Meyer v Villa Bahia II Developments Ltd, 2017 ABQB 105

Court of Queen’s Bench of Alberta Citation: Meyer v Villa Bahia II Developments Ltd, 2017 ABQB 105 Date: 20170214 Docket: 0903 10259 Registry: Edmonton Between: Richard Meyer Plaintiff/Defendant by Counterclaim - and - Villa Bahia II Developments Ltd. and Sonora Storage SA DE CV Defendants/Plaintiffs by Counterclaim _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Douglas R.

Mah _______________________________________________________ Introduction [ 1 ] The plaintiff Richard Meyer (Meyer) seeks repayment of the sum of $230,300 USD paid as a “reservation fee” in March 2007 to the defendant Villa Bahia II Developments Ltd. (Villa Bahia) in respect of a condominium unit that is part of the Villa Bahia development in San Carlos, Sonora County, Mexico. The transaction was not completed. Meyer insists there was never an agreement to do so.

Villa Bahia, on the other hand, says that Meyer is contractually obligated to complete the transaction and seeks to compel him, by way of counterclaim, to pay the balance of the purchase price ($48,700 USD), upon which Villa Bahia will convey title to Unit 4D to Meyer. [ 2 ] The Court is called upon to consider and interpret the provisions of a reservation agreement, as well as the surrounding conduct of the parties (including the circumstances of the signing of a subsequent purchase promise agreement), in order to determine the respective rights and obligations of the parties arising from the incomplete transaction.

[ 3 ] This dispute was compounded by two additional factors. The first was the use of English translations of Mexican documents, which left something to be desired in terms of clarity. The second was a rather laissez-faire attitude and lack of urgency toward the transaction exhibited by both parties over a course of more than one and a half years. The latter tended to make the former even more obscure. [ 4 ] As will be seen, this is not a case of lack of consensus ad idem . Rather, it is a case of buyer’s remorse. For reasons that follow, I dismiss Meyer’s action and allow Villa Bahia’s counterclaim.

Factual Background [ 5 ] Counsel presented an agreed statement of facts at the trial, supplemented by the oral evidence of the plaintiff Meyer and, on behalf of the Defendant, that of Mike Yakemchuk (Yakemchuk), the president of Villa Bahia. No other witnesses were called. [ 6 ] Meyer is a retired Edmonton businessman. For 21 years, he was a principal in DenRay Rathole Drilling Ltd, an oilfield company. He sold his interest in 2006 for $3.8 million in cash plus another $960,000 worth of shares in the successor company.

Aside from owning a principal residence, between 1992 and 2007, Meyer had purchased 9.5 acres of land near Onoway (another 90 acres being acquired through inheritance), a house in Canmore and two condominium properties also in Canmore, the latter three properties as investments. He has been active in the stock market since 1980 and at one time had up to $500,000 invested. He allowed that by June 1, 2009 his net worth was in the area of $8.5 million. He professes to no more than completion of Grade 11 and part of Grade 12.

He retired in 2006 at age 58. [ 7 ] Villa Bahia is an Alberta Corporation which acquired 9 out of 17 units in Phase II of the Villa Bahia development. Sonora Storage SA DE CV was the Mexican developer of the project. It was noted in default in these proceedings and did not take

part in the trial. [ 8 ] In June 2007, Meyer met an individual named Lloyd Culham (Culham) at a golf tournament. During conversation, Meyer learned that Culham was promoting a condo development in San Carlos, Mexico, known as Villa Bahia, Phase II. Meyer expressed an interest in possible ownership of one of the units. [ 9 ] While Culham was not an employee of Villa Bahia, he was involved in finding potential purchasers for the condo units in Phase II. On June 20, 2007 Culham met with Meyer at his farm in Onoway to discuss Meyer’s possible purchase of such a unit.

On June 21, 2007 Culham presented Meyer with a document called a “reservation agreement” in which it is stated that in exchange for payment of the sum of $230,300 USD, Villa Bahia would reserve Unit 4D of Phase II in Meyer’s name. The reservation agreement spoke of an ultimate purchase price for Unit 4D of $329,000 USD, but there were discussions about reducing the purchase price to $279,750 USD. Nonetheless, Meyer executed the reservation agreement at the original price and provided a payment to Culham in the sum of $230,300 USD. [ 10 ] A

section on the top part of the document contains purchaser name and contact information, and amounts stipulated as reservation fee and ultimate price. Below that, the entirety of the text of the reservation agreement reads as follows: In consideration of the foregoing payment of the Reservation Fee, the Seller agrees to reserve condominium no. 4D in Villa Bahia II Condominiums in San Carlos, Sonora, Mexico for a period of 15 days. No interest shall be payable on the Reservation Fee.

The future Purchaser/Future Bank Trust Beneficiary shall be provided 15 days’ notice and on or before the expiry of the 15 day notice, the Future Purchaser/Future Bank Trust Beneficiary shall decide whether or not to execute the Agreement for Purchase and Sale of the Condominium. The Reservation Fee shall be applied as a deposit or down payment on the Agreement for Purchase and Sale.

In the event the Future Purchaser/Future Bank Trust Beneficiary shall not enter into the Agreement for Purchase and Sale, the Reservation Fee shall be refunded to the Future Purchaser/Future Bank Trust Beneficiary without interest or deduction.

Financial requirements pursuant to the Agreement for Purchase and Sale shall be: a) 35% upon execution of the Agreement for Purchase and Sale; b) 35% upon start of construction (occurred June 1, 2007); c) 20% upon ¾ completion of the condominium unit (as determined by the Seller/Builder); d) 10% final payment upon delivery of keys to the condominium unit. [ 11 ] Below the date and Meyer’s signature, Meyer added in his own handwriting “Dependent on viewing contract before 15 days” and signed again. [ 12 ] Meyer testified that his belief at the time, based on representations made by Culham, was that the reservation fee was fully refundable unless he executed an agreement for purchase and sale at some undetermined point later in time.

He also made the assumption that the entirety of his reservation fee of $230,300 USD was being held in trust. [ 13 ] The cheque that Meyer provided states in the memo

section “Purchase 70 % of 4D condo” which corresponds to subparagraphs (

a) and (

b) in the payment

schedule with a purchase price of $329,000. Culham called Meyer a few days later to advise that the shareholders of Villa Bahia had agreed to the reduced purchase price of $279,750 USD, making the amount paid over in the area of 82-83% of the purchase price. It is common ground, for the purposes of these proceedings, that the purchase price agreed upon, is the lower amount. Nonetheless, the purchase price in the reservation agreement was not changed, nor was there an attempt to execute a new reservation agreement with the correct price.

The additional condition that Meyer had handwritten into the reservation agreement was not fulfilled. Yakemchuk stated in evidence that he provided a boilerplate purchase agreement to Culham to convey to Meyer, but Meyer

says he didn’t receive it, nor did he ever ask for that condition to be fulfilled. [ 14 ] Shortly after June 21, 2007 Villa Bahia provided and Meyer received an invoice dated June 20, 2007 showing a purchase price for Unit 4D of $279,750, an amount paid of $230,300 and a balance owing of $49,450, all USD. [ 15 ] Yakemchuk confirmed under cross-examination that he had no direct dealings with Meyer in 2007. He doesn’t know for sure what Culham might have told Meyer.

He acknowledged that Villa Bahia had never signed the reservation agreement. [ 16 ] On February 5, 2008, Villa Bahia staged a presentation at the Mayfield Inn for purchasers and potential purchasers of Phase II condo units. It was here that Meyer met Yakemchuk for the first time. There was discussion about the progress of the construction but no discussion of how the project was being financed, what had happened to Meyer’s reservation fee or the purpose to which the funds were being used.

Meyer did not request to see nor was there any discussion of the purchase agreement at that time. [ 17 ] In March 2008 a further meeting for purchasers and prospective purchasers was held in a downtown Edmonton office for the purposes of establishing a condo board and to provide a further construction update. Meyer testified that he mentioned to Tom Colquhoun (Colquohon), another representative of Villa Bahia, that he had not seen the purchase agreement yet. He said that Colquhoun seemed surprised and told him he would look into it.

Meyer did not follow up with Colquhoun regarding the purchase agreement and none was ever forthcoming from Colquohon. [ 18 ] The parties did not communicate with one another again for the better part of a year. Sometime shortly before March 1, 2009 Meyer and Yakemchuk had a telephone conversation. Yakemchuk advised that the units were ready for inspection, the purchase agreement was ready for signature and he was expecting the transaction to close. Meyer mentioned that his sister just happened to be in Sonora County on or about March 1 and he wanted her to swing by Unit 4D to have a look.

Yakemchuk agreed and arrangements were made for Meyer’s sister to do just that. [ 19 ] After Meyer was briefed by his sister, he met with Yakemchuk at his office in the Twin Atria building in Edmonton. There is no dispute that Meyer executed three copies of the purchase promise agreement at this meeting. There is, however, some divergence about what happened during the meeting, a subsequent meeting and the aftermath. Meyer’s version [ 20 ] Meyer relates that he arrived at the first meeting without his reading glasses. He confirmed that the required magnification for his reading glasses is 2.75 diopters.

Yakemchuk placed three copies of the purchase promise agreement before him, which Meyer signed on both the cover page and on page 6 for a total of six signatures. Meyer says he doesn’t recall whether the cover page was filled out or not when he signed. He said that he may have signed the copies in blank. He says he didn’t read the agreement before signing. He couldn’t read it without his glasses. Meyer stated he left the meeting without taking a copy. The meeting lasted 5 to 8 minutes. [ 21 ] The next day, Meyer indicates, he was feeling uneasy about what he had done.

He telephoned Yakemchuk and told him he was uncomfortable about signing a document he had not read. He told Yakemchuk that “it was a stupid thing to do.” They met again at Yakemchuk’s Twin Atria office so that Meyer could read the agreement. This time he brought his reading glasses. [ 22 ] He noted that the purchase price was incorrectly stated, on both the cover page and page 3. It had been inserted as the original price of $329,000 USD and not the agreed reduced price of $279,750 USD. Meyer stated (under cross-examination) that the only thing he disagreed with in the agreement that he had signed was the price.

Yakemchuk acknowledged that the price was wrong. He said he would have a new agreement prepared and ripped up two copies of the signed agreement. Meyer took the third copy with him. The second meeting last five minutes. [ 23 ] Meyer relates that when he closely read the copy of the purchase promise agreement that he had in his possession, he became alarmed by what he thought were additional fees that had never been mentioned.

These included responsibility for property taxes and condo fees under the Clause 6 of the agreement and a 1% fee under Clause 9 in the event the purchaser wished to assign the rights under the agreement to someone else. When Yakemchuk called three or four days later to advise that he had a new and corrected agreement ready for signature, Meyer made him aware of his concerns, told Yakemchuk that he was backing out and asked for his money back under the terms of the reservation agreement. [ 24 ] During this conversation, Meyer also advised Yakemchuk that his wife was refusing to go to Mexico.

Meyer and his wife had been travelling since 1975 and he knew she had anxiety issues related to travelling away from home. They had tried to control her anxiety with medication but it hadn’t worked.

Recent media reports about criminal drug activity and violence in Mexico had made her even more nervous about going to Mexico. [ 25 ] Yakemchuk’s reported reaction to the news that Meyer wanted out was to say that he would “take it under advisement”, consult the shareholders and “get back to him.” Five to seven days later, Yakemchuk called to say that the shareholders of Villa Bahia had decided not to give Meyer a refund.

The result was that Meyer’s counsel then issued a demand letter to Villa Bahia dated April 7, 2009, thus kick-starting this litigation. [ 26 ] Under cross-examination, Meyer admitted that he had been aware since at least 2005 of his wife’s anxiety problems during travel. It didn’t matter if they were staying in a five-star hotel. He confirmed that he told Yakemchuk that 95% of the reason he was backing out was because of his wife’s anxiety disorder, 4% was because of the crime generally in Mexico (these first two factors were overlapping) and 1% because of concern regarding extra fees.

Yakemchuk’s version [ 27 ] Yakemchuk does not recall anything at the first meeting about reading glasses. He recounts that Meyer expressed issues with

Unit 4D as reported by his sister, namely that the construction wasn’t complete and the property was dirty. In response, Yakemchuk says he told Meyer that he did not have to pay the balance until he was satisfied, presumably after his own inspection, as to the unit’s condition. In the meantime, he suggested the purchase promise agreement be signed. [ 28 ] Yakemchuk made handwritten insertions in the blank spaces on the cover sheet and elsewhere in the document in Meyer’s presence.

In particular, he inserted Meyer’s new residential address on the cover sheet, although he couldn’t say whether he knew Meyer had moved from Sherwood Park to Edmonton. Meyer then signed three copies of the document, both on the cover page and the signature page. In court, Yakemchuk explained the reason for the three copies. One is given to the purchaser so that the purchaser has an immediate physical copy of what he has signed.

The other two are sent to the vendor for signature and when returned, one fully executed copy is retained and the other provided to the purchaser. [ 29 ] According to Yakemchuk, Meyer took his copy with him that first day. The next day, Meyer called him to say that the purchase price in the signed document was wrong. Yakemchuk agreed that it was and said the agreement needed to be redone. Meyer reattended at the Twin Atria office but it turned out that Yakemchuk had no more copies of the blank agreement and would have to have to send down to Mexico to get more.

Yakemchuk explained in evidence that he preferred to redo the agreements rather than simply cross out the incorrect price and write in the correct price because there wasn’t enough room in the document, which is single-spaced, to do the writing-in. Meyer expressed discomfort with the two incorrect copies being in existence. Yakemchuk stated that, as a gesture of good faith, he would rip up the two physical copies of the incorrect document, and he did.

Meyer decided to hang onto his, although at some point he did cross out his signature in both places. [ 30 ] According to Yakemchuk, Meyer called two or three days after the second meeting at Twin Atria to say that he was having difficulty persuading his wife to go to Mexico. She was concerned about the crime rate. He said he needed another week to “settle her down” but did not indicate that he wasn’t signing. [ 31 ] A week or so later, near the end of March, Meyer called again to tell Yakemchuk that he couldn’t convince his wife to go to Mexico and he wanted out of the transaction.

Yakemchuk says he replied by saying “But we have a deal!” and asked whether he could be of any help in convincing Meyer’s wife. Yakemchuk said that he would take up Meyer’s case with the shareholders. Late in March, Yakemchuk says that Meyer left a voicemail for him confirming that he was “out” and advising that he was referring the matter of the refund to his lawyer. The demand letter of April 9, 2009 then arrived. Continuation of Factual Background [ 32 ] Meyer’s cheque in 2007 was cashed almost immediately and the funds sent to the developer for construction purposes.

Yakemchuk agreed that no notice under the reservation agreement as contemplated in the second paragraph thereof was ever given to Meyer, at least not by him. He can’t speak for Culham, and Culham was not called by either party. [ 33 ] Yakemchuk confirmed that the purchase promise agreement is the “Agreement for Purchase and Sale” referred to in the reservation agreement. He testified that the documents are English translations of Mexican documents prepared originally in Spanish and conceded that they are probably not the best translations.

He further agreed that no copy of the purchase promise agreement as signed by Meyer was retained by Villa Bahia and that no revised agreement with the correct purchase price exists. [ 34 ] It is noted that under Clause 8 of the purchase promise agreement, the vendor’s remedy for breach by the purchaser (including the failure to make timely payment as required under the agreement) is rescission plus a penalty of 5% of the total purchase price, retained from any funds on deposit.

Villa Bahia has not pursued this remedy. [ 35 ] Instead, Villa Bahia by its own counsel’s letter of July 2, 2009, in response to Meyer’s counsel’s demand letter, demanded of Meyer that he conduct the inspection, take possession and pay the closing sum of $49,750 USD. Failure to do so, the letter warned, would result in an action for recovery of the closing amount “plus all interest, costs and damages which may arise.” [ 36 ] It is agreed that Meyer has never completed an inspection of nor taken possession of Unit 4D, nor has the balance of the purchase price nor any further amount ever been paid.

The present counterclaim ensued as a result. [ 37 ] Villa Bahia had not, as at the date of trial, been successful in selling Unit 4D and has incurred service costs in relation to its acquisition and maintenance.

During his evidence, Yakemchuk presented an invoice dated December 31, 2016 made out to the account of Meyer, listing these costs: Condo Fees $ 24,380.39 Municipal Taxes 1,809.54 Power & on-site supervision 549.20 Closing costs 7,768.25 Total $ 34,507.38 USD Plaintiff’s position [ 38 ] On Meyer’s behalf it is essentially argued that he is entitled to the return of his payment and relieved of any further commitments to Villa Bahia because that is precisely what the reservation agreement provides.

In Meyer’s view, the Court need look no further than the reservation agreement, which is plain and unambiguous and contains only four basic terms: (

a) in consideration of

payment of a reservation fee of $230,300 USD, Villa Bahia would reserve Unit 4D for him for a period of 15 days; (

b) Meyer would be given 15 days’ notice to enter into a purchase agreement; (

c) if he does so, the reservation fee would be applied as a deposit; and (

d) if Meyer does not enter into a purchase agreement, the reservation fee is refunded. [ 39 ] Meyer says that no notice was given, and no purchase agreement was ever entered into because the purchase promise agreement that was signed by Meyer contained a mistake as to one of its essential terms (price). Villa Bahia’s two copies were destroyed. Meyer retained a copy (with his signatures scratched out) only for reference. Since neither events (

b) nor (

c) occurred, he is entitled to his refund under (d). [ 40 ] Second, while Villa Bahia pleads rectification of the reservation agreement in its Amended Statement of Defence to align with Villa Bahia’s view as to the true intention of the parties, there is no cogent evidence of any such intention. Villa Bahia contends that the true intention of the parties was that Meyer would have 15 days after signing the reservation agreement to back out, after which he was obliged to enter into a purchase promise agreement and complete the transaction.

Meyer points out that the only extrinsic evidence of intention with regard to the reservation agreement is Meyer’s own evidence of his understanding of the agreement, namely that he was free to withdraw from the transaction with a full refund until the moment he signed a purchase promise agreement. There is no evidence of what Villa Bahia may have intended, since Lloyd Culham was not called to testify and Mike Yakemchuk did not even meet Meyer until well into 2008. [ 41 ] Third, Villa Bahia cannot rely on the purchase promise agreement that Meyer signed in any event because there was no meeting of the minds.

There was a mistake in one of the essential terms. Villa Bahia’s copies were destroyed and Meyer’s signatures were scratched out from his copy. There is no document evidencing the transaction that Villa Bahia is trying to enforce.

Section 4 of the Statute of Frauds prevents the Court from giving effect to the transaction. [ 42 ] Finally, in the alternative, if the Court by some stretch were to recognize the validity of the purchase promise agreement signed by Meyer, then Villa Bahia is restricted to the remedy of rescission and a 5% penalty in accordance with Clause 8. Defendant’s position [ 43 ] Villa Bahia essentially argues that the Court should consider the written documents along with the whole course of dealings between the parties in order to ascertain the terms of the contract between these parties.

According to Villa Bahia, the conduct of the parties gave every indication of an intention on the part of both that Villa Bahia convey Unit 4D to Meyer upon its completion for a purchase price of $279,750 USD. Indeed, says Villa Bahia, the transaction was very nearly memorialized but for the fortuitous circumstance of Yakemchuk writing in the wrong price and then running out of purchase promise agreement forms. Even so, all essential elements of purchase and sale were in place when Meyer left the second meeting at Twin Atria but for the formality of the signed purchase promise agreement.

It was only after Meyer later discovered that his wife was having none of Mexico that he tried to rely on an isolated sentence in the reservation agreement, while ignoring everything else that had transpired, to extract himself from the deal. [ 44 ] With regard to s. 4 of the Statute of Frauds , Villa Bahia asserts that there is a sufficient memorandum evidencing the agreement in accordance with applicable law. [ 45 ] In addition, Villa Bahia says that Meyer actually did get notice under the reservation agreement. No form of notice is prescribed and therefore it could have taken any form.

The 15 days’ notice may have been co-extensive with the 15 day reservation period and triggered by the very signing of the reservation agreement. Alternatively, the notice period could have commenced when Meyer apparently waived the handwritten condition (“Dependent on viewing contract before 15 days”), thus implicitly signaling an intention to proceed. It may have been triggered by the telephone call before March 1, 2009 when Yakemchuk advised Meyer that the purchase promise agreement was ready for signature and there was discussion of Meyer’s sister visiting the unit.

It surely was triggered, says Villa Bahia, when the actual purchase promise agreement was presented to Meyer for signing at the first meeting at Twin Atria. [ 46 ] Moreover, Villa Bahia says that the question of notice is moot because Meyer actually did execute a purchase promise agreement, thus discharging the terms of the reservation agreement. [ 47 ] In Villa Bahia’s estimation, there was overall a meeting of the minds as to the essential terms of the transaction: parties, price and property.

Where there are differences in the evidence between Meyer and Yakemchuk, Villa Bahia urges me to prefer the evidence of Yakemchuk and view the differences as embellishment on Meyer’s

part in an effort to evade contractual responsibility. [ 48 ] Villa Bahia did not pursue the rectification issue in argument. Matters not in controversy Choice of Law [ 49 ] The purchase promise agreement at Clause 14 contains a choice of law provision stipulating that the laws of Sonora, Mexico apply to any interpretive and compliance disputes and that the Courts of Hermosillo or Guaymas, in the State of Sonora, have jurisdiction. Counsel both agreed that Alberta law applies to this case, noting that neither party relies upon nor pled foreign law: see Phillips v Avena , 2006 ABCA 19 at paras 72 & 73 .

Furthermore, there is a dispute about whether the purchase promise agreement signed by Meyer even exists in the legal sense. Accordingly, I have applied the law of Alberta. Villa Bahia’s costs of acquisition and maintenance of Unit 4D

[ 50 ] Just prior to argument, counsel for Villa Bahia sought leave to amend its Amended Counterclaim in order to claim the additional expenses enumerated in paragraph [37] above. I expressed some scepticism as to whether an amendment was necessary given that the relief sought in the Amended Counterclaim included “such further and greater amounts as may be proven at the trial of this action.” I also note that in Villa Bahia’s demand letter to Meyer of July 2, 2009 in which the closing balance was demanded, counsel wrote “ ... we have been instructed to commence an action against Mr.

Meyer for the sum of $49,750.00 USD plus all interest, costs and damages which may arise.” [ 51 ] Nonetheless I heard argument on the application and, based on the “classic test” articulated in Balm v 3512061Canada Ltd , 2003 ABCA 98 at para 43 and the commentary related to Rule 3.65 on page 207 of Fradsham’s Annotated Alberta Rules of Court 2017 , allowed the amendment. [ 52 ] Yakemchuk testified during trial that the costs are proper. In final argument, Meyer’s counsel could provide no reason why the costs are not valid.

Issues [ 53 ] The Court is required to answer this question: Was there a binding agreement between Meyer and Villa Bahia for the purchase and sale of Unit 4D? In doing so, the Court must consider a number of subsidiary issues: (

a) What is the relevance of the conduct of the parties? (

b) Did Villa Bahia comply with the reservation agreement? (

c) What is the effect of s. 4 of the Statute of Frauds on this transaction? (

d) What is the effect of the signed purchase promise agreement? (

e) Is Villa Bahia restricted to the remedy of rescission and a 5% penalty for Meyer’s failure to complete the transaction, per Clause 8 of the purchase promise agreement? Analysis [ 54 ] At the outset I mentioned two factors that contributed to this dispute: the less than precise language of the documents, particularly the reservation agreement, and the lackadaisical attitude of both parties toward the transaction.

I will elaborate. [ 55 ] While it is possible it reads more elegantly in Spanish, the English translation of the reservation agreement presents a number of difficulties: • The reservation period is only 15 days. Nothing is said about what happens after the 15 day period expires and no action is taken by either side. Does this signify the end of the transaction, or not? • The second paragraph of the reservation agreement speaks of a 15 day notice period to be afforded to Meyer to decide whether to execute a purchase agreement. There is no form of notice prescribed.

It is not clear whether this 15 days is concurrent with the 15 day reservation period, although that would seem to make sense. • During the 15 notice period, Meyer as prospective purchaser must decide whether or not to execute a purchase agreement. How is one to know when or how a person has subjectively decided to do something?

How is that decision to be signaled or communicated to Villa Bahia? • The reservation agreement does not speak to what happens with the funds after the reservation period is over but before a further agreement is signed (which in this case was a period of 21 months). [ 56 ] The parties also paid little attention to the reservation agreement itself and displayed a cavalier attitude about the whole transaction right from inception in June 2007 through till March 2009: • The purchase price in the reservation agreement is expressed to be $329,000 USD when the actual agreed upon price was $279,750 USD.

No attempt was made by either side to amend or correct the price in the document. • Meyer allowed the 15 day reservation period to lapse. Villa Bahia was under no obligation to hold Unit 4D for him after that. Yet both parties acted as if the reservation continued beyond the 15 days.

In particular, Villa Bahia continued to construct and hold the unit for Meyer over a period of 21 months. • Even though the reservation period had expired, Meyer allowed Villa Bahia to hold his substantial payment for a period of some 21 months, never asking any questions about where his money was or the use to which it was being put. • Villa Bahia did not provide any express notice, in writing or otherwise, that the 15 day notice period in the second paragraph had started to run.

It was a question at trial whether it ever did start to run or was simply skipped. • Meyer did not ask for a refund or even inquire about his payment until late in March 2009, after he concluded that his wife was refusing to go to Mexico and after he had already signed a promise purchase agreement. • The handwritten condition that the transaction was “Dependent on view contract before 15 days” was ignored. While Yakemchuk

said he did provide a copy to Culham to transmit to Meyer, it appears that Culham did not do so. Meyer did mention to Colquhoun in March 2008 that he hadn’t seen the agreement yet. Colquhoun did not send a copy of the agreement to Meyer and Meyer did not follow up with anyone connected with Villa Bahia. Counsel for Meyer told me I should just ignore this handwritten condition as it seems to have been waived by Meyer. • Villa Bahia never bothered to sign the reservation agreement. • Meyer showed no interest in how the project was being financed.

He testified that the assumed his funds were in trust and therefore intact but there is no evidence that he sought confirmation or even made inquiries as to where the funds were, who was holding them in trust, whether the funds were bearing interest or what the terms of the trust were. • Meyer paid Villa Bahia $230,300 USD with a cheque that indicates in Meyer’s own handwriting that it was for “Purchase 70% of 4D condo”. The 70% corresponds to the “35% upon execution of the Agreement for Purchase and Sale” plus “35% upon start of construction (occurred June 1, 2007)” in sub-paragraphs (

a) and (

b) of the payment

schedule mandated by the purchase promise agreement. Yet at the time of payment, Meyer had not executed such an agreement. • Villa Bahia took an inordinately long time to present the purchase promise agreement to Meyer to sign. It waited until Unit 4D was ready for inspection and occupation, some 21 months after taking initial payment from Meyer. Meyer’s money had already been spent and the unit constructed.

The agreement that Yakemchuk prepared again had the wrong purchase price. • Meyer did not consult with his wife (at least not meaningfully) about purchasing a condo in Mexico until after he had signed the purchase promise agreement, even though he was well familiar with her travel anxiety since at least 2005. Relevance of conduct [ 57 ] Counsel for Meyer urged me to restrict myself to considering and interpreting the reservation agreement. It was argued that the rights and obligations of the parties in this case are discernible within the four corners of that document.

As attractive as that proposition might be, I must resile from it. The problem, as I have recounted above, is that the reservation agreement is imprecise and in many ways the parties either failed to implement its terms or took such a relaxed attitude toward the transaction that some of the terms of the reservation agreement were rendered nugatory. The reservation agreement is only part of the story.

Thus I am required to look at the entire course of events in order to determine the intention of the parties and the actual nature of the transaction. [ 58 ] Where no single certain document governs, the Court is entitled to consider the conduct of the parties in order to determine whether a contract exists: See G. H. L.

Fridman, The Law of Contract in Canada, Sixth Edition (Toronto: Thomson Carswell, 2006) at pages 16-17, cited with approval in Genesis Land Development Corp v Alberta , 2009 ABQB 221 (at paras 156-158 ), affirmed 2010 ABCA 148 . [ 59 ] Meyer tried to present a certain picture of himself in his evidence, that of a relatively unsophisticated purchaser who was lulled into a false sense of security by promoter Culham. He says that Culham told him his money was retrievable at any time prior to actual execution of a purchase agreement, and he believed him.

He formed the impression that his funds were in trust somewhere and didn’t realize they had been used for construction purposes. As a further example of his haplessness, he forgot his reading glasses on a critical occasion and signed documents without first looking them over. He purported to rely on the wording of the refund provision of the reservation agreement, without regard to the whole course of events that had transpired. [ 60 ] I am inclined to find that Meyer is not as naïve or unsophisticated as he tried to portray at trial. His record indicates otherwise. He operated a business for 21 years.

It appears he sold his interest in that business to advantage in a transaction worth nearly $4.8 million, most of it in cash but also close to $1 million in shares. He was in a position to retire after the sale. He owned three investment properties in Canmore, including two condominium units. At one time he had up to half a million dollars invested in the stock market through various brokers. He conceded that his net worth by June 2009 was in the area of $8.5 million. All of this was laudably accomplished with a Grade 11 education.

From this, I conclude that Meyer is a person of some business experience and acumen. [ 61 ] Counsel for Villa Bahia tried to impeach Meyer’s credibility by pointing out discrepancies between his discovery evidence and his trial evidence. For the most part, I viewed any such discrepancies as minor and inconsequential. Counsel also drew to my attention what he thought were some logical inconsistencies in Meyer’s evidence.

For example, I was asked to question the whole incident where Meyer described how he had shown up to sign documents at Yakemchuk’s office without his reading glasses, and then proceeded to sign those documents (three copies of the purchase promise agreement) without reading them or even having the ability to read them. At one point Meyer said he wasn’t sure the documents had even been filled out.

Counsel indicated that it didn’t make sense for someone with Meyer’s acumen and experience to sign important documents without reading them. [ 62 ] Counsel also suggested that Meyer couldn’t have signed them in blank because Yakemchuk needed to fill in Meyer’s new address on the cover page and Yakemchuk couldn’t have done that without Meyer in the room to tell him that new address. [ 63 ] Counsel for Villa Bahia also pointed out that one of Meyer’s stated reasons for backing out of the transaction is that he became aware of previously unmentioned fees and costs.

Counsel said it was unreasonable for Meyer to state that he was taken by surprise that he would be responsible for property taxes and condo fees as part of condo ownership, even in Mexico, noting for me that Meyer currently owned two condominium properties in Canmore. [ 64 ] I will comment on these logical inconsistencies further in these reasons.

For now, it is noteworthy how Meyer’s behaviour was more consistent with someone who had actually purchased a condominium unit as opposed to someone who had merely reserved a condominium unit and had yet to commit. [ 65 ] First, he seemed remarkably unconcerned about what had happened to his money. The amount of the reservation fee ($230,300 USD) is a substantial sum by ordinary standards. He assumed that the funds were held in trust but showed no curiosity about

where, how or upon what terms the funds were held. This lack of concern is more consistent with Meyer knowing that he had purchased Unit 4D and knowing that the funds had been applied to construction. [ 66 ] Second, the amount paid over to Villa Bahia by itself shows more of an intention to purchase rather than an intention to merely reserve. The amount that Meyer paid ostensibly under the rubric of a “reservation fee” represented 70% of the original purchase price of $329,000 USD and 82-82% of the reduced price of $279,750.00.

This was no mere reservation agreement as described by Ritter, J (as he then was) in Lear v Klapstein , 2000 ABQB 298 at para 19 , which was relied upon by Meyer in argument: It is noteworthy that reservation agreements do not constitute a Purchase Agreement. They are documents that reserve a particular unit for a proposed purchaser in contemplation of a project proceeding . This is done in exchange for a very small deposit which is refundable to the proposed purchaser should the purchaser decide not to proceed at the time the project is developed to a point where Purchase Agreements are available .

If the purchaser does decide to proceed, the deposit forms part of the purchase deposit. (emphasis added) [ 67 ] The bulk of the purchase price is not a “very small” amount as described in Lear . Nor was the Villa Bahia Phase II project merely contemplated. Construction had already begun. The project was proceeding. Meyer knew this because the reservation agreement itself said so and because he attended update meetings. Further, the purchase agreements were clearly available. Yakemchuk had given a copy to Culham to give to Meyer.

Villa Bahia was merely dilatory in getting Meyer to sign. [ 68 ] The paying of 82% of the purchase price is more consistent with actual purchase than a mere reservation. I noted earlier that the payment of $230,000 USD aligns with the payment

schedule called for in the purchase promise agreement, rather than the token or nominal amount referred to in Lear . [ 69 ] Third, Meyer’s own cheque noted that the payment was for the purchase of 70% of Unit 4D. [ 70 ] Fourth, Meyer produced from his own records a standard form invoice dated June 20, 2007 prepared by and provided to him by Villa Bahia, showing Unit 4D as the “Description”, the sum of $279,750 as the “Amount”, the sum of $230,300 USD as having been paid, and a “Balance Owing” of $49,450 USD.

At no time did Meyer take issue with the characterization suggested in the invoice. [ 71 ] Fifth, he showed no concern and made no inquiries after the 15 day reservation period expired. One would have thought that with no reservation and the other party in possession of his funds, there would have been some urgency to get the funds back, or at least inquire as to the status of matters. [ 72 ] Meyer was content to leave his money with Villa Bahia for a period of some 21 months, with virtually no questions asked.

During that span, he attended a couple of meetings to receive construction updates and, in the second meeting, to discuss the formation of a condo board, although he had no interest in serving. When the parties spoke before March 1, 2009, Yakemchuk advised Meyer that the unit was ready for inspection and the purchase promise agreement ready to sign. Meyer did not take issue with this information. Rather, he arranged for his sister to view the unit. He then met with Yakemchuk later in March 2009 and signed a purchase promise agreement in triplicate.

From the perspective of an objective observer, everything seemed to going smoothly with the transaction, that is, until Meyer’s wife balked at the idea of a vacation condo in Mexico. [ 73 ] Where Meyer’s credibility suffers is in the improbability of his actions when compared to his stated beliefs. Why would he pay out 82% of the purchase price for a condo and not think it was being used to finance construction or not think that he had committed to buy it? Why would he not ask for a refund immediately after the 15 day reservation period elapsed if he thought that all he had done was make a reservation?

Why would he leave substantial funds with a third party for some 21 months with no questions asked? Why would he not contest an invoice saying that he owed another $49,450 USD for a condo if he had not actually bought a condo? Why would he not be concerned about who was holding his funds in trust and the terms of the trust if he thought his $230,000 USD was in trust? Why would he think he could get a full refund knowing that a unit had been constructed and was being held for him in Mexico?

Why would he sign a purchase promise agreement (even with the wrong price) if he was not already committed? [ 74 ] Despite what Meyer may profess, the mostly likely inference this Court draws is that he no longer needed a reservation nor expected his funds back because he had committed to the transaction. [ 75 ] For its part, Villa Bahia always acted as if there was a binding agreement for purchase and sale of Unit 4D from the outset.

That much is evidenced by the invoice sent to Meyer and its whole course of conduct since then, including Yakemchuk’s reaction to learning that Meyer wanted to back out in March 2009. Villa Bahia, an Alberta corporation, used Mexican forms translated from Spanish into English. Yakemchuk admitted during testimony that, quite frankly, he did not understand what the 15 day periods mentioned in the reservation agreement were meant to do or when they were supposed to run and did not say that he did anything to activate any such periods.

Yakemchuk advised the Court that he was trained and worked as an engineer but that apart from the 9 units in Villa Bahia Phase II, he had no experience in promoting or marketing real estate in Mexico or elsewhere. It might be said that Villa Bahia, at least through the person of Yakemchuk, was no more commercially sophisticated than Meyer purported to be.

Compliance with the Reservation Agreement [ 76 ] Meyer argues that Villa Bahia’s failure to give 15 days’ notice to Meyer to execute the purchase promise agreement and that no meaningful purchase promise agreement was ever entered into means that Meyer is entitled to a refund of his original payment. Villa Bahia argues that the requisite notice was given in one or more ways and that Meyer in fact signed a purchase promise agreement. [ 77 ] There is no doubt that express written notice was not provided to Meyer by Villa Bahia.

However, Villa Bahia contends that no form of notice is prescribed and that effective notice could be found to have been given in any of the four different ways described in paragraph [45] above. [ 78 ] To me, the first theory above makes the most sense from a practical standpoint. It would be tidy, convenient and lend certainty if the two 15 day periods are concurrent. However, it is not clear they are meant to be and the 15 day notice period may require

some future event in order to start running. Meyer’s counsel urged me to apply contra proferentum to resolve any ambiguity in favour ofhis client, since Villa Bahia is the proponent of the document. [79] I do not find it necessary to consider Villa Bahia’s first theory of notice in light of the contra proferentum rule or any of thealternative theories. I say this for two reasons. First, as I noted above, the parties conducted themselves as if they were committed to andwere completing the transaction.

I find that, following the execution the reservation agreement, both parties were proceeding on the basisof an outright purchase. Villa Bahia was no longer reserving a unit for Meyer. It had actually assigned and was building Unit 4D for him.At the same time, Meyer had not merely reserved Unit 4D for 15 days. Rather, he had actually purchased it. [80] I find that the 15 day notice provision for execution of a further agreement was simply waived or ignored by the parties, in thesame way the reservation period provision and the added handwritten condition were waived or ignored.

It is clear that neither side wasfollowing the reservation agreement. The price wasn’t even right. As late as March 2009, Yakemchuk was still prepared to makechanges on the fly to the payment

schedule shown in the reservation agreement. [81] Accordingly, I find the parties proceeded straight to a purchase and sale transaction with a $279,750 purchase price that wasquite irrespective of the reservation agreement. In this sense, the execution of the purchase promise agreement became a mere technicalformality to be dealt with when convenient. [82] Second, in the alternative, the undeniable fact is that Meyer did sign a purchase promise agreement. Whether or not he wasgiven proper notice is moot.

That the agreement that was signed contained the wrong price (as did the reservation agreement) or that twoof three copies were ripped up, with the third copy having the signatures scratched out, does not matter. This signing had the effect offulfilling the requirement of execution of “the Agreement for Purchase and Sale” as contemplated in the reservation agreement. I willcomment more on this later.

The Statute of Frauds [83] Meyer asserts that the purchase promise agreement is not a binding contract as it does not meet the dictates of s. 4 of theStatute of Frauds, the relevant portion of which reads: No action shall be brought whereby ... to charge any person ... upon any contract or sale of lands ... unless the agreement upon whichsuch action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith,or some other person thereunto by him lawfully authorized. [84] 1042063 Alberta Ltd v McLean, 2016 ABQB 436 was relied on by both counsel as a recent Alberta case correctly stating thelaw concerning the application of the Statute of Frauds.

Meyer argues that the fact that Villa Bahia did not sign the purchase promiseagreement and that it contained a mistake (an incorrect price) as to one of the essential terms means the requirements of the Statute ofFrauds are not satisfied. [85] Meyer further argues that no agreement effectively exists because Villa Bahia’s two copies of the purchase promise weredestroyed upon the parties noticing the error, and Meyer’s signatures were scratched out from the one remaining copy that Meyerretained. [86] Villa Bahia counters by saying the contract was sufficiently memorialized, not by the purchase promise agreement itself, butby the whole course of dealings between the parties and including both documents.

It specifically cites para 60 of 1042063 Alberta Ltdwhich summarizes the case law as pronounced by the Court of Appeal in support: In Harvie v Gibbons, 1980 ABCA 38 , [1980] AJ No. 951 (QL) at paras 16-20, 109 DLR (3d) 559, Laycraft JA, set out therequirements of the Statute developed in the case-law as follows: 1) No rigid or precise form of memorandum is prescribed by the Statute, nor need the entire contract be contained in writing. 2) What is required is a statement of the essential terms of the contract.

Moreover, the statute does not deal with the validity of thecontract but with the evidence of its existence. 3) The memorandum must, however, set forth the material terms of the agreement.

Though what is material will vary with thecircumstances of each case, in land transactions the usual essentials are said to be “parties, property and price.” 4) Several documents may be connected to each other by reasonable inference, by parole evidence if necessary, to constitute a sufficientmemorandum. [87] In Villa Bahia’s contention, the record of the transaction as described at the trial meets the above formulation the followingways: • The entire contract was not in writing.

The correct purchase price was not in the purchase promise agreement nor the reservationagreement but both parties knew the purchase price was $279,750 USD not $329,000 USD. • The purchase promise agreement is only evidence of the existence of a contract, not of the internal validity of document itself,particularly as regards purchase price. • The essential elements of parties, property and price were present in the transaction, and even though the price was misstated inboth documents, there was no mistake in the mind of each party as to the correct purchase price. • The Court must consider both documents and the oral evidence of the course of dealings between the parties to discern whetherthere is a contract.

[ 88 ] I agree with Villa Bahia’s position. The signed purchase promise agreement is only the last facet of a string of dealings between Meyer and Villa Bahia that evince a binding agreement between the parties, which dealings taken in totality satisfy the requirements of the Statute of Frauds . I do note that the invoice dated June 20, 2007, another connecting document in the string, correctly states the purchase price. [ 89 ] The fact that Villa Bahia did not sign the purchase promise agreement is of no consequence because no one is seeking to enforce it against Villa Bahia.

Villa Bahia already considers itself bound. Further, the fact that Yakemchuk ripped up the two copies cannot be construed as a symbolic repudiation of the deal by both parties. Rather, Yakemchuk tore up the copies as a gesture of “good faith” because Meyer did not want the incorrect copies floating around.

There was a full expectation on the part of both parties at the second meeting at Twin Atria that a purchase promise agreement with the correct price would be executed as soon as the forms were available and that the transaction would close. [ 90 ] Nor does the scratching out of the signatures on the extant copy mean that the copy was not signed or that it ceases to exist. At best, the scratching out and the ripping up are a disavowal of the purchase price of $329,000 USD as opposed to $279,750 USD.

Apart from the misstated price, as Meyer himself testified, he did not object to any of the content of the purchase promise agreement at the time of the second Twin Atria meeting. Effect of the purchase promise agreement [ 91 ] I have determined above that the reservation agreement, by itself, does not govern the rights and obligations of the parties in this case.

In the event I am wrong, I will now discuss whether the purchase promise agreement signed by Meyer in March 2009 had the effect of disentitling him to a refund under the terms of reservation agreement. [ 92 ] Meyer did attempt to raise a non est factum -type of scenario by stating during testimony that he had forgotten his reading glasses at the time of signing. The whole account of the forgotten reading glasses is somewhat troubling. Meyer acknowledged that his reading glasses are non-prescription and can be purchased from any pharmacy.

One wonders why he didn’t delay the signing until he had retrieved the glasses from home or picked up another pair at a local drugstore. He could have even taken the documents home for reading and then returned the next day. At one point, he even suggested that he might have signed the documents in blank.

It is hard to understand why someone with Meyer’s background in business and investing would do either such thing. [ 93 ] Meyer attempted to suggest, under his version of what happened, that when he finally perused the document in detail it was the extra costs and fees, previously unknown, that prompted him to back out of the transaction. Yet, as Villa Bahia’s counsel pointed out, anyone who had previously bought a condominium would know that property taxes and condo fees are payable, even in Mexico.

The other objectionable expense was a 1% fee charged by the vendor to the purchaser for the assignment of rights under the purchase promise agreement to a different purchaser. This was not a situation that Meyer was facing. [ 94 ] He also testified that he had been given no copy of the signed purchase promise agreement the day that he signed it. He said he had to go back to Yakemchuk’s office the next day to get one. Yakemchuk told the Court that Meyer had been given a copy on that first occasion.

Yakemchuk explained quite reasonably why three copies are always executed and how the purchaser always receives a copy on the day of signature. [ 95 ] Meyer then agreed under cross-examination that it was his wife’s travel anxiety and reports of the Mexican crime rate (accounting for 95% and 4% of his reason for wanting out, with some overlap, and only 1% attributable to the extra costs and fees) that caused him to change his mind about buying. [ 96 ] Meyer’s account of the two meetings at Twin Atria and the subsequent discussions with Yakemchuk strike me as a transparent attempt to evade the consequences of having put his signature on the purchase promise agreement.

To the extent it is necessary, I prefer the evidence of Yakemchuk as to these events, who I find gave his evidence in an unassuming and straight-forward manner. [ 97 ] Not knowing what one is signing might suggest there is no meeting of the minds. Having forgotten one’s reading glasses on the day of signing, not seeing a copy of the signed document until the next day and then objecting to its contents (as Meyer testified he did), would lend support to the notion that there is no meeting of the minds in the document that was signed.

By trying to explain away the signed purchase promise agreement, Meyer hoped to put himself in the position to argue that no purchase promise agreement exists, either factually or legally, thus enabling him to rely on the refund provision of the reservation agreement. What with an incorrect purchase price, Meyer may have been careless in signing the document, as Yakemchuk was in its preparation, but that does not detract from the fact that they both knew what they were doing.

To the extent it is necessary, I find that Meyer’s signing of this purchase promise agreement had the effect of nullifying his claim to a refund. Conclusion on the main issue [ 98 ] In the result, I find that there was a meeting of the minds in respect of this transaction and certainty with regard to parties, property and price. I have examined the entirety of the events that transpired between the parties and in particular the way Meyer conducted himself from the occasion of signing the reservation agreement until the moment he learned his wife was refusing to travel to Mexico.

I find, on a balance of probabilities, that the reservation agreement was not followed by either party and that rather through a confluence of conduct and events, there was a binding contract for the sale of Unit 4D by Villa Bahia to Meyer for the sum of $279,300 USD. If it is necessary to specifically disentitle Meyer from claiming a refund, I find that the disentitlement occurred upon his signing of the purchase promise agreement.

The wrong price having been stated in both the reservation agreement and the purchase price agreement is of no consequence since both parties had agreed upon the reduced price, which was accurately stated in a connecting document, namely the invoice of June 20, 2007.

Villa Bahia’s remedies under Clause 8 [ 99 ] Meyer has argued in the alternative that the Court should restrict Villa Bahia’s remedies to those provided by Clause 8, namely rescission and a penalty of 5% of the total price, with the result that Meyer should be awarded the balance of the original funds paid. [ 100 ] Under general principle, by not paying the balance and refusing to take possession, Meyer has breached the contract but whether a breach of this magnitude ends the contract is at the option of Villa Bahia.

By insisting on performance, Villa Bahia has clearly not accepted a repudiation by Meyer. [ 101 ] Furthermore, Clause 8 itself, if applicable, indicates that the remedies specified are “Besides the causes set forth in law” which I take to mean in addition to any other remedies available under law. By participating in this litigation, Villa Bahia has chosen another remedy.

Decision [ 102 ] Meyer’s claim for return of the funds originally paid as a reservation fee is dismissed. [ 103 ] The counterclaim of Villa Bahia for the balance of the purchase price is allowed, along with the subsequent damages for breach of contract listed in paragraph [37].

In addition, Villa Bahia is entitled to interest in accordance with the Judgment Interest Act for any period not covered by a tolling agreement. [ 104 ] Inherent in this decision is that Villa Bahia is required to convey Unit 4D to Meyer. [ 105 ] I will leave it to the parties and their counsel to agree as to how best to implement this decision, but in the event they cannot, I grant this provisional Order: • Upon payment of the closing balance and any judgment interest on that balance, Villa Bahia will forthwith provide title to and possession of Unit 4D to Meyer. • In the event Meyer wishes to conduct an inspection of Unit 4D prior to payment of the closing balance, he must do so in person or by agent within 90 days of this judgment, otherwise any inspection requirement is deemed to be waived.

Judgment interest will continue to accrue in the meantime. • After closing, Villa Bahia may enforce any remaining amounts owing under this judgment in the normal fashion. [ 106 ] Villa Bahia will have its costs of the main action and the counterclaim on Column 2 of

Schedule C. Heard on the 16 th and 17 th day of January, 2017. Dated at the City of Edmonton, Alberta this 14 th day of February 2017. Douglas R. Mah JCQBA Appearances: Trevor A. Kelly Paul Howard LLP for the Plaintiff/Defendant by Counterclaim Edward R. Feehan

Duncan & Craig LLP for the Defendant/Plaintiff by Counterclaim, Villa Bahia II Developments Ltd.