A St Albert Trail Liquor Cellar Ltd v, 2016 ABQB 318

Court of Queen ’ s Bench of Alberta Citation: A St Albert Trail Liquor Cellar Ltd v 1105849 Alberta Ltd, 2016 ABQB 318 Date: 20160608 Docket: 1503 07471 Registry: Edmonton Between: A St. Alberta Trail Liquor Cellar Ltd. Plaintiff - and - 1105849 Alberta Ltd. Defendant _______________________________________________________ Reasons for Judgment of the W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] These are cross applications about the payment of interest. The Real Estate Purchase Contract [ 2 ] The Real Estate Purchase Contract provided:

The “New Mortgage” will have monthly payments as set out in Appendix A (not) including taxes, interest not greater than the rate of 7% per annum calculated half-yearly not in advance , for a term of 8 years, amortized over not more than 8 years. (emphasis added) [ 3 ] The Appendix A, which was drafted by the Respondent (cross Applicant) provided: Appendix A YEAR DATE OF FIRST PAYMENT PRINCIPAL AMOUNT NUMBER OF PAYMENTS AND PAYMENT AMOUNT INTEREST ACCRUED 1 Feb 1, 2008 $1 , 700 , 000 . 00 12 Payments at $25 , 000.00 per month From January 31 , 2009-$119 , 000.00 2 Feb 1, 2009 $1,400,00 0 . 00 12 Payment s at $25 , 000.00 per month From January3 l , 2010 - $98,000.00 3 Feb 1, 2010 $1 ,1 00 , 000.00 12 Payments at $20,000.00 per month From January 31, 2011 - $77 , 000.00 4 Feb 1 , 2011 $860 , 000.00 12 Payments at $20,000.00 per month From January 31, 2012 - $60,200.00 5 Feb 1, 2012 $620,000 . 00 12 Payments at $1 5 , 000 . 00 per month From January 31 , 2013 - $43 , 400.00 6 Feb 1 , 2013 $440, 000 . 00 12 Payments at $15 , 000.00 per month From January 31 , 2014 - $30 , 800.00 7 Feb 1 , 2014 $260 , 000 . 00 12 Paymen t s of $11,000.00 per month From January 3 1 , 2015 - $18,200 . 00 8 Feb 1 , 2015 $128 , 000 . 00 12 Payment s at $10 , 666.66 per month From January 31, 2016 - $8 , 980 . 00 [ 4 ] In plain words, this is interest at 7% per annum ‘calculated annually but in advance’.

The payments are blended. This mode of calculation does not give credit for the declining balance. The words in the contract are not consistent with the Schedule. The Mortgage [ 5 ] The mortgage provided: Repayment The Mortgagor will pay to the Mortgagee at the above address, or such other place as the Mortgagee may designate from time to time, the Principal Sum, with interest thereon at the rate of Seven (7%) per centum per annum calculated monthly and payable monthly as well after as before maturity, and both before and after any default and judgment until paid, as follows:

a) Interest at the said rate on the amounts from time to time advanced, computed from the respective dates of such advances, shall become due and be paid on the 18 th day of January, 2008 (the “date for adjustment of interest”).

b) See

Schedule “B”.

c) All interest on becoming overdue shall be forthwith treated (as to payment of interest thereon) as part of the Principal Sum and shall bear compound interest at the rate aforesaid as well after as before maturity of this mortgage and both before and after default and judgment, and all such interest and compound interest shall be a charge on the mortgaged premises. (emphasis added) [ 6 ]

Schedule B was appended to the Mortgage:

Schedule B YEAR DATE OF FIRST PAYMENT PRINCIPAL AMOUNT NUMBER OF PAYMENTS AND PAYMENT AMOUNT INTEREST ACCRUED 1 Feb 18, 2008 $1 , 700 , 000 . 00 12 Payments at $25 , 000.00 per month From January 31 , 2009-$119 , 000.00

2 Feb 18, 2009 $1,400,000.0012 Payments at $25,000.00per month From January3 l , 2010 - $98,000.003 Feb 18, 2010 $1,000,000.0012 Payments at $20,000.00per month From January 31, 2011 -$77,000.004 Feb 18, 2011 $860,000.0012 Payments at $20,000.00per month From January 31, 2012 -$60,200.005 Feb 18, 2012 $620,000.0012 Payments at $15,000.00per month From January 31, 2013 -$43,400.006 Feb 18, 2013 $440,000.0012 Payments at $15,000.00per month From January 31, 2014 -$30,800.007 Feb 18, 2014 $260,000.0012 Payments of $11,000.00per month From January 31, 2015 -$18,200.008 Feb 18, 2015 $128,000.0012 Payments at $10,658.66per month From January 31, 2016 -$8,980.00 [7]

Schedule B is the same as

Schedule A (above) except that

Schedule B adjusts the annual date of the first payment (fromFebruary 1 to February 18) and the amount of the monthly payments in the final year. It too is inconsistent with the wording of themortgage, which indicates that interest will be calculated monthly. [8] Paragraph 1 of the mortgage says interest would be calculated monthly, payable monthly. This would give credit for thedeclining balance from blended payments. There was one advance.

Schedule B (like

Schedule A, before it) represents interest calculatedannually, in advance, payable monthly. [9] The Respondent ‘recognized that there was an error in the payment schedule’ in December 2012. After that, some of thepayments were made into trust. Otherwise, all of the payments have been made. [10] The options presented by these conflicting terms appear to be as follows: 1. Declare that interest is owing in accordance with the calculation in the schedules, which would mean that the Applicant is entitledto retain the funds currently held in trust. 2. To acknowledge the "error" in the

schedule and calculate interest over the course of the mortgage at the rate specified in paragraph2 of the Agreement for Sale. Counsel for the Respondent indicates that this would mean a reduction of the total in the

schedule by$63,972.00. In other words, there would have been an overpayment to date of this amount and the Applicant would have to return thefunds held in trust plus a little more. 3. Calculate interest in accordance with the wording of the repayment terms in the mortgage. 4. Find that there was no meeting of the minds with respect to interest and award interest on the bases of

section 3 of the Interest Act,RSC 1985, c 1-15 at the rate of 5% simple interest. This would mean that the Respondent would have over-paid in the amount of$208,656.00. List of Authorities 1. Interest Act , RSC 1985, c I-15, s 3; 2. Ron Ghitter Property Consultants Ltd v Beaver Lumber Co,.2003 ABCA 221, 2003; 3. Royal Bank v Larry Creighton Professional Corp, 1989 ABCA 53 , 95 AR 40 1989 CarswellAlta 23 (CA). 4. LaChance v Transwest Financial Services Corp, 2008 ABQB 402 , 2008ABQB 402, 2008 CarswellAlta; 5. Sattva Capital Corporation v Creston Moly Corp, 2014 SCC 53; 6.

Montreal Trust Co. of Canada v Birmingham Lodge Ltd., (ONCA); 7. Shafron v KRG Insurance Brokers (Western)Inc., 2009 SCC 6 8. Performance Industries Ltd v Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19 , 2002 SCC19. Analysis [11] This is a classic case when extrinsic or parol evidence would be useful to chose between the conflicting meanings set outabove: Terwillegar Towne Residents Association v Brookfield Residential (Alberta) LP, 2015 ABQB 14 at para. 8 and following.

Tofind that there was no ‘meeting of the minds’ and that simple interest was payable at 5% pursuant to the Interest Act would represent awindfall. It is not attractive equitably, as it was the Cross-Applicant/Respondent who drafted the schedules.

[ 12 ] There are some other equitable possibilities based on mistake, rectification, unjust enrichment or restitution. [ 13 ] The Respondent tendered the following evidence: 5. With respect to the Agreement for Sale, it was my intention, on behalf of Ace Auto Sales Inc., that the interest rate would be 7% per annum. 6. With respect to the Mortgage, it was my intention, on behalf of the Respondent, that the interest rate of the mortgage would be 7% per annum. 7. The agreed-upon interest rate of 7% was incorporated as a term of both the Mortgage and the Agreement for Sale. 8. The payment

schedule in Appendix A of the Agreement for Sale was drafted hastily. Due to a calculation error, the interest rates in the payment

schedule exceeded 7%. This calculation error was similarly reproduced in

Schedule B of the Mortgage. 9. I believe that it was the intention of Mr. Braithwaite, on behalf of both 628442 Alberta Ltd. and the Applicant, that the interest rate in the mortgage would be 7% per annum, and that this would govern the required payments. 10. To the extent that the payment

schedule in Appendix A of the Agreement of Sale requires a higher interest rate than the 7% expressed in the Mortgage and Agreement for Sale, the payment

schedule is inconsistent with the intention of 628442 Alberta Ltd. or Ace Auto Sales Inc. at the time these documents were executed by myself and Mr. Braithwaite. 11. On or about December 17, 2012, I recognized that there was an error in the payment

schedule as it did not reflect our contracted interest rate of 7%, and I advised the Applicant of the same. [ 14 ] The difficulty is that this evidence does not really put us any further ahead because interest at 7% per annum can be calculated in a number of ways. There is no dispute about the rate. The main question is whether it was to be calculated in advance or not.

The evidence is silent on this point. [ 15 ] In my view, the only thing certain or consistent about these agreements was that the parties agreed to pay interest in accordance with the schedules; not only once but twice; which is interest at 7% per annum calculated annually in advance and payable monthly. Disposition [ 16 ] The application is allowed and the funds in trust are to be paid to the Applicant. Heard on the 11 th day of April, 2016. Dated at the City of Edmonton, Alberta this 08 th day of June, 2016. W. S. Schlosser M.C.Q.B.A.

Appearances: Stuart Weatherill Emery Jamieson LLP for the Applicant Marco Poretti

Reynolds Mirth Richards & Farmer LLp for the Respondent