Haji Holdings Inc v, 2016 ABQB 233

Court of Queen ’ s Bench of Alberta Citation: Haji Holdings Inc v 1194038 Alberta Ltd, 2016 ABQB 233 Date: 20160421 Docket: 1303 09594 Registry: Edmonton Between: Haji Holdings Inc. Plaintiff - and - 1194038 Alberta Ltd. Defendant _______________________________________________________ Reasons for Judgment of L. A. Smart , Master in Chambers _______________________________________________________ Introduction [ 1 ] Haji Holdings Inc (Haji) seeks

Summary Judgment on a debt owed by 1194038 Alberta Ltd (119) being alleged unpaid arrears under a lease (including rent, taxes, interest, and legal fees). A commercial building (the Property) owned by Haji located in Edmonton was occupied by a business known as West End Rock Shop for a period of 5 years commencing June, 2008.

Background [ 2 ] In February 2008, Al Dobish (Dobish) contacted Haji to propose a purchase of the Property. Subsequently in May, Dobish then proposed that the purchase of the Property take the form of a lease with an option to purchase. Alim Somji, a realtor acting on behalf of Haji, entered into negotiations and discussion with Mr. Dobish who was assisted by Mark McCann also a realtor. A lease and option to purchase agreement was prepared between Haji and 119 and forwarded to McCann and Dobish.

Revisions were made and in early June, Somji and Dobish met and made minor handwritten changes to that form of lease and option to purchase (Lease). Dobish subsequently signed the signature pages on the Lease on behalf of 119, initialed the pages that had handwritten amendments and faxed those pages to Somji. Shortly thereafter West End Rock Shop took possession of the Property. [ 3 ] Although Haji states that it signed the Lease, no copy of a fully executed Lease has been located. The Lease sets out the legal description of the lands on which the building is located but does not contain a

Schedule “A” setting out the boundaries and location of the Building which has a bearing on additional rent payable for taxes. 119 only occupied a portion of the building and allegedly the other portion had numerous issues making some of it unusable. The Lease provided that the premises were to be used for conducting the business of a music and instrument sales store although it contemplated and expressly permitted a sublease to another entity to use the remaining portion of the building for carrying on a business related to laser adventure games and similar activities.

The West End Rock Shop is an operating name of Trespass Music Ltd, a company also owned by Dobish. Rental cheques at the outset were tendered by Trespass for rent of the premises although during the course of the tenancy 119 tendered over 20 cheques in varying amounts for payment of rent and arrears.

In addition, Haji corresponded with the City of Edmonton advising that the West End Rock Shop was its tenant and that they were authorized to enter into an installment arrangement for payment of property taxes. [ 4 ] In a November 2007 Haji had entered into a Real Estate Purchase Contract with Ridge Development Corporation. That agreement was protected by a caveat registered on March 5, 2008. A certificate of lis pendens in relation to that agreement was registered on August 5, 2008.

By correspondence dated February 11 th , 2009 Haji’s legal counsel corresponded with 119 describing the circumstances and obtained 119’s agreement by endorsement on that letter to permit Haji to propose to Ridge that the sale close; that 119 would not register any caveat on the title until after Haji’s application to discharge the caveat and the lis pendens was resolved; and if Ridge was successful that the tenancy would be terminated and Haji would pay 119 $150,000 plus back taxes.

Ultimately this was achieved in the December, 2009 and until then Haji had not been in a position to deliver title pursuant to the Option to Purchase contained in the Lease. Discussion [ 5 ] It is 119’s position that the foregoing circumstances point to there never being an agreement on the essential terms of the Lease.

Alternatively, the Lease had been frustrated or terminated because it contemplated the second tenant which 119 was unable to secure; Haji was not in a position to deliver on the option to purchase; and the building or portions thereof were unfit for occupation. [ 6 ] On questioning Dobush acknowledged that the obligations under the Lease were set out in the Lease document as amended by the hand written changes and signature page returned by fax to Somji. He also acknowledged that when he approached Haji he held out that he was acting on behalf of 119.

At no time did he indicate he was acting on any other party’s behalf. All documents exchanged during negotiations displayed 119 as tenant.

He executed the February 11, 2009 letter on behalf of 119; he emailed Haji seeking new arrangements for 119 in August, 2012; and in February, 2013 he purported on behalf of 119 to terminate the Lease. [ 7 ] In addition, Dobish acknowledged that the condition of the property did not prevent occupation or prevent conducting business on the premises. 119 did not attempt to exercise the option, and furthermore, it was acknowledged that 119 was never in the financial position to complete a purchase if it had been.

The letter of February 11, 2009 effectively acknowledged the existence of the option but also by agreement dealt with the predicament Haji found itself in arising from the earlier offer made by Ridge.

Summary Judgment [ 8 ] The law on

summary judgment was recently described by our Court of Appeal in Condominium Corporation No. 0321365 v Cuthbert, 2016 ABCA 46 as follows: A. The Law on

Summary Judgment [25] Hryniak identified a cultural shift. The Supreme Court held that

summary judgment ought to be granted whenever there i s no genuine issue requiring trial: " when the judge is able to reach a fair and just determination on the merits on a motion for

summary judgment ": para 49. [26] Since Hryniak , thi s Court has confirmed the test for

summary judgment in A lb erta: Windsor v Canadian Pacific Railway Ltd ., 2014 ABCA 108 at para 13 , 572 AR 317 ; Sherwood Steel Ltd v Odyssey Construction Inc , 2014 ABCA 320 at paras 7-8 ; WP v Alberta , 2014 ABCA 404 at para 26 [ WP]; Ostrowercha at paras 9-11 ; Whitecourt at para 9. [27] When deciding a

summary judgment application, there are two considerations. With respect to the process , the court must ask, "whether examination of the existing record can l ead to an adjudication and disposition that is fair and just to both parties ": Whitecourt at para 9; see also Ostrowercha at para 9; WP at para 26 ; Windsor at para 16 .

With respect to the substantive issues, the court must ask “w hether there is any issue of merit that genuinely requires a trial or, conversely, whether the claim or defense is so compelling that the lik elihood it will succeed is very high such that it should be determined summarily”: Whitecourt at para 9; see also Ostrowercha at para 10. An issue of merit is established when the respondent’s (non-moving party) case discloses a “g enuine issue of a potentially decisive material fact in the case which cannot be summari l y found against the non-moving party on the record revealed by the ‘fa ir and just

[summary] process”’: Ostrowercha at para 11. [28]

Summary judgment i s not possible if opposing parties’ affidavits and evidence conflict on material facts because a chambers judge cannot weigh evidence or credibi lit y on a

summary judgment application: Sherwood Steel at paras 7 - 8; Whitecourt at paras 31, 40-41. [29] Complex le gal questions may be sufficient to deny

summary judgment. A fu ll trial is required when the

summary record cannot be used to decide l egal i ss ues that are unsettled , complex or intertwined with facts: Templanza v Wolfman , 2016 ABCA 1 at para 20 ; Amack at paras 36-37. A trial i s also required when an applications judge is not satisfied she can fairly resolve the dispute on the record before her: Templanza at para 20 . Conclusion [ 9 ] In my view there are no material facts in dispute that preclude me from fairly resolving most of this dispute on the record before me. The Lease was clearly with 119.

The building on the Lands was occupied and rent paid based on the base rental amounts and expenses as provided for in the Lease. Dobush on behalf of 119 on repeated occasions acknowledged its obligations in that regard. Although there is no fully executed copy of the Lease in evidence, I am also satisfied that the Option to Purchase was effectively granted and binding upon Haji. [ 10 ] I do agree however that any claim for payment of property taxes is uncertain and likely unenforceable as the amount is incapable of calculation without reference to

Schedule A of the Lease. Although this supports the argument the Lease is incomplete and unenforceable, resort may be had to para 13.12 of the Lease which effectively permits severance of unenforceable provisions. [ 11 ] Haji shall have judgment for the rental arrears due under the Lease with the exception of any amounts for property taxes. Although attractive, I resist following Pyrrha Design Inc v Plum and Posey Inc, 2016 ABCA 12 and dismiss that part of claim but this was never raised in any manner in the application so that would be improper.

Haji shall have costs on a solicitor and own client basis in accordance with the terms of the Lease. Dated at the City of Edmonton, Alberta this 21 st day of April, 2016. L. A. Smart M.C.C.Q.B.A. Appearances: Beamer Comfort Bennett Jones LLP for the Plaintiff David Parkatti McAllister LLP for the Defendant