidence, the question is whether on that evidence a reasonably-instructed·trier of fact could find that the necessary elements have been proved on a balance of probabilities. Kentv.

Martin 2013 ABQB 436 at para. 71 , 73 and 74; [ 51 ] The allegations in this claim are that Carter told Nagra that he should sign the Quit Claim, keep the Agreement for Sale quiet from the Receiver and that Carter would subsequently help him reacquire the land. The only evidence on this point is given by Albinati who clearly states he prepared the Quit Claim himself, Carter was not involved in it, and that he accepted the best offer for the land on October 11, 2013 from Signature Land Corp. in the amount of $50,000.00 per acre. Albinati was not involved in any conspiracy.

That does not mean there was no conspiracy among the other defendants. Unjust Enrichment [ 52 ] The law is clear that the elements of unjust enrichment are: A cause of action in unjust enrichment requires the plaintiff to make out three elements:

a) There is an enrichment to the defendant;

b) corresponding deprivation to the plaintiff; and

c) an absence of a juristic reason for the enrichment. Garland v Consumers Gas, 2004 SCC 25, 2004 CarswellOnt 1558 at para 30 [53] The burden is on the plaintiff to establish it suffered a detriment. Air Can v BC, 1989 Carswell BC 67, at para 85 [54] The burden is on the plaintiff to establish that there is no recognized juristic reason for the enrichment and correspondingdeprivation. Mitchell McInnes, The Canadian Law of Unjust Enrichment and Restitution (LexisNexis: 2014) at 233 ("Unjust Enrichment") [55] A benefit incurred pursuant to an effective contract cannot be reversed.

The contract is the juristic reason for any benefit anddetriment. [56] With regard to Albinati, there is no unjust enrichment as there is a juristic reason for his enrichment that being the Quit Claimand his lawful right to the property and the right to make a profit from the sale of it. As for the other defendants they profited by makingan offer for the land that was available at fair market value. The question is was this through the breach of a fiduciary duty. [57] SLC purchased the land at a higher price then offered by Studio. Studio cannot now argue that Albinati was unjustly enrichedthrough that process.

While the remaining defendants are of the position that this action is nothing more than a creative attempt byStudio to assert a claim to property which had been deliberately relinquished in the settlement, that does not respond to the allegations ofconspiracy and knowing assistance in breach of a fiduciary duty.

Ex turpi causa [58] The defendants raised ex turpi causa as a defence to the plaintiff’s claim. [59] Ex turpi causa non oritur actio has been described as: "A modern statement of the principle which, in my respectful opinion, expresses it in terms that are helpful in determining itsapplicability to the circumstances of a case, was made by Diplock, L.J. (now Lord Diplock), in Hardy v.

Motor Insurer's Bureau, [1964]2 All E.R. 742, in these terms (p. 750): The rule of law on which the major premise is based, ex turpi causa non oritur actio, is concerned not specifically with the lawfulness ofthe contracts but generally with the enforcement of rights by the courts, whether or not such rights arise under contract. All that the rulemeans is that the courts will not enforce a right which would otherwise be enforceable if the right arises out of

an act committed by theperson asserting the right (or by someone who is regarded in law as his successor) which is regarded by the court as sufficiently anti-social to justify the court's refusing to enforce that right. Tallow et al v Tailfeathers et al, 1973 ALTASCAD 86 , 1973 CarswellAlta 102, 44 DLR (3d) 55 at para 16. [60] The defence of ex turpi causa is an exceptional power of the Court which should be used only in very limited circumstanceswhere it is necessary to do so to maintain the internal consistency of the law. Hall v.

Hebert (SCC), [1993] 2 S.C.R.159 at para. 5, 36 and 40. [61] Numerous factors apply to the Court's consideration of this defence. "The application of the ex turpi causa doctrine in a particular case must depend on the public policy underlying it, the proximity of theillegality to the claim, the gravity of the claimant's conduct, and other relevant factors:" . . . "The state of mind and moral culpability (or "mens rea") of both the appellant and the respondent are central to this dispute, andparticularly to the application of the ex turpi causa doctrine." Tran v.

Kerr, 2014 ABCA 350 at para. 28 and 32. [62] The defence of ex turpi causa is a difficult question of law which requires the exercise of discretion and, particularly in thecontext of a client suing his lawyer, should be decided by the trial judge after hearing all the evidence. Kulaga v. First National Financial GP Corp., 2013 ABQB 377 at para. 20, 22, 27 and 29. [63] There is an exception to ex turpi causa, known as in pari delecto, where one party stood in a fiduciary position, to the other,and abused it. The application of those two doctrines is complicated and nuanced, and ill-suited to

summary judgment. Kindrachuk v. Belseek, 2012 ABQB 515 at para. 6 and 9. [64] If Elaborate's evidence is accepted, it is apparent that it executed the Settlement Agreement in an effort to keep the Land out

of Elaborate's receivership. In order to succeed in its claim, Elaborate must admit that it knowingly carried out a plan to keep property outof the receivership despite understanding that it had to tell the Receiver about all of the property of Elaborate. [65] The Defendants submit that Studio is asking the Court to assist in Elaborate's plan of shielding these assets from its creditorsand later reacquire its interest, albeit through a separate, but related, legal entity.

They further submit it would be against the interests ofjustice for the Court to recognize an interest in lands by Studio based on its assignor's attempt to defraud its creditors. [66] The receiver was aware of the Agreement for Sale and it agreed to the assignment of Elaborate’s right to sue on any actionthat might exist as a result of Elaborate’s involvement in SFC. Ex turpi causa is not available on the facts. All parties were aware of thefacts surrounding the Quit Claim. Whatever Nagra may have been told, the Receiver was fully aware of what took place and took noaction.

There is no evidence to support this defence. Knowing Assistance in Breach of a Fiduciary Duty [67] The elements of the tort of knowing assistance are:

a) a fiduciary duty;

b) a fraudulent or dishonest breach by the fiduciary;

c) actual knowledge by the defendant of the fiduciary relationship and the fraudulent or dishonest breach; and

d) participation or assistance by the defendant in the fiduciary’s fraudulent and dishonest conduct. Harris v Leikin Group Inc., 2011 ONCA 790, at para 8. [68] A Court has to be cautious in dismissing a claim. The Hryniak case makes it clear that there has to be no merit to the claimbased on the available evidence before the court. In this situation I am not satisfied that I can say that there is no possibility that Studiohas a claim against Szakacs, Gunderson and SLC. This is something that can be determined through questioning of the defendantspursuant to the Rules.

The issue could have been resolved by affidavits by these three defendants. [69] I have no evidence from any defendant other than Albinati. From Albinati’s affidavits and questioning I am satisfied that hewas not part of any conspiracy to defeat Elaborate’s interest in the land. [70] I am however concerned that I have no evidence from any of the other applicant/defendants.

There was a question raised as towhether there should be an adverse inference from the failure of the defendants other than Albinati to give evidence. [71] In certain cases and in certain factual situations Courts have held that an adverse inference can be drawn from the failure of aparty to give evidence. Each case depends on its own facts. The plaintiff’s case is weak but Nagra deposes that the remaining defendantsconspired against him. [72] There is no onus on a party to give evidence. Rule 7.3 indicates: 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the followinggrounds: (

a) there is no defence to a claim or part of it; (

b) there is no merit to a claim or part of it; (

c) the only real issue is the amount to be awarded. (2) the application must be supported by an affidavit swearing positively that one or more of the grounds described in subrule (1)have been met or by other evidence to the effect that the grounds have been met. [73] Rule 7.3(2) requires evidence to the effect that the grounds in 7.3(1) have been met. In Grivicic v Alberta (Health Services)2014, ABQB 444, Master Prowse dealt with a

summary judgment application. The claim concerned the death of a cancer patient byalleged negligence by a Cancer Centre and treating doctors of the deceased. The defendants’ took the position that there was no merit tothe claim against them. [74] While all the cases indicate that there must be an affidavit indicating that there is no genuine issue for trial, 7.3(2) states: “orby other evidence to the effect that the grounds have been met”.

In examining this issue in Grivicic, Master Prowse refers to Stewart vEnterprise Universal Inc, 2010 ABQB 259 , 2010 CarswellAlta 711. 2010 ABQB 259, Master Prowse states: [80] What TBCC’s approach ignores is that fact that the initial burden rests with it. As stated in Stewart v. Enterprise Universal Inc.,2010 CarswellAlta 711, 2010 ABQB 259: In a

summary judgment application taken by the defendant, the general issue is whether it is plain and obvious that the plaintiff's claimcannot succeed. Evidence is directed towards that primary issue, although there is often some complexity. It is a merits based applicationin which the defendant bears the initial burden of establishing that it is plain and obvious the plaintiff cannot succeed, at which point theburden shifts to the plaintiff to establish that a triable issue remains. [81] As already discussed in these reasons, Rule 7.3(2) requires that TBCC begin by putting forward evidence (even if it is not from its

own deponent) to the effect that there is no merit to Mrs. Grivicic’s claim that treatment was denied Mr. Grivicic for budgetary reasons. TBCC did not refer the court to any evidence to that effect. Accordingly its application for

summary dismissal is denied. [ 75 ] In this case Nagra deposes positively to the effect that there was a conspiracy involving Carter, CLH, Szakacs, Albinati, Gunderson and SLC. There is evidence that Carter was involved in the incorporation of SLC, and that his wife was a director and shareholder of the company and Carter was a director for a very short period of time of SLC. Nagra’s affidavit of December 13, 2013 attaches a letter from counsel for CLH to counsel for Studio which indicates: After considering all the offers he [Albinati] decided to sell the land to a company formed by Mr. Szakacs. Mr.

Albinati’s son-in-law, Darrell Gunderson and Roy Carter’s wife, also became shareholders in this company. [ 76 ] There is no evidence on behalf of any of these defendants. The only evidence which may slightly deal with the issue is where Nagra at one point deposes that Natalie Gunderson indicated that Carter had prepared the Quick Claim. He later in questioning on affidavit indicated that he could not say for sure that Natalie Gunderson had indicated Carter was involved in preparation of the Quit Claim. In my view this does not substantively take away from the allegation of Studio through Nagra and Elaborate.

Where is there evidence to the effect that there is no merit to Studio’s claims against all defendants but for Albinati? [ 77 ] There are many cases dealing with the law as stated by the Supreme Court in Hryniak . Master Schlosser sums it up very well, as he is prone to do, in the Padget case 2015 ABQB 515 . He stated: [10] Modern

Summary Judgment is a function of whether a fair and just determination can be made on the merits without a trial. It is a measure of the confidence the Court has in predicting the outcome of the case: ( Rai v 1294477 Alberta Ltd. (Vinyl Retro Dance Lounge) , 2015 ABQB 349 (and the cases cited there)). The real risk is weighing whether the truncated procedure will produce a wrong result and create an injustice. [ 78 ] Hryniak has required chambers adjudicators to examine the evidence even when there is conflicting evidence. Where is the line drawn with regard to what evidence is necessary to dismiss a claim by way of

summary judgment? Where is the balance between the right to seek a remedy and the right not to give evidence against a case without merit? How do you measure contested evidence? Where does speculation stop and evidence start? In this case while the evidence may be weak, it is not so weak that the action should be dismissed. There is evidence sufficient to show merit to the Plaintiff’s case at this juncture. And the remaining defendants have failed to prove otherwise. [ 79 ] It may be that after this case has progressed further the remaining defendants will be in a position to successfully seek

summary judgment dismissing the claim. However, at this point I cannot say there is no merit to the claim. The defendants have not proven there is no merit to the Plaintiff’s claim such that this action should be dismissed this early on in the action.

Summary of Conclusions [ 80 ] The claim of Studio against Albinati is dismissed. Judgment is granted to Albinati on his counterclaim against Studio Homes and there is a declaration that the interests of Elaborate both in the land and in the infrastructure and investment claimed in the Statement of Claim in this action ceased as of February 2, 2011. Neither the Receiver, for Elaborate or anyone else had any interest in the land thereafter other than Albinati. [ 81 ] The Application of the Defendants, Szakacs, Gunderson and SLC is dismissed for the reasons stated. Costs follow the event.

Heard on the 3 rd day of November, 2015. Dated at the City of Edmonton, Alberta this 23 rd day of November, 2015. R. P. Wacowich M.C.C.Q.B.A. Appearances: Grant Dunlop

Ogilvie LLP for the Plaintiff B. P. Kaliel and E. Johnston Miller Thomson For the Defendant, Albinati Vivian Stevenson, QC Duncan & Craig for the Defendants, Szakacs, Gunderson and Signature Land Corp