Park Place Communities Ltd v Wong, 2017 ABQB 725

Court of Queen’s Bench of Alberta Citation: Park Place Communities Ltd v Wong, 2017 ABQB 725 Date: 20171128 Docket: 1003 11839 Registry: Edmonton Between: Park Place Communities Ltd Appellant - and - Angeline Wong Respondent _______________________________________________________ Judgment of the Honourable Mr. Justice J.S. Little _______________________________________________________ Introduction: [ 1 ] This is an appeal of a Master in Chambers’ decision, which dismissed the

summary judgment application made by Park Place Communities Ltd [Park Place] against Ms. Angeline Wong [Respondent or Ms. Wong] for forfeiture of deposit and damages for breach of contract regarding the purchase of a condominium unit. [ 2 ] The Master’s decision granted the Respondent’s counterclaim for return of the deposit and rescission of the contract, pursuant to

section 12 of the Condominium Property Act , RSA 2000, c C-22 [ CPA ]. Background Facts [ 3 ] Ms. Wong signed a condominium purchase agreement with Park Place in July, 2007, and delivered a deposit of $11,907.59 for a condominium unit under construction. She was given a copy of the offer made on the purchase agreement document that she alone had signed. Park Place accepted her offer later that same day, but for the purposes of this appeal, the parties agree that Park Place did not

provide a copy of the accepted offer – evidenced by the signature of Park Place’s representative on the purchase agreement document –to Ms. Wong. [4] In November, 2008, Park Place mailed a letter to Ms. Wong proposing a walk through and possession date in January, 2009. She did not respond. Park Place sent another letter in March, 2009 to the effect that if they did not hear from her within 10 days, theywould terminate the contract and she would forfeit her deposit. She did not respond to that letter. [5] When Park Place sued for damages, Ms.

Wong counterclaimed for return of her deposit and rescission of the contractpursuant to s 12 of the CPA, which permits a purchaser of a condominium from a developer to do so within 10 days of execution of thecontract by both parties. [6] On application by both parties for

summary judgment in October, 2015, Master Schlosser granted Ms. Wong’s applicationfor rescission and refund of her deposit. [7] The Learned Master dismissed Park Place’s application for forfeiture of the deposit and damages for breach of contract. Law: [8] Subsection 12(3) of the CPA reads as follows: Subject to subsection (4), a purchaser who purchases a residential unit pursuant to this

section may, by providing written notice to thedeveloper and without incurring any liability for doing so, rescind the purchase agreement within 10 days from the date the purchaseagreement was executed by the parties to it. [9] Subsection (4) deals with the situation where the purchaser has been given the required documents 10 days in advance ofexecution of the offer.

That scenario is not at play here. [10] The right of rescission itself must be printed prominently on the first page of a purchase agreement between a developer andpurchaser: CPA s 13(a). [11] In Bougainville Investment Corp v Semple, 2013 BCSC 1919 at para 160, 2013 CarswellBC 3175, Fitzpatrick J of the BCSupreme Court stated that: Acceptance is generally subject to a requirement that it be communicated to the offeror. The general rule is that an acceptance has nolegal effect until it is communicated to the offeror.

For an acceptance to be “communicated” it must normally be brought to the notice ofthe offeror: Chitty on Contracts at paras. 2-045-2-046 (emphasis added). See also, Spectris Corp v Central Canada Contact Lenses Inc, 1999 CarswellOnt 3423 at para 19 (Ont Sup Ct J) [Spectris Corp], wherethe Court held that although a signed copy of the agreement was found in the plaintiffs’ file, acceptance was never communicatedbecause there was no evidence of receipt by the defendant. Grounds of Appeal [12] The Appellant’s grounds of appeal are that the Learned Master in Chambers erred in: i.

Failing to properly interpret s 12 of the CPA by importing the requirement that communication of acceptance mustbe in a method akin to service under the Alberta Rules of Court, Alta Reg 124/2010 [Rules of Court], in order to commence the statutoryrescission period; and ii. Failing to consider that acceptance had been communicated, and that “service in the contractual manner occurred.” Positions of the Parties [13] The Learned Master found that s 12(3) of the CPA which contains the right of rescission requires two elements for itsperfection: acceptance by the vendor and communication of that acceptance.

For this second element, he held that the communicationought to occur “at or near the level of service provided by the Rules of Court.” [14] Counsel for Park Place concedes that acceptance by the developer does not trigger the right of rescission and that acceptancemust be communicated. But it argues that even though it had not provided Ms.

Wong with a fully executed copy of the purchaseagreement or otherwise formally notified her of its acceptance of her offer, communication of its acceptance was implicit in itssubsequent letters to her, some 16 and 20 months after acceptance, purporting to confirm the possession date in the first instance andthreatening to terminate the agreement in the second. [15] Park Place’s counsel argues that at common law, these steps and conducts would constitute communication of acceptance;Ms. Wong did not exercise her right to rescind, and the purchase agreement was therefore binding on both parties.

In support of thisposition, counsel cites: Canadian Market Place Ltd v Fallowfield, (1977) (ON SC), 13 OR (2d) 456, 71 DLR (3d)347; McLean v Quality Clothing Corporation, 2004 PESCTD 57, where the conduct of the parties in the context of “the whole of theevidence” before the court led to the Court’s conclusion that acceptance was communicated.

[ 16 ] Counsel for Ms. Wong contends that the CPA , and in particular

section 12, is consumer protection legislation, and that it therefore must be interpreted strictly as was done by the Learned Master, whose reasons included that: The net result in my view is this. The counterclaim – the defence and counterclaim seek rescission and in my view, the effect of this pleading is to have sought rescission for technically the 10-day time limit provided in Section 12(3) of the Condominium Property Act had expired because the clock did not begin to run until the vendor’s acceptance of it had been technically communicated to the purchaser… In my view,

Section 12 of the Condominium Property Act is a very important piece of consumer protection. And as noted earlier, it is important enough to have been on the cover page of the agreement. I have some difficulty with Ms. Wong thinking that she had a binding deal as at July 22, 2007 and then later on purporting to rely on a technical defence, but in my view

Section 12 is important enough that it warrants strict and technical

interpretation, even to the point where it can be relied on [in] a post-facto or in a somewhat opportunistic way. [ 17 ] Further, the Respondent draws the Court’s attention to the facts that: (

i) the purchase agreement was drafted by vendor (Park Place); (ii) she had no legal skill and simply responded to the vendor’s advertisement; and (iii) the letters of November 2008 and March 2009 were sent by Park Place more than one year from the date she signed the purchase agreement; and aside from that, these letters did not refer to Park Place’s execution of the purchase agreement, or her right to rescission, as prescribed by the CPA .

Standard of Review [ 18 ] The parties agree that the standard of review of a Master’s decision on all issues is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 30 , 524 AR 382. Analysis [ 19 ] The Respondent submits that the essential points in the Learned Master’s reasons, inter alia , include: (

i) the CPA , s 12(3) creates a specific right which is the right to rescind; (ii) there are two elements for perfecting this right: first, acceptance by the vendor (offeree), and second, communication of the acceptance by the vendor to the purchaser (offeror); (iii) the notice of acceptance ought to have occurred in a manner “at or near the level of service” available under the Rules of Court ; (iv) “there has to be a clear and unequivocal method of communicating [acceptance] to the purchaser so that they know that this [rescission] right is engaged”; (

v) the calculation of time limitation under the CPA , s 12(3) did not start running until the vendor’s acceptance had technically been communicated to the purchaser; and (vi) the CPA , s 12 is important enough to warrant strict and technical

interpretation. [ 20 ] In my opinion, the Respondent’s presentation in the preceding paragraph accurately reflects the reasons of the Learned Master, who also premised his decision on the “circumstances where the document [was] accepted later by the vendor, even though in this case it was the same day.” [ 21 ] Firstly, it seems to me that it is a critical factor that the provisions of the CPA , being consumer protection legislation, are engaged in the transactions between Ms. Wong and Park Place.

In Association des courtiers et agents immobliers du Quebec v Proprio Direct Inc , 2008 SCC 32 , [2008] 2 SCR 195 [ Association ], the Supreme Court of Canada overturned a Quebec Court of Appeal decision that interpreted consumer protection legislation based on freedom of contract principles. There, the legislation mandated a certain form of brokerage agreement which allowed payment of a commission only on a sale. Parties to a brokerage agreement amended it to provide for payment of a commission without a sale, and a vendor subsequently complained to the real estate association.

The Supreme Court stated (in para 38): The legislature has explicitly restricted the parties’ freedom of contract by making the language of the compensation clause a mandatory requirement of the contract. That language ties payment to sale. To allow easy modification of this requirement is to allow easy modification of the protection so clearly designed not to be eroded. Consumer protection trumps freedom of contract, not the other way around. [ 22 ] Secondly, Park Place raised the issue of inequity that will result if Ms.

Wong is permitted to rely on a statutory right of rescission long after the contract had been executed and after she should have known that her offer had been accepted.

With respect to this argument, I note that our Court of Appeal in Hi Hotel Limited Partnership v Holiday Hospitality Franchising Inc , 2008 ABCA 276 , 437 AR 225 [ Hi Hotel ], dealt with a situation where a franchisee, after performing the franchise agreement for almost a year, relied on a right of rescission contained in the Franchises Act , RSA 2000, c F-23, for failure by a franchisor to provide a certificate of truth of its officers. [ 23 ] In Hi Hotel , the Alberta Court of Appeal held, following Association , that franchise legislation was intended to remedy a perceived imbalance of power between franchisors and franchisees, but that that was no reason to read down the protection when dealing with sophisticated franchisees or when such protection might be considered unfair. [ 24 ] Similarly, when remedial or consumer protection legislation, such as the CPA , gives a right of rescission to a purchaser for a period of time after the developer accepts an offer, the purchaser should not lose his or her right because the developer “sort of” complied or “almost” complied with the requirements of the legislation, based on the common law principles governing the formation of contract by conduct. [ 25 ] For those reasons, I find that the cases relied upon by counsel for Park Place, which deal with standard principles of the law of contract in relation to offer and acceptance vis-à-vis the conduct of the parties, are not persuasive.

[ 26 ] In that context, and putting aside the fact that the purchase agreement between Park Place and Ms. Wong engages the provisions of the CPA as consumer protection legislation, I note the lack of any meaningful interactions between Park Place and Ms. Wong in the period after she signed the purchase agreement/offer document and the time the two letters from Park Place were written almost 16 months after Ms. Wong’s offer.

That intervening dearth of activities does not support a reasonable inference that the conduct of the parties here amounted to communication of acceptance by Park Place. [ 27 ] In any event, the classical general rule, at common law, was clearly articulated by the BC Supreme Court in Bougainville Investment at para 160, where Fitzpatrick J stated that “an acceptance has no legal effect until it is communicated to the offeror.” And that “[for] an acceptance to be “communicated” it must normally be brought to the notice of the offeror”: Ibid .

In other words, the acceptance by Park Place (the offeree) has no legal effect until it is brought to the notice of Ms. Wong (the offeror). [ 28 ] Park Place argues that the Learned Master erred in finding that notice of acceptance must be communicated in a matter similar to that provided in the Rules of Court , notwithstanding that the purchase agreement here provided for service by mail. What that argument fails to recognize is that notice of acceptance (evidenced by the signature of Park Place on the purchase agreement) was not communicated to Ms.

Wong, the offeror; and as such, the purchase agreement (along with its prescribed mode of service by mail) had no legal effect. The purchase agreement can only become enforceable subsequent to Park Place’s communication of its acceptance of the offer to Ms. Wong. And apparently, while Park Place had a signed copy of the accepted offer in its custody or office, there is no evidence in the record before this Court that Ms.

Wong was notified about the signed copy of the purchase agreement document, until the commencement of the within action in 2010: Spectris Corp at para 19; CED Contracts II.3(a), §51. [ 29 ] Further, the Appellant’s argument challenging the Learned Master’s reference to the Rules of Court appears to be oblivious to the practical nature of his conclusion.

In my view, the logic behind the Learned Master’s assertion is solid, to the effect that one possible way through which communication of acceptance could have been clearly and certainly effected is in a manner similar to what is available under the Rules of Court , r 11. [ 30 ] Although Park Place alleges that the two letters that were sent some 16 and 20 months, after Ms. Wong made her offer in July 2007, constitute acceptance, I disagree.

Strictly and substantively construed, neither of those two letters directly or explicitly accepted the Respondent’s offer; instead, one of the letters proposed a walk-through, as well as a closing and a possession date, while the other letter threatened termination of the contract. [ 31 ] The Learned Master did not rule that had Park Place mailed notice of acceptance or effectively communicated its acceptance of Ms. Wong’s offer in some other ways, its action would not have constituted communication of acceptance.

Rather, his ruling was to the effect that, sending a notice of possession date or a threat of termination does not constitute technical notice of acceptance. [ 32 ] Put differently, the Learned Master ruled that, given the circumstances of this case where both parties did not sign the purchase agreement document at the same time, a clear communication of acceptance of Ms. Wong’s offer would be effective – and certainly constitute technical notice – where service of the acceptance on her was implemented in a manner similar to that prescribed in the Rules of Court .

In my view, the Master’s ruling simply utilized the Rules of Court in an analogous manner to exemplify how a notice of acceptance would satisfy the legal and technical requirement of “communication of acceptance.” [ 33 ] I agree with the Learned Master that, in the absence of any intervening activities or conduct suggesting otherwise between the parties, these letters do no t constitute “communication” of acceptance, which is a fundamental pre-requisite for the conclusion of a contract. [ 34 ] The mischief sought to be addressed in the CPA is exactly what happened here.

A purchaser made an offer and paid a deposit, but for 16 months did not receive anything from the developer confirming that she had a deal. Without that technical notice of acceptance, her substantive right of rescission that derived from the CPA was rendered meaningless. [ 35 ] For these reasons, the appeal is dismissed.

Process: [ 36 ] While not necessary to dispose of this appeal, it may be useful both to developers and purchasers to set out a process for compliance with section 12(3) of the CPA . [ 37 ] The Learned Master referred to communicating acceptance in a manner akin to service of documents in a court action. As discussed, he did not make that a requirement, but that principle would provide for a level of certainty, so the developer should have some familiarity with

Part 11 of the Rules of Court . [ 38 ] In a situation where a developer receives an executed offer from a purchaser which the developer wishes to accept: 1 . The developer on acceptance of the offer must notify the purchaser of this acceptance. If it is done, for example, in the sales office, the developer should provide a letter to the purchaser confirming its acceptance of the offer and enclosing a fully executed copy of the agreement. The purchaser should acknowledge, on that letter, receipt of the disclosure documents and fully executed agreement. 2 .

If the developer accepts sometime after the purchaser submits the offer, the developer should deliver, mail, or e-mail to the purchaser a letter confirming its acceptance of the offer and delivery of the disclosure documents, together with a copy of the fully executed agreement. The delivery, mail, or e-mail should be in compliance with the method of service of documents under the executed agreement and done in a manner that will allow the developer to prove service by affidavit, if necessary. 3 .

Ten days after delivery or e-mail, or 17 days after service by mail, the developer should confirm to the purchaser, again in a manner that will permit proof of such confirmation by affidavit, that the parties have a binding agreement.

[ 39 ] While these common sense steps will not prevent all disputes respecting communication of acceptance, I am optimistic that they will provide a level of certainty that may prevent a dispute such as the one between these particular parties as to if or when acceptance was communicated. Disposition [ 40 ] The appeal is dismissed. [ 41 ] If parties are unable to agree on costs, they may speak to me within 30 days of the release of this decision. Heard on the 17 th day of November, 2017. Dated at the City of Edmonton, Alberta this 28 th day of November, 2017. J.S. Little J.C.Q.B.A.

Appearances: David Archibold Sharek Logan & van Leenen LLP for the Appellant Colin Wong Colin Wong Professional Corporation for the Respondent