Weinberger v Condominium Corporation No, 2017 ABQB 280

Court of Queen’s Bench of Alberta Citation: Weinberger v Condominium Corporation No 0022830, 2017 ABQB 280 Date: 20170420 Docket: 1603 19525 Registry: Edmonton Between: Anton Weinberger and Marina Weinberger Plaintiffs - and - Condominium Corporation No 0022830 and Randy Bennett Defendants _______________________________________________________ Reasons for Decision of W.S. Schlosser , Master, Court of Queen's Bench of Alberta _______________________________________________________ [ 1 ] This is a case of a contract that needs an implied term to cover an event that neither side foresaw.

Facts [ 2 ] The Weinberger’s owned a condominium in Fort McMurray. Mr. Bennett bought it. [ 3 ] Before it was sold, the Condominium Corporation levied a special assessment for capital expenditures, including: fire safety deficiencies, sewer line repairs, boiler replacement and asbestos abatement. [ 4 ] The total assessment was $21,000, payable by installments: $3500 on September 1, 2015, and $3500 on each of March 1, 2016, September 1, 2016, March 1, 2017, September 1, 2017, March 1, 2018 and September 1, 2018.

[5] The real estate contract provided: 4.7 Unless the Buyer and the Seller otherwise agree in writing, then regardless of when a special assessment states that it is due andpayable: (

a) the Seller is responsible for special assessments that are passed by resolution on or before 12 noon on the Completion Day. and (

b) the Buyer is responsible for special assessments that are passed by resolution after 12 noon on the Completion Day. (Emphasisadded) There was an ‘entire agreement’ clause: 6.4 The Seller and the Buyer each acknowledge that, except as otherwise described in this Contract, there are no other warranties,representations or collateral agreements made by or with the other party, the Seller’s brokerage and the Buyer’s brokerage about theProperty, any neighbouring lands, and this transaction, including any warranty, representation or collateral agreement relating to thesize/measurements of the Property or the existence or non-existence of any environmental condition or problem. [6] Randy Bennett bought the condominium on November 27, 2015.

The agreement was that the sellers were to take care of thespecial assessments, including the installments payable after November 2015. The parties had discussed reducing the sale price to coverthe assessment. Instead, the seller paid it, even though some of it wasn’t due until later. Clause 4.7 was altered to add: “seller to have allspecial assessments paid on closing through lawyer”; which was done. [7] Then two things happened. First, the condominium complex burned to the ground in the Fort McMurray wildfire.

Second,the Condominium Corporation passed a resolution to return unused funds for the remedial work on the building that no longer existed.There is $14,000 in trust. Both sides want it. The contract doesn’t cover it. The Court is to decide who should have it. [8] Both sides have a good argument. The sale contract was not frustrated. The Weinberger’s no longer have any interest in thecondominium. The question is how fairly to deal with these events that neither side foresaw. List of Authorities By the parties: 1. Condominium Property Act, RSA 2000, c C-22; 2. Judicature Act, RSA 2000, c J-2; 3.

Frustrated Contracts Act, RSA 2000, c F-27; 4. Canadian Western Bank v 702348 Alberta Ltd, [2009] AJ No 481. By the Court: 1. Anson’s Law of Contract, 24th ed, AG Guest, Oxford 1975, p 137; 2. An Introduction to the Law of Contract, JE Côté (lately, a judge of the Court of Appeal), Juriliber, 1974, p 36; 3. The Law of Contracts, 6th ed, SM Waddams, Canada Law Book, pp 262 – 264; 4. Canadian Contract Law, 3rd ed, Angela Swan, Jakub Adamski, LexisNexis, pp 698 – 700; 5. The Business of Judging, Selected Essays and Speeches, Lord Bingham, Oxford: “Law in a Pluralist Society”; 6.

Martel Building Ltd v Canada, 2000 SCC 60 , [2000] 2 SCR 860; 7. Reigate v Union Mfg Co (Ramsbottom) Ltd and Elton Cop Dyeing Co Ltd (1981-19) All E.R. Rep 143; 8. Shirlaw v Southern Foundries

(1926) Ltd, [1939] 2 All E.R. 113; 9. R v Oland, 2017 SCC 17; 10. Davis Contractors Ltd v Fareham Urban District Council, [1956] AC 696 at 728-9; 11. Moulton Contracting Ltd v British Columbia, 2015 BCCA 89; 12. A Theory of Justice, John Rawls, Harvard, 1971, p 11.

Analysis [9] The Condominium Property Act, RSA 2000, c C-22, isn’t much help in these circumstances. Section 43(2) tells us that fundsare to be held in trust, not for a beneficiary such as the payor, but: “for the performance of the duties and obligations in respect of which the payment was made.” The Act does not tell us who should get the funds if the duties and obligations in respect of which the payment was made no longerexists. Implied Terms [10] In Martel Building Ltd v Canada, 2000 SCC 60 , [2000] 2 SCR 860 the Court said: 81 ... this contract, like all contracts, could also include implied obligations.

The inclusion of implied terms may be based on custom orusage, as the legal incidents of a particular class or kind of contract, or based on the presumed intention of the parties where it isnecessary to give a contract business efficacy or where it meets the "officious bystander" test: Canadian Pacific Hotels Ltd v Bank ofMontreal, (SCC), [1987] 1 SCR 711 at p 775; MJB Enterprises [Ltd v Defence Construction

(1951) Ltd, (SCC), [1999] 1 SCR 619 at para 27]. [11] Adding terms to make a contract efficacious comes from The Moorcock (per Bowen LJ). [12] The officious bystander is our old friend from law school.[1] She was an invention of Scrutton LJ. in Reigate v Union Mfg Co(Ramsbottom), Ltd and Elton Cop Dyeing Co Ltd, [1918-19] All ER Rep 143 at 149: ... if it is such a term that it can confidently be said that if at the time the contract was being negotiated someone had said to the parties,“What will happen in such a case,” they would both have replied, “Of course, so and so will happen; we did not trouble to say that; it istoo clear.’ (Emphasis added) And, later, named, by McKinnon LJ, in Shirlaw v Southern Foundries

(1926) Ltd, [1939] 2 All ER 113 at 124: Thus, if, while the parties were making their bargain, an officious bystander were to suggest some express provision of it in theiragreement, they would testily suppress him with a common: “Oh, of course.” It is the ‘of course’ part that is sometimes troublesome. [13] Parties to a contract are not disinterested or impartial. Suggesting a term that favours one or the other in an unforeseencircumstance would just as likely prompt one to say: ‘Of course’, and the other: ‘Of course not!’. Hence the dispute. [14] The metaphor only works if you don’t know what side you are on.

Lord Bingham writes: In his much-discussed book A Theory of Justice John Rawls suggested that the relative justness of various societies could be tested byasking which society one would choose to belong to if ignorant what position one would occupy within it. (Emphasis added) This might supply a neutral approach to an implied term supplied by ‘officious bystanders’ (or the Court). It is a means of stripping awaypartiality and choosing a term that both sides would agree was inherently fair.

Parties are more likely to say ‘of course’ to a reasonableterm if they don’t know which of them it favours. [15] But that isn’t the end of the story. The use of the officious bystander test is not just a license to invent reasonable terms. Theterms have to be grounded in the contract.

Anson says (at p 137): The cases in which the Courts will [imply terms] are strictly limited, for they rightly conceive that it is not their task to make contractsfor the parties concerned, but only to interpret the contracts already made. [16] Côté (lately JA), then speaking extra-judicially in An Introduction to the Law of Contract, echoes this point (at p 36): Nor will the courts attempt to supply a missing term or to set what is reasonable, in the manner described above, where there is morethan one answer permissible, for then the court would not be discovering the bargain the parties made, but making its own bargain forthem. (Emphasis added) Thus the implied term has to be grounded in the intent of the parties (and see Moulton Contracting Ltd v British Columbia, 2015 BCCA89 at para 58 (leave denied, [2015] SCCA No 163)).

There is, of course, a fine line between interpreting the intent of the parties andmaking a contract for them when the events in question are unforeseen. [17] The difference between making a bargain and discovering the bargain isn’t meant to induce judicial paralysis. Discovering aterm grounded in the intent of the parties is the only real option when there is no other reasoned choice available and the Court might justas well flip a coin.

[ 18 ] Mr. Bennett wanted peace of mind that the special assessment would be dealt with. He did not want the responsibility of dealing with it himself. He did not want to be out-of-pocket. It should not matter whether it was the sellers, or the fire that absolved him of that responsibility. If the unused funds are returned to the sellers, he will end up getting exactly what he bargained for and will be in the same position (ultimately) as he would have been had the special assessment repairs been completed. The parties did not make a formal adjustment to the sale price.

They only wanted the sellers to bear the responsibility for the assessment. [ 19 ] Clause 4.7 put the obligation on the seller for special assessments passed by resolution on or before closing date. It did not deal with special assessments that were passed but not due until afterwards. The addendum addressed this squarely, placing the burden of payment on the sellers, even for those payments not yet due.

In my view, it is implicit that the sellers should also enjoy the benefit of the reversal. [ 20 ] Applying the methodology set out above: that is, if an officious bystander were to have asked the parties (then not knowing what side they were on): “what should happen if the condominium burns down and the special assessment were returned?” – something that was probably about the furthest thing from their minds – it is my view that they would have agreed that the unnecessary funds should be returned to the sellers. That, correspondingly, was implicit in the bargain, or should be implied.

Disposition [ 21 ] The application is allowed and the paid but unnecessary special assessments are to be returned to the sellers. If the parties cannot agree on costs they may be spoken to. Heard on the 21 st day of March, 2017. Dated at the City of Edmonton, Alberta this 20 th day of April, 2017. W.S. Schlosser M.C.Q.B.A. Appearances: Slader Oviatt Oviatt Law for the Plaintiffs Georges Brosseau, Q.C. Brosseau & Associates for the Defendant, Randy Bennett