MD of Opportunity No 17 v Gun-Shy Investments Inc, 2016 ABQB 244

Court of Queen ’ s Bench of Alberta Citation: MD of Opportunity No 17 v Gun-Shy Investments Inc, 2016 ABQB 244 Date: 20160429 Docket: 1503 04497 Registry: Edmonton Between: M.D. of Opportunity No. 17 Applicant - and - Gun-Shy Investments Inc. Respondent _______________________________________________________ Reasons for Judgment of W. S. Schlosser , Master in Chambers _______________________________________________________ [ 1 ] This is an application by the Municipal District of Opportunity No. 17 for the return of lands that were to be developed by Gun-Shy Investments Inc.

There is a cross application seeking dismissal of the claim, ‘relief from forfeiture’, and extension of contractual deadlines. [ 2 ] The land that was to be developed is a five acre parcel of vacant serviced land in Wabasca. Opportunity sold it to Gun-Shy on the condition that it be developed in accordance with a detailed agreement. The land was sold subject to an ‘option to repurchase’ in favour of Opportunity in the event that Gun-Shy did not meet the various contractual deadlines or conditions. [ 3 ] The Agreement permitted Opportunity to grant extensions at their discretion (clause 17 (a)).

Otherwise, time was expressed to be of the essence (clause 29). The Agreement further provided: 37. Neither the granting of any time or other indulgence to any party hereto nor the failure of any party to insist upon the strict performance of any covenant, term, or condition of this Agreement or to enforce its rights hereunder shall be construed as a waiver of its rights or remedies hereunder and the same shall continue in full force and effect. [ 4 ]

Section 17 of the Agreement dealt with the timing of the various stages of development.

Section 17 (

a) provided:

17. The Purchaser acknowledges that as part of the consideration for the Vendor’s agreement to sell the Lands to the Purchaser, the Purchaser shall: (

a) commence and complete the following within one (1) year of the Closing Date: (

i) apply and obtain all appropriate development and building permits; (ii) obtain registration of the Bare Land Condominium Plan; (iii) obtain all approvals for the installation of the Services and commence the installation of the services for the entire of the Lands; and (iv) the completion of all work contemplated for Phase 1.

The Vendor may grant an extension of the above deadline where it is satisfied that the Purchaser submitted complete applications in time to permit approval in the normal course prior to the above deadline and where the required approval has not yet been obtained as a result of a third party considering the application and that the failure to obtain approval is not through any fault or failure on the part of the Purchaser; The entire project was to be completed within seven years of the closing date. [ 5 ] The closing date was June 28, 2013. The land was transferred pursuant to the agreement on July 9, 2013.

Opportunity registered its Caveat, protecting the right to repurchase, on the same day. [ 6 ] Conditional approval of the subdivision was granted April 22, 2014. Then, a plan was submitted June 24, 2014 that showed seven lots, not the eight required by the agreement. Units 1 and 8 were shown as a single lot. [ 7 ] Section 17(1)(a)(i)-(iv) required a number of things to be done by the anniversary of the closing date. But they were not done. The proposed changes to the project made by the developer were a large part of the problem.

A subdivision plan had not been registered, though conditional approval had been granted. Civil Engineering for the site had not been completed. The development had approval from the utilities companies for the installation of water and tie-in services. Deep services were waiting approval. Site leveling had not been commenced. [ 8 ] On June 30, 2014, just over a year after closing, Gun-Shy requested changes to the agreement. It also wanted the agreement to be assigned to another entity. [ 9 ] In July, 2014, Opportunity advised Gun-Shy that there were two questions to be put before council:

(1) Whether the Development Agreement should be rescinded and the option to repurchase exercised or,

(2) Whether Gun-Shy’s request for contract extensions and a change of terms should be approved. [ 10 ] Council did not choose the second option. Gun-Shy was advised of this by letter June 25, 2014. Then, on August 7, 2014, Opportunity gave notice to Gun-Shy that it would be exercising its right to repurchase the lands. That is what precipitated these applications. [ 11 ] There were four issues that came up in the course of argument, which will be dealt with in turn. Authorities Cited: 1. Municipal Government Act , RSA 2000, c M-26, s 536, s 537, s 539 2. Bowlen v Digger Excavating

(1983) Ltd , 2001 ABCA 214 , 286 AR 291 3. Windsor v Canadian Pacific Railway Ltd , 2014 ABCA 108 4. Transamerica Life Canada v Oakwood Associates Advisory Group Ltd , 2015 ABQB 600 5. Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc, 2015 ABCA 252 6. Vanden Brink v Vansickle , 2015 ABCA 291 7. Styles v Alberta Investment Management Corporation , 2015 ABQB 621 8. Athabasca Chipewyan First Nation v Alberta (Minister of Energy), 2011 ABCA 29 9. Okotoks (Town) v Foothills (Minicpipal District) No 31, 2013 ABCA 222 10. F Prins Potatoes Ltd v Agriculture Financial Services Corp , 2015 ABQB 335 By the Court: 11. 1214777 Alta Ltd v 480955 Alberta Ltd , 2014 ABQB 301

12. Sherwood Steel Ltd v Odyssey Construction Inc, 2014 ABCA 320 13. Judicature Act, RSA 2000, c J-10

section 10 1. Procedure [12] This application was brought by an Originating Application. The cross application was made in those proceedings. It mightjust as well have been brought by way of Statement of Claim and with the relief sought by the Respondent set out in a Defence or aCounterclaim but that would have been a much longer, less direct route. [13] Originating applications are intended for matters where no central facts are in dispute. In that respect it mirrors the

SummaryJudgment procedure. In circumstances where another commencing document would be the more appropriate choice, the Court has powerto convert the procedure. [14] In this case, the Respondent says that there are facts in dispute which should necessitate a conversion of the procedure andultimately a trial.

However, there are various tools available to the Court to deal with factual issues in this context (eg 1214777 Alta Ltdat para 17); one of which is to accept the truth of the facts raised by the Respondent and see whether the matter can be determined onthat basis: Sherwood Steel at paras 7 and 8. [15] There is another important consideration linked to the choice of procedure. [16] If this were a

Summary Judgment application in a claim started by way of a Statement of Claim, the standard for success isquite high; not as high as the pre-Hryniak or pre-new-Rules standard; which approached the criminal standard, but in most cases it ishigher than the balance of probabilities. Some cases have put the

Summary Judgement figure at 80%, but what it really comes down to isa measure of the confidence the Court has in being able to dispose the matter on the factual record before the Court. In a case brought byOriginating Application, by contrast, the threshold is 51%. [17] An Originating Application, or, for that matter, a Rule 7.1 application, is decided on the balance of probabilities. I amconfident that I am able to determine this matter on the evidence before the Court, on this standard.

As I see it, it is not a question of thecentral facts being in dispute but rather a disagreement about what should be drawn from those facts, and the legal consequences of thosefacts. Converting the procedure or directions a trial of an issue would be unnecessary. 2. The Duty of Good Faith [18] The Respondent claims that the Applicant has breached the duty of good faith recently set out in the case of Bhasin vHrynew, 2014 SCC 71 , [2014] 3 SCR 494. However, the only “bad faith” evident here is that the Applicant is insisting on legalrights accorded to it by a non-ambiguous contract.

The duty of good faith does not apply to prevent a party to a contract from insisting onits rights so long as there is no element of dishonesty, no ulterior motives, or no basis for finding that enforcement of the agreementwould be unconscionable. There is no such evidence here. In Bowlen v Digger Excavations

(1983) Ltd the Alberta Court of Appeal said: The party which has fully performed its obligations under a contract is entitled to insist on performance by the other party. Certainty incontracts, especially terms relating to the closing date of contracts for the sale of land is of great commercial importance, and the Courtcannot insert itself into the contracting process by extending time for performance absent evidence of relevant misconduct by theinnocent party or waiver... 3. Relief from Forfeiture/Extension of Contractual Deadlines [19] Relief from forfeiture is an equitable remedy provided for in

section 10 of the Judicature Act. However, the circumstances donot warrant granting relief from forfeiture or further extension of the deadlines in the contract. That would essentially be to rewrite theagreement between the parties and allow Gun-Shy to perform the agreement on its own terms. The Respondent came up with a differentplan than the one agreed to. It was not accepted by the Applicant. Whether or not the Respondent ran into financial difficulty, Gun-Shycould not, or would not perform as it had agreed. 4.

Municipal Government Act Deadlines [20] In the circumstances it is not necessary to decide whether sections 536, 537 or 539 of the Municipal Government Act, and thetime limits imposed there, creates a time-bar for the Respondents’ cross application. Disposition [21] Gun-Shy Investments Inc. shall, within 14 days of the date of the formal Order, provide the Applicant with a registerabletransfer of the lands and a discharge of all non-permitted encumbrances registered against the land, including the Caveat registered asInstrument 1521648010 in trust for the payment of the sum of $112,500.

The Applicant is entitled to costs, which may be spoken to.

Dated at the City of Edmonton, Alberta this 29 th day of April, 2016. W. S. Schlosser M.C.C.Q.B.A. Appearances: Kenneth Bailey, Q.C. Parlee McLaws LLP for the Applicant Joseph Kueber, Q.C. Bryan & Company LLP for the Respondent