Shelbra International Inc v Peter Pond Portfolio Inc, 2015 ABQB 762

Court of Queen ’ s Bench of Alberta Citation: Shelbra International Inc v Peter Pond Portfolio Inc, 2015 ABQB 762 Date: 20151201 Docket: 1403 17600 Registry: Edmonton Between: Shelbra International Inc. Applicant - and - Peter Pond Portfolio Inc. Respondent _______________________________________________________ Reasons for Judgment of L. A.

Smart , Master in Chambers _______________________________________________________ Background [ 1 ] Shelbra International Inc. (Shelbra) is the registered owner of two lots (the Hotel Lands) contained in a certain city block in Fort McMurray, Alberta on which the Stonebridge Hotel is situated. Peter Pond International Inc. (Peter Pond) owns essentially the balance of that city block on which there is located, among other things, a shopping mall, Safeway, and freestanding restaurants (the

Shopping Center Lands). In 1983 Allarco Group Ltd (Allarco) owned all of the Hotel and Shopping Center Lands except for one lot then owned by Hudson’s Bay Company Developments Limited (the Bay). [ 2 ] Allarco and the Bay entered into a Parking and Access Agreement (Agreement) on May 4, 1983 granting parking and access easements and rights-of-way between the various parcels of land. For purposes of the agreement Allarco identified itself as “Allarco”, owner of the Hotel Lands; as “Group”, owner of the Mall and Safeway lands; and as “Lot 12 Owner” owner of the then vacant Lot 12.

Each parcel was identified by its respective legal description(s). [ 3 ] Allarco, Group, Lot 12 Owner and the Bay (Owners) subject to the conditions contained in the Agreement granted to one another, their respective successors and assigns . . . a perpetual, free and uninterrupted right, license, liberty, privilege and easement for a right-of-way for use as parking and ingress and egress, in, over, and upon all and singular that portion ... of their respective parking areas and access points.

The Agreement also provided that each of the Owners covenant and agree with one another that provided they perform and observe the covenants and conditions therein that they and each of them shall peaceably hold and enjoy the rights, licenses, liberties, privileges and easements hereby granted without any hindrance, molestation, or interruption on the part of another owner. [ 4 ] The Agreement recited a desire on the part of the Owners to construct a multilevel parkade, additional commercial buildings, to expand existing buildings, establishment of an agreement with respect to parking, access, and management as well as a cost-sharing for maintenance of the lands.

The recitals were incorporated into the Agreement by its terms. To date no parkades have been constructed although a number of commercial buildings have been added. [ 5 ] Under the Agreement caveats may be filed by an owner against another owner’s lands for the purpose of protecting and evidencing their rights thereunder and the party against whose lands the caveat is filed shall not take any action to cause removal of the caveat.

It also contains a common enurement provision for successors and assigns, and at para 23 states: All grants herein contained shall be as and from the date hereof and for so long hereafter as the grantees may desire to continue to exercise the rights and privileges hereby granted on the terms and conditions contained herein. [ 6 ] And further, at para 24; The provisions of this Agreement shall not merge but shall be deemed to be a covenant running with all of the lands described herein. [ 7 ] Shelbra as owner of the Hotel Lands has made an application pursuant to s 141 of the Land Titles Act , RSA 2000, c.L-4 for the Respondent Peter Pond, owner of all of the other lands subject to the Agreement, to show cause why the Caveat registered against the Hotel Lands should not be discharged. [ 8 ] Shelbra argues that the caveat should be discharged, firstly, because it has terminated its participation in the Agreement in September 2013 and secondly, the Agreement contains positive and personal covenants that do not run with the land, that is, it was intended to be merely a commercial arrangement.

Termination [ 9 ] If the Agreement was terminated by Shelbra as it states it has done under para 23 of the Agreement, it is immaterial whether or not the terms constitute interests that run with the land ( Remington Development Corporation v. Enmax Power Corporation , 2012 ABCA 196 ). It is argued that para 23 constitutes a general termination provision with respect to the “grants herein contained” and is said to negate any possible

interpretation that the Agreement would exist in perpetuity. “Grant” is a technical term used in the conveyance of lands and in this circumstance reference to “all grants” would capture the Agreement as it pertains to parking and access provisions. [ 10 ] Shelbra relies on the fundamental principles of contractual

interpretation. It is a basic principle of law that

interpretation of an agreement requires an examination of the contract as a whole, and meaning must be given to all of its provisions. Discussion of the scope of analysis is set out in A.G . Clark Holdings Ltd v HOOPP Realty Inc ., 2013 ABCA 101 as follows: [15] As this Court recently noted in Nexxtep Resources Ltd v Talisman Energy Inc, 2013 ABCA 40 at para 20 , contracts should be enforced in accordance with the intention of the parties, gleaned from the words used in their agreement. The Court went on in that case to emphasize that the words are not to be interpreted in a vacuum.

The Court must have regard to the contract as a whole, giving the words used their natural and ordinary meaning, and also having regard to the relevant background context. [16] The interpretive exercise was explained as follows in ATCO Electric Ltd v Alberta (Energy and Utilities Board) , 2004 ABCA 215 at para 77 : ... the search for the parties’ intentions is conducted on an objective basis, meaning that the focus is on what a reasonable person would infer from the words used. This interpretive exercise must be undertaken with due regard to the entire contract.

One cannot simply pick and choose clauses - or parts of clauses - without considering the contract as a whole.

It also means being alive to the relevant background against which the contract was concluded, the purpose of the exercise being to ascribe to the written text the most appropriate meaning which the words can properly bear. [17] The first step in determining the parties' intent with respect to dispute resolution is, therefore, to examine the words they have chosen to use. [ 11 ] The ability to terminate must arise from the words of para 23 “ and for so long hereafter as the grantees may desire to continue to exercise the rights and privileges hereby granted . . .” Despite the approach advocated for contractual

interpretation considerable focus is placed upon this specific paragraph without regard to other language and words used throughout the Agreement notably the description of the grant as perpetual, the express statement that the covenants are to run with the land and the covenants to both allow the filing of a caveat against one another’s titles and not to take steps to remove such caveats.

[12] What is somewhat confounding is the use of the term “grantees”. This term is not defined nor from my review used elsewherein the Agreement but is clearly in reference to all of the parties to the Agreement in one fashion or another. The question is whether it isintended to mean all the Owners collectively as grantees or intended to mean any one or perhaps some or all of the grantees dependingon the circumstances. The

interpretation urged is to conclude that it bestows a right upon each grantee individually. It strikes me thatclarity in that regard could have been achieved by simply referring to “a grantee” if that were the desired intention. [13] Shelbra nonetheless says that it no longer desires to exercise the rights and privileges granted under the Agreement and havingexercised their right to withdraw, it would be absurd to interpret the Agreement so as to oblige Shelbra to continue to permit parking andaccess by the other owners on the Hotel Lands. Accepting that Shelbra’s

interpretation that a single grantee may withdraw, it must berecognized that each of the grantees are also grantors under the Agreement. The provision expressly addresses the desire to continue toexercise rights and privileges but is silent as to the concomitant obligations granted under the Agreement. [14] In my view, in the context of the whole Agreement reference to “grantees” must be interpreted such that the obligations topermit parking and access under the Agreement will remain in place until such time as all of the parties no longer wish to take itsbenefits.

To place the meaning urged by Shelbra is to in effect disregard numerous provisions in the Agreement setting out a clearintention to the contrary. Commercial Agreement [15] In light of the above discussion, it is necessary to consider whether or not the Agreement constitutes an easement running withthe land. Shelbra points to the Agreement noting that it contains personal covenants which cannot run with the land. The personalcovenants relate to cost-sharing provisions and provisions regarding management, maintenance, alterations and developments to theproperties.

It is argued that these covenants and the grants given demonstrate a commercial arrangement which is on all fours with thelimited rights offered under a license merely giving contractual permission to park and obtain access which would otherwise constitute atrespass. [16] To support its position Shelbra cites Imperial Oil Ltd v Young, (NL CA) at paragraphs 15 and 35: [15] The trial judge's examination of the parking arrangement was based on the generally stated elements required for an easement:the existence of both a dominant and servient tenement, the absence of unity of ownership or occupancy of both tenements, the nature ofthe use in question being to benefit or improve the enjoyment of the dominant tenement, and the use being a type which is capable ofbeing granted at law.

Further, the use in question cannot be totally inconsistent with the continuing possessory rights of the owner of theservient property over its land. However, the trial judge also noted, quoting Gypsum Carrier Inc. v. Canada (1977), 78 O.L.R.(3d) 175(F.C.T.D.), that the presence of all of the elements is not determinative of the issue as that question must, particularly in the case of awritten agreement, be determined on the basis of the intent of the parties.

I agree with the trial judge that in deciding this case one mustlook to the intention of the parties both as to the characterization of the parking arrangement and to ascertain if the agreement may beterminated. There are, of course, a number of interests or rights that resemble easements. (emphasis in original). [35] Indeed, the nature of the relationship was a factor considered by the trial judge in this case when he said: The case here, on the other hand, is one of a purely commercial, business relationship, with each party having commercial value to itsown use of the land in question.

In such circumstances the cases suggest it is more difficult to imply perpetuity, or even long termduration. . . . [17] There is no dispute that there are many personal covenants contained in the Agreement along with the grants of parking andaccess. Here the necessary elements for an easement are present and one must look to the intention of the parties. Imperial Oil is anexample of a circumstance where the court found that the agreement in that case supported only a license.

Although not necessarilydeterminative of intention it cannot be ignored that this Agreement expressly uses words of grant, perpetuity, non-interference andcovenants running with the land with the ability to place caveats protecting such interests.

Drafting that carefully separated parcels andcreated rights as between and among the Allarco parcels, and each of them respectively with the Bay and its parcel is particularly telling.That approach would be entirely unnecessary if the objective was simply to create a commercial arrangement between Allarco Group Ltdand the Bay. [18] With the changes in ownership over time there is no doubt that the enforcement of the personal covenants contained in theAgreement as a practical matter are no longer functional and cannot be enforced directly by Shelbra or Peter Pond against the other.

Thisdoes not preclude the enforcement of parking and access covenants which run with the land (Spartan Developments Ltd v 206559Developments Ltd, 2001 ABQB 926 aff’d 2004 ABCA 12) as against subsequent owners. Despite the court not enforcing all covenants itdoes not render otherwise enforceable covenants unenforceable (Ruptash v Zawick, (SCC), [1956] SCR 347. Conclusion [19] This is an application by Shelbra requiring the Respondent Peter Pond to show cause why the Caveat should not bedischarged pursuant to s 141 of the Land Titles Act.

In Ulysses Development Corp. v Yosemite District Holdings, 2010 ABCA 275: “In Main v Jeerh, 2006 ABCA 138, . . . this court determined that when challenged, the burden of proof is on the caveator to show whythe caveat ought not to be discharged. More specifically, the caveator must show a prima facie claim, that is to say that there is a bonafide question to be tried. Failing that, the caveat will be discharged. [20] Shelbra notes that Peter Pond has provided no evidence and tendered no alternative

interpretation to the Agreement, andoffered no specific response to the challenge to the caveat itself. Under the circumstances, the issue is whether or not the underlyingAgreement has been terminated at the instance of Shelbra or alternatively, the Agreement does not contain covenants which run with theland and therefore does not bind subsequent owners.

[ 21 ] The Caveat with the Agreement attached is in evidence. A factual background is provided in the affidavit of Shelbra’s representative along with the recitals to the Agreement that were expressly incorporated. For purposes of ascertaining the intention of the parties to the Agreement, it must be viewed on an objective basis with due regard to the entire contract. The materials required to determine the issues are before me. [ 22 ] I concluded above that Shelbra is unable to unilaterally withdraw from the Agreement.

Although I need only find a prima facie claim, I have also concluded that the intention of the parties to the Agreement was to create parking and access easements running with the land. Accordingly, the application to discharge the Caveat is dismissed. Peter Pond shall have its costs of this application. Dated at the City of Edmonton, Alberta this 1 st day of December, 2015. L. A. Smart M.C.C.Q.B.A. Appearances: Jonathan McCully Sharek Logan & Van ZLeenan LLP for the Applicant Bryan G. West Sean S. Smith McCarthy Tetrault LLP for the Respondent