1468717 Alberta Ltd Applicant - v. –, 2017 ABQB 393

Court of Queen’s Bench of Alberta Citation: 1468717 Alberta Ltd v Wood, 2017 ABQB 393 Date: 20170621 Docket: 1403 02145 Registry: Edmonton Between: 1468717 Alberta Ltd Applicant - and – Alton Edward Frank Wood, Leah Denise Wood, Edward Albert Wood, Francis N J Taman and Bishop & McKenzie LLP Respondents _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ I. Introduction [ 1 ] This is an application for

summary judgment by the plaintiff against the defendants Alton Wood and Alton’s wife, Leah Wood. The judgment sought is an order registering an Access and Right of Way Agreement against certain lands now owned by Alton and Leah (“the Lands”). For reasons which follow, the application is granted. II. Background [ 2 ] The Lands were part of a larger number of properties once owned by the defendant Edward Wood. Edward is Alton’s father. Edward has been noted in default. Owing to financial difficulties he was experiencing in the spring 2011, Edward sold the Lands to Alton and Leah.

Edward sold certain other land to Laura Kos. Laura is Edward’s step-daughter. Laura assigned the purchase and sale to her company, 1468717 Alberta Ltd. [ 3 ] The agreement between Edward and 1468717 included

Schedule “F”.

Schedule F did two things: it gave Edward, Alton and Leah a first right of refusal to purchase the 1468717 land; and it obliged Edward to supply non-commercial existing road access and to

register an agreement in that regard on the title to the Lands being transferred by Edward to Alton and Leah. [4] An Access and Right of Way Agreement (“the Access Agreement”) was executed on April 15, 2011. [5] No one disagrees that it was intended and expected that the Access Agreement would be registered against the title to landsEdward sold to Alton and Leah. Once so registered, 1468717 would have access through the Lands owned by Alton and Leah to theland owned by 1468717.

But for an Access Agreement on title, 1468717 would have no legal right to access its own land by way of theAlton & Leah Lands. [6] Neither Alton nor Leah, nor 1468717, realized until 2013 that the Access Agreement had not been registered against theLands. [7] Alton and Leah have restricted 1468717’s access to the isolated lands. (In his affidavit filed February 12, 2016, Alton saysthe dispute regarding the Access Agreement “is directly connected to [1468717’s] threat to deny Leah and me use” of certain otherlands. (Through counsel, Alton and Leah raise the same point at paragraph 11 of their Brief filed December 23, 2016.) Whether that isso is not relevant to the discrete application before me.) [8] Alton and Leah do not deny the existence or validity of the agreement; they defend essentially on the basis that the AccessAgreement was simply not registered on the Lands at the time they purchased the Lands from Edward, and that the plaintiff is not nowentitled to any right of way or access to the Lands. [9] In their Amended Statement of Defence filed April 8, 2016, Alton and Leah admit that Edward’s lands were the subject offoreclosure proceedings, and that as such, Alton, Leah and the plaintiff agreed to purchase certain portions of Edward’s lands.

NeitherAlton nor Leah admit any other particular interconnectedness between the land transactions. Aside from the evidence touching on theAccess Agreement, there is little if any other evidence from the plaintiffs as to alleged interconnectness arising from the foreclosures andthe timing and/or structure of the transactions between Edward, Alton & Leah, and the plaintiff. [10] There is, however, evidence of interconnectness in arising from

Schedule F and the corresponding Access Agreement. Andfor example, in questioning, Alton stated he was aware of the agreement between Edward and 1468717 and expected, when he purchasedthe access lands, that those lands would be subject to an access and right of way agreement. III. Analysis [11] The respondents argue that

summary judgment is not available for either of two reasons: first, owing to a lack of evidencerelevant to the remedy sought of rectification; and second, given a complete defence under the ‘mirror’ and ‘curtain’ principles in theTorrens system and in land titles law. For reasons which follow, I disagree on both counts.

Summary judgment [12] I find this is an appropriate case for

summary judgment under Rule 7.3 of the Alberta Rules of Court and the leadingauthorities interpreting the Rule: Windsor v Canadian Pacific Railway Ltd., 2014 ABCA 41, [2014] AJ No 256, and more recently,Condominium Corporation No. 0321365 v Cuthbert, 2016 ABCA 46, 612 AR 284, at paras 25-29: 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 is nogenuine issue requiring trial: “when the judge is able to reach a fair and just determination on the merits on a motion for

summaryjudgment”: para 49. [26] Since Hryniak, this Court has confirmed the test for

summary judgment in Alberta: 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 paras7-8; 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 lead to an adjudication and disposition that is fair and just to both parties”: Whitecourt atpara 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“whether there is any issue of merit that genuinely requires a trial or, conversely, whether the claim or defense is so compelling that thelikelihood it will succeed is very high such that it should be determined summarily”: Whitecourt at para 9; see also Ostrowercha at para10.

An issue of merit is established when the respondent’s (non-moving party) case discloses a “genuine issue of a potentially decisivematerial fact in the case which cannot be summarily found against the non-moving party on the record revealed by the ‘fair and just[summary] process’”: Ostrowercha at para 11. [28]

Summary judgment is not possible if opposing parties’ affidavits and evidence conflict on material facts because a chambersjudge cannot weigh evidence or credibility on a

summary judgment application: Sherwood Steel at paras 7-8; Whitecourt at paras 31, 40-

41. [29] Complex legal questions may be sufficient to deny

summary judgment. A full trial is required when the

summary recordcannot be used to decide legal issues that are unsettled, complex or intertwined with facts: Templanza v Wolfman, 2016 ABCA 1 at para 20; Amack at paras 36-37. A trial is also required when an applications judge is not satisfied she can fairly resolve thedispute on the record before her: Templanza at para 20. See also Composite Technologies Inc. v Shawcor Ltd., 2017 ABCA 160 at paras 75-93. [13] In the application before me, there is no significantly conflicting evidence. Nor are there complex legal issues that cannot beresolved in a

summary way. Both parties have had an opportunity to bring forward the relevant evidence, and to respond to it. In all, Ifind that I am able to reach a fair and just determination on the merits on the application. Rectification [14] Both parties rely on Canada (Attorney General) v Fairmont Hotels Inc., [2016] 2 SCR 720, 2016 SCC 56. [15] Beginning at paragraph 3 in Fairmont the court outlined that: [3] Rectification is limited to cases where the agreement between the parties was not correctly recorded in the instrument thatbecame the final expression of their agreement: A. Swan and J.

Adamski, Canadian Contract Law (3rd ed. 2012), at §8.229; M. McInnes,The Canadian Law of Unjust Enrichment and Restitution (2014), at p. 817. It does not undo unanticipated effects of that agreement.While, therefore, a court may rectify an instrument which inaccurately records a party’s agreement respecting what was to be done, itmay not change the agreement in order to salvage what a party hoped to achieve. … [38] To summarize, rectification is an equitable remedy designed to correct errors in the recording of terms in written legalinstruments.

Where the error is said to result from a mistake common to both or all parties to the agreement, rectification is availableupon the court being satisfied that, on a balance of probabilities, there was a prior agreement whose terms are definite and ascertainable;that the agreement was still in effect at the time the instrument was executed; that the instrument fails to accurately record the agreement;and that the instrument, if rectified, would carry out the parties’ prior agreement.

In the case of a unilateral mistake, the party seekingrectification must also show that the other party knew or ought to have known about the mistake and that permitting the defendant totake advantage of the erroneously drafted agreement would amount to fraud or the equivalent of fraud. [16] I agree with the plaintiff that the test articulated in Fairmont is met: A. The terms of the agreement between Edward and 1468717 are definite and ascertainable.

It is comprised in large part of theevidence of Alton’s expectation and, I find, agreement that the Access Agreement would be registered on the title to the Lands that heand Leah were acquiring from Edward. The defendants argue that at a minimum, the question of whether there is a “prior agreement” is a matter for trial. Through counsel, theyargue that “there is nothing before this Court that relates to Edward, Alton, or Leah’s intentions with respect to any prior agreement”. I am unable to accept that argument.

Edward has been noted in default; Alton’s evidence is before the court, as outlined herein; hisanswers in questioning are helpful to the plaintiff’s cause. If there is something more, it should be before me, given the long-standingauthority that “each side must present its strongest case” in a

summary judgment application: Composite Technologies Inc. v ShawcorLtd., 2017 ABCA 160 at para 77. B. The agreement or agreements were in effect when the instrument – giving effect to Edward’s sale of the Lands to Alton andLeah – was executed. C. That instrument fails accurately to record the agreement or agreements, in that the Access Agreement which everyoneexpected to have been registered on title, was not so registered. D. The instrument can be rectified to carry out the agreement or agreements. E.

The applicant has shown, on Alton’s own evidence, that the unilateral mistake at issue here was known to Alton, andAlton’s reliance on it now amount to fraud or the equivalent of fraud – fraud in the “wider sense” as described in PerformanceIndustries Ltd. v Sylvan Lake Golf & Tennis Club Ltd. [2002] 1 SCR 678, 2002 SCC 19, at para 39: … refer[ing] to transactions falling short of deceit but where the Court is of the opinion that it is unconscientious for a person to availhimself of the advantage obtained. [17] The defendants argue that Performance Industries is “easily distinguished” as it dealt with different facts.

Of course that istrue, but the principle stated in Performance Industries still assists me in what I have to decide regarding the conscionability of the

defendants’ position. [18] I also agree with the plaintiff’s reliance on Greymar Equipment

(2008) Inc. v Canada (Attorney General), 2014 ABQB 154,and the following comment from Greymar as endorsed in Fairmont, at paras 57-59: [57] The rationale for the remedy [of rectification in the context of unilateral mistake] is that no one should be allowed “to take unfairadvantage of another’s mistake”: Lord Goff of Chieveley and Gareth Jones, The Law of Restitution (7th ed. 2007), at p. 299; see alsoHall, at pp. 190-91.

In accordance with this purpose, rectification “should not be circumscribed by anomalous or artificial rules, butshould be applied where appropriate in order to give better effect to equitable doctrines”: I. C. F. Spry, The Principles of EquitableRemedies (9th ed. 2014), at p. 632. [58] The test for rectification requires courts to assess the true intention of the parties: In order for rectification to be available, it is necessary to identify a “true agreement” which precedes (and is not accurately recorded by)the written instrument.

Such an agreement may itself be contained in a written instrument; but it may be oral, and need not itself havecontractual force (Snell’s Equity (31st ed. 2005), by John McGhee, ed., at p. 332. See also Mitchell McInnes, The Canadian Law of Unjust Enrichmentand Restitution (2014), at p. 820; Angela Swan and Jakub Adamski, Canadian Contract Law (3rd ed. 2012), at pp. 772-73; Goff andJones, at p. 295; Hart v. Boutilier (1916), 56 D.L.R. 20 (S.C.C.), at pp. 621-22 and 630; Mitchell v. MacMillan (1980), (SK CA), 5 Sask. R. 160 (C.A.), at para. 8; Reed Shaw Osler Ltd. v. Wilson (1981), 1981 ABCA 317 , 17 Alta.

L.R. (2d)81 (C.A.), at p. 89; Bryndon Ventures Inc. v. Bragg (1991), (BC CA), 82 D.L.R. (4th) 383 (B.C.C.A.), at pp. 402-3;Dynamex Canada Inc. v. Miller (1998), (NL CA), 161 Nfld. & P.E.I.R. 97 (Nfld. C.A.), at para. 23; WasauksingFirst Nation v. Wasausink Lands Inc. (2004), (ON CA), 184 O.A.C. 84, at para. 77.) [59] Nor does the parties’ prior intention have to amount to a fully enforceable agreement: Joscelyne v. Nissen, [1970] 2 Q.B. 86(C.A.), followed in Peter Pan Drive-In Ltd. v. Flambro Realty Ltd. (1978), (ON SC), 22 O.R. (2d) 291 (H.C.J.), aff’d(1980), (ON CA), 26 O.R. (2d) 746 (C.A.).

As Brown J. (as he then was) explained in Graymar Equipment (2008)Inc. v. Canada (Attorney General) (2014), 2014 ABQB 154 , 97 Alta.

L.R. (5th) 288 (Q.B.): Rectification is available . . . even where the parties have not concluded an agreement, so long as there is sufficiently convincingevidence that the parties had arrived upon a common intention. [para. 36] [19] In its recent decision of Composite Technologies Inc. v Shawcor Ltd., 2017 ABCA 160 at paras 128-129, the court stated: [128] The law on rectification is clear. [129] Justice Brown, writing on this point for an unanimous Supreme Court of Canada in Canada v.

Fairmont Hotels Ltd., provided aprecise and workable statement of the purpose of rectification [at paras 12-13]: If by mistake a legal instrument does not accord with the true agreement it was intended to record – – because a term has been omitted,an unwanted term included, or a term incorrectly expresses the parties’ agreement – – a court may exercise its equitable jurisdiction torectify the instrument so as to make it accord with the parties’ true agreement.

Alternatively put, rectification allows a court to achievecorrespondence between the parties’ agreement and the substance of a legal instrument intended to record that agreement, when there is adiscrepancy between the two.

Its purpose is to give effect to the parties’ true intentions, rather than to an erroneous transcription of thosetrue intentions … … [R]ectification is unavailable where the basis for seeking it is that one or both of the parties wish to amend not the instrumentrecording their agreement, but the agreement itself. … [A]s this Court said in Performance Industries …, “[t]he court’s task in arectification case is … to restore the parties to their original bargain, not to rectify a belatedly recognized error of judgment by one partyor the other”. [20] These many cases and statements of principle overcome any persuasive value I might attach to the defendants’ authority ofRic New Brunswick Inc. v 1301725 Alberta Inc. 2012 ABQB 213. [21] In conclusion on this point, I find sufficiently convincing evidence in the facts of the application before me, that the partieshad arrived upon a common intention that is not reflected on the title of the Lands that transferred from Edward to Alton and Leah in thespring, 2011.

The Land Titles Act/Torrens issue [22] Both parties referred in their briefs to Wharton v. Smerychynski, 2000 ABQB 217. [23] In that case, at paras 8, 75-78, Veit J concludes that where a contract has been rescinded or rectified, neither the Land TitlesAct nor Torrens principles stand in the way of correcting a title. [24] I did not hear counsel for the defendants to take issue with this proposition.

Rather, the defendants say there is no contract torectify, so Wharton does not apply. [25] For the reasons already given, I have found there is an agreement that obliges the defendants, and entitles the plaintiff, by wayof rectification principles, to have the Access Agreement registered onto the title to the Lands now owned by the defendants.

IV. Conclusion [26] The application is allowed. The parties are free to speak to costs should they be unable to agree. Heard on the 6 th day of January, 2017. Dated at the City of Edmonton, Alberta this 21 st day of June, 2017. Peter Michalyshyn J.C.Q.B.A. Appearances: Engelking Wood Murray L. Engelking For the Applicant DLA Piper (Canada) LLP Craig W. Brusnyk For the Respondents Alton Edward Frank Wood and Leah Denis Wood