Telsec Developments Ltd v Abstak Holdings Inc, 2017 ABQB 801

Court of Queen ’ s Bench of Alberta Citation: Telsec Developments Ltd v Abstak Holdings Inc, 2017 ABQB 801 Date: 20171221 Docket: 0901 10515 Registry: Calgary Between: Telsec Developments Ltd. Plaintiff - and - Abstak Holdings Inc. Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.M. Jones _______________________________________________________ I. Introduction [ 1 ] The Calgary real estate market is notoriously volatile.

This dispute arose because an agreement for the purchase of land, made when the market was rising, was terminated after the market collapsed. The agreement was conditional upon the issuance of a development permit that was never obtained. The parties, Telsec and Abstak, are at odds as to whether Abstak made sufficient efforts to seek it.

If Abstak’s efforts fell short, the parties disagree on the proper date for assessment of Telsec’s damages, on whether Telsec should have mitigated its damages and on whether damages should be reduced to reflect uncertainty about the success of an abandoned appeal of the permit application. II. Factual Background [ 2 ] The parties filed an Agreed Statement of Facts, the relevant portions of which are as follows: 1.

On April 8, 2008, Volkswagen Canada confirmed to South Centre Fine Cars, a company related to Abstak, that it was required to purchase land by July 31, 2008 to establish a new Volkswagen dealership in south Calgary. 2. Telsec is the registered owner of 9.74 acres of land legally described as Lot 3, Block 9, Plan 0112475 and municipally described as 10808 – 18 th Street SE, Calgary. 3. On July 7, 2008, Telsec and Abstak entered into an agreement of purchase and sale for the westerly 5 acres of the Telsec land. The purchase price was $5,875,000 ($1,175,000 per acre). Abstak paid a deposit of $100,000. 4.

Abstak purchased this land for the purpose of relocating the South Centre Volkswagen and Porsche dealerships. 5. In order to construct the new dealerships, Abstak required a development permit from the City of Calgary.

6. On August 28, 2008, South Centre wrote to Volkswagen Canada to ask for an extension of time to complete the land purchase. 7. On September 2, 2008, Volkswagen Canada advised that it was prepared to extend the deadline for the purchase on the condition that the required zoning approval was obtained no later than February 28, 2009. 8. On September 2, 2008, Abstak retained Robert Homersham, a real estate and development lawyer, to assist in obtaining the development permit. 9.

On September 3, 2008, the City’s Corporate Planning Applications Group issued its pre-application assessment of Abstak’s proposed development permit. 10. On September 7, 2008, Telsec and Abstak entered into an Amending Agreement which dealt with the requirement that a development permit be obtained by February 27, 2009. 11. On October 7, 2008, Abstak submitted its development permit application along with the drawings prepared by Rick Balbi, the architect Abstak hired to design the new dealerships and make the application. Abstak also submitted a letter from Mr. Homersham in support of the application. 12.

On November 6, 2008, Abstak was advised that a representative of the City had indicated the development permit application would be a “refusal”. 13. On January 20, 2009, the City issued its decision refusing Abstak’s development permit application. 14. On January 26, 2009, Abstak filed its Notice of Appeal to the Subdivision and Development Appeal Board. 15. On February 3, 2009, Telsec wrote to the SDAB in support of the appeal. 16. On February 4, 2009, Abstak submitted to the SDAB a revised site plan. 17. On February 11, 2009, Abstak advised Mr.

Homersham that Volkswagen Canada had granted an extension of time for receiving zoning approval to the end of March 2009. 18. The appeal was scheduled to be heard by the SDAB on February 12, 2009. 19. On February 12, 2009, Mr. Homersham attended at the SDAB and adjourned the appeal to February 26, 2009. 20. On February 25, 2009, Abstak advised the SDAB and Telsec that it was withdrawing its appeal. Abstak also advised Telsec that, since the purchaser’s condition had not been met and Abstak was not prepared to waive it, the purchase and sale agreement was terminated. 21.

In mid-December 2008, Abstak began discussions with Gerry Wood regarding the land held by his corporation. The Wood land had zoning approval for automotive use and two other car dealerships were in operation on that land. 22. On February 24, 2009, Mr. Homersham forwarded to Abstak a working draft of an Offer to Lease 4.5 acres of the Wood land. 23. On July 29, 2010, Abstak entered into an offer to purchase 3.5 acres of the Wood land for the relocation of its Volkswagen dealership at a price of $1,200,000 per acre. 24.

A Volkswagen dealership has been constructed on the Wood land and is being operated by South Centre. 25. In late 2008, Mr. Van Grieken, the principal of Telsec, was made aware by a third party that Abstak was investigating the purchase of the Wood land. 26. Telsec received an offer to purchase the Telsec land dated August 13, 2012 at a price of $1,100,000 per acre, but did not accept it. On June 13, 2013, Telsec sold the Telsec land to an affiliate at a price of $1,100,000 per acre. III. Analysis [ 3 ] The fundamental issue is whether Abstak breached the Agreement.

This requires me to consider the precise nature of Abstak’s obligations in respect of acquiring the development permit. A. Did Abstak Have An Obligation to Pursue the SDAB Appeal? [ 4 ] The Amending Agreement contemplates the development permit application as follows: 7.1 In the event that, on or before October 10, 2008 the Purchaser has applied for a development permit for its proposed use (the “Development Permit”), the Purchaser shall have until February 27, 2009 to obtain the Development Permit (the “Purchaser’s Condition”).

In the event the Purchaser has not applied for the Development Permit on or before October 10, 2008 then the Vendor shall forthwith return the Deposit to the Purchaser, together with any interest earned thereon. This Agreement shall be of no further force or effect. In the event the Purchaser obtains approval of the Development Permit, materially in the form as submitted to The City of Calgary and subject to reasonable prior-to-release conditions, then the Purchaser’s Condition shall be conclusively deemed to have been satisfied.

Without limiting the generality of the foregoing, any amendment to the Development Permit by The City of Calgary limiting the term of the Purchaser’s use of the site shall be deemed to be a material change. In the event that the Purchaser has not obtained the Development Permit within the time provided herein, the Purchaser may elect, by provision of notice in writing to the Vendor, to waive the Purchaser’s Condition. [ 5 ] Telsec argues that, until October 10, 2008, Abstak had the option to decide not to apply for the development permit, to walk away from the deal and to demand the return of its deposit.

However, once Abstak elected to submit the application, this triggered an obligation to make further efforts to obtain the permit. [ 6 ] Abstak asserts that its sole obligation was to make the application for the development permit. It points out that the Agreement says neither that it must use best or reasonable efforts to obtain the permit nor that it is required to proceed with the SDAB appeal. Abstak argues that imposing an obligation on it to make further efforts to secure the permit would require implying a term into the Agreement and that there is no basis for the Court to do so.

It points to an entire agreement clause in support of its argument that no such term may be implied. [ 7 ] In my view, Abstak advances an outdated approach to contractual

interpretation that is not consonant with the modern case law. I do not think it necessary to imply a term into the Amending Agreement. Rather, I find that a proper

interpretation of clause 7.1 gives rise to a greater obligation on Abstak’s part than it is prepared to admit. [ 8 ] In my view, the Agreement must be interpreted in light of the factual matrix of this case. This approach was aptly summarized by Justice Poelman of this Court in Nexxtep Resources Ltd v Talisman Energy Inc , 2012 ABQB 62 , aff’d 2013 ABCA 40 at paras 5 , 6, 17 and 56: The objective of contractual

interpretation is to ascertain what the parties objectively intended by their bargain, when they made it. Primacy is given to the parties’ words, particularly in a written contract, because it is presumed that the parties chose words that embodied their intentions. However, the objective remains the determination of the parties’ intention, not the meaning of words in a document. Thus, the authorities give guidelines for the consideration of the “factual matrix” or “surrounding circumstances” to help determine the parties’ contractual intention as would be determined by a reasonable person so situated.

In other words, extra-textual evidence is used to help understand what the parties meant by the words they used. ... The factual matrix of a contract is properly considered as part of the interpretive task of ascertaining the parties’ intentions having regard to the relevant background context known to the parties. In other words, no special justification is needed to consider extra-textual evidence, provided it is within the prescribed limitations. ... A contract must be interpreted as of the time it was made.

What would a reasonable person conclude that the words meant, having regard to the contract as a whole, used in the context of and with the knowledge of the parties at the time?

Reference to the contract’s words and the factual matrix are complementary tasks, to be undertaken together. [ 9 ] Justice Poelman recently reiterated his reasoning in Homersham v New Urban (Ramsay Exchange) GP Ltd , 2017 ABQB 384 . [ 10 ] Our Court of Appeal also has endorsed this approach, making these comments in IFP Technologies (Canada) Inc v EnCana Midstream and Marketing , 2017 ABCA 157 at paras 79 – 83 : I turn now to a brief overview of the applicable principles of contractual

interpretation. The goal of contractual

interpretation is to determine the objective intent of the parties at the time the contract was made through the application of legal principles of

interpretation... To this end, “the exercise is not to determine what the parties subjectively intended but what a reasonable person would objectively have understood from the words of the document read as a whole and from the factual matrix”... One aspect of the current law on contractual

interpretation engaged by this appeal relates to the relevance of the factual matrix. In Sattva , the Supreme Court finally clarified that courts ought to “have regard for the surrounding circumstances of the contract – often referred to as the factual matrix – when interpreting a written contract” (para 46). Why? As the Supreme Court noted, “ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning” (para 47). Considering the surrounding circumstances of a contract does not offend the parol evidence rule.

That rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract. However, evidence of surrounding circumstances is not used for this purpose but rather as an objective interpretive aid to determine the meaning of the words the parties used: Sattva , supra at paras 59-61. Therefore, while the factual matrix cannot be used to craft a new agreement, a trial judge must consider it to ensure the written words of the contract are not looked at in isolation or divorced from the background context against which the words were chosen.

The goal is to deepen the trial judge’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. This approach is in keeping with Lord Steyn’s famous admonition in Regina v Secretary of State for the Home Department, Ex Parte Daly , [2001] UKHL 26 at para 28 that “[i]n law context is everything”. Thus, in interpreting a contract, a trial judge must consider the relevant surrounding circumstances even in the absence of ambiguity... Determining what constitute properly surrounding circumstances is a question of fact.

As to what is meant by surrounding circumstances, this consists of “objective evidence of the background facts at the time of the execution of the contract... that is, knowledge that was or reasonably ought to have been within the knowledge of the parties at or before the date of contracting”: Sattva , supra at para 58. ... Ultimately, the surrounding circumstances can include “absolutely anything which would have affected the way in which the language of

the document would have been understood by a reasonable man”: Sattva, supra at para 58, citing Lord Hoffman in InvestorsCompensation Scheme Ltd. v West Bromwich Building Society, [1998] 1 WLR 896 at 913 (UKHL). [11] In fairness to Abstak, neither Justice Poelman’s decision in New Urban nor the Court of Appeal’s judgment in IFP wereavailable to it at the time of this trial. However, both the trial and appeal decisions in Nexxtep had been issued.

Therefore, the lawpertaining to the use of the factual matrix in interpreting contracts was already established. [12] In addition, the Court of Appeal has indicated that courts should be pragmatic in interpreting contracts. In Schmidt v Wood,2014 ABCA, the Court said this at paras 10 and 27: ...where business people draft their own contract, without using lawyers, the maxim res magis valeat quam pereat is especiallyimportant. The court should strive to make the contract work, not upset it. ... The poorer the quality of drafting, the less picky should bethe

interpretation, and the greater the effort to make the contract sensible and businesslike... As we see it, the judge who tried this issue did not quite use extrinsic evidence. He looked at what facts the parties knew when theysigned the contracts, in order to understand brief allusions in their contracts. This is what the law of wills calls the “armchair rule”. ... [13] Similarly, in Samson Cree Nation v O’Reilly & Associés, 2014 ABCA 268, the Court said this at para 81: Parties are free to make impractical contracts.

But where there is doubt about what deal they made or how to interpret its words, courtscan and should lean toward what is practical and workable and achieves their aims. ... [14] Finally, in IFP, the Court of Appeal made these comments at paras 88 and 89: Also of particular importance on this appeal, commercial contracts should be interpreted in accordance with sound commercial principlesand good business sense... In the absence of evidence of a bad bargain, courts should not interpret a contract in a way that yields anunrealistic or absurd result. In the end, contractual

interpretation is not an exercise in second guessing what could have been included in a contract while discountingor dismissing relevant terms of a contract and uncontradicted contextual information. It is instead an exercise in determining what theparties objectively intended having regard to the entire written text, relevant contextual background and commercial context. [15] Adopting this approach, it is clear to me that Abstak’s obligation was not limited merely to applying for the developmentpermit. Both parties were aware that the application was likely to be refused.

Indeed, Abstak states as much in its brief, saying “...at thetime the Amending Agreement was entered into, all parties knew that the City did not support an automotive use on the Telsec propertyso it would be a difficult task to obtain the City’s approval for a development permit and that the application would ultimately have to bedealt with through an appeal to the SDAB.” Given that understanding, limiting Abstak’s obligation to submitting the initial applicationwould not accord with “good business sense”. Nor, in my view, would it be an accurate reflection of the parties’ intentions at the time ofthe Agreement.

Until October 10, 2008, Abstak could have abandoned the deal without making application for the development permit.However, once it elected to submit the application, a reasonable person in the circumstances of these parties would have understood thatAbstak would have to pursue the matter further, appealing the City’s inevitable refusal to the SDAB. B. Was the Standard Best Efforts or Reasonable Efforts? [16] It is common ground that Abstak did in fact appeal the City’s refusal to the SDAB, though the appeal ultimately wasabandoned.

The next question, then, is how far Abstak was required to go in pursuing that appeal. [17] Telsec argues that clause 7.1 of the Amending Agreement, as set out above, would be impossible to satisfy if Abstak failed orrefused to take all necessary, reasonable steps to obtain the development permit. It points to the Supreme Court of Canada’s decision inDynamic Transport Ltd v OK Detailing Ltd, (SCC), [1978] 2 SCR 1072. In that case, planning approval was requiredfor the transaction to proceed, but the agreement was silent on who was to apply for the approval.

The Court stated at 1084 that “Thecourt will also imply that each party is under an obligation to do all that is necessary on his part to secure performance of the contract.”In the circumstances of that case, the Court further held as follows: The common intention to transfer a parcel of land in the knowledge that a subdivision is required in order to effect such transfer must betaken to include agreement that the vendor will make a proper application for subdivision and use his best efforts to obtain suchsubdivision.

This is the only way in which business efficacy can be given to their agreement. [18] Telsec argues that by abandoning the appeal, Abstak failed to use its best efforts to secure the development permit. [19] Abstak argues that Telsec fails to distinguish among the possible standards for its efforts, referring variously to “reasonableefforts”, “best efforts” and “good faith efforts”.

It points to Victoria Drive Auto Sales Ltd v Cardinal Management Ltd, 2008 BCCA428, wherein the British Columbia Court of Appeal noted at para 48: The principles for satisfying “best efforts” are set out in Atmospheric Diving Systems Inc. v.

International Hard Suits Inc. (1994), 89B.C.L.R. (2d) 356 at para. 71 (S.C.): 1. “Best efforts” imposes a higher obligation than a “reasonable effort”. 2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logicalconclusion and leaving no stone unturned. 3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.

4. The meaning of “best efforts” is, however, not boundless. It must be approached in the light of the particular contract, the parties to it and the contract’s overall purpose as reflected in the language. 5. While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith. 6. Evidence of “inevitable failure” is relevant to the issue of causation of damage but not to the issue of liability.

The onus to show that failure was inevitable regardless of whether the defendant made “best efforts” rests on the defendant. 7. Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test, is relevant evidence that the defendant did not use its best efforts. [ 20 ] Abstak argues that a duty to use reasonable efforts can be found only if a term imposing such an obligation can be implied into the Agreement.

It distinguishes the case law cited by Telsec, including Dynamic Transport , Victoria Drive and 504148 Alberta Ltd v The Seventies Homes Canada Inc , 2005 ABQB 382 , on the basis that in those cases such a term either was contained in the agreement or could be implied. [ 21 ] As I have already indicated, I do not think that a duty on Abstak to pursue the SDAB appeal requires an implied term. Rather, given the factual matrix, I find that such an obligation was understood by the parties and arises from a proper

interpretation of the Agreement. [ 22 ] With respect to the standard to be applied to Abstak’s efforts, I am inclined to the view that best efforts were required. As the British Columbia Court of Appeal held in Victoria Drive , such efforts are not boundless. Nevertheless, I am satisfied that Abstak was required to pursue the SDAB appeal diligently. Indeed, it did so up to a point. It was Abstak’s last-minute abandonment of the appeal that amounted to a breach of the Agreement.

Even if I am wrong and a lesser standard applies to Abstak’s required efforts, I find that abandonment of the appeal without reasonable justification falls below the necessary threshold. [ 23 ] Abstak’s proffered rationale for abandoning the appeal is decidedly unsatisfying. It argues that proceeding with the appeal was not a reasonable step. It asserts that it relied on Mr. Homersham’s advice at the time that the appeal was not likely to be successful.

Abstak submits in its brief that “...any reasonable businessman in these circumstances having been provided with the same advice would have made the same decision...”. [ 24 ] I do not accept this argument. As noted above, the appeal was scheduled to be heard on February 26, 2009, having previously been adjourned from February 12. Abstak made the decision to abandon the appeal the day before the hearing. Prior to that point, significant efforts had been made to advance the appeal.

These included meeting with the relevant alderman to discuss some of the issues raised by the City, consulting with the community association and preparing a revised site plan that addressed some of the bylaw relaxations identified by the City. While Telsec argued that Abstak’s representatives had not done enough to prepare for the appeal, Mr. Homersham’s evidence was that he was sufficiently prepared and that both he and Mr. Balbi were fully versed in the issues to be addressed by the SDAB. All that remained was the hearing itself.

This, I find, was only an incremental additional step that a reasonable businessperson would have pursued after having expended the time, effort and money to prepare for it. [ 25 ] I note that the Court in Victoria Drive held that the onus of proving “inevitable failure” is on the defendant. Abstak has not discharged this onus. C. Did Abstak Breach Any Duty of Honest Performance? [ 26 ] This brings me to Telsec’s arguments based on the Supreme Court of Canada’s decision in Bhasin v Hrynew , 2014 SCC 71 .

In that case, the Supreme Court established a common law duty of honest contractual performance, holding as follows at para 73: ...I would hold that there is a general duty of honesty in contractual performance. This means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.

This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance. [ 27 ] Abstak focuses on the Court’s statement that this duty does not include a duty of loyalty or of disclosure. It argues, inter alia , three things. First, it had no duty to ask Telsec for an extension of the February 27, 2009 deadline. Second, it had no duty to inform Telsec of Volkswagen’s deadline extension or to disclose “what is was doing with respect to the Wood land backup”.

Third, it had no duty to consider Telsec’s having tied up the land by entering into the Agreement. [ 28 ] In principle, I agree with these assertions, though I do not think they provide a complete answer to Telsec’s argument. I agree that Abstak was under no duty to ask Telsec for an extension, though I accept Telsec’s assertion that the extension would have been granted if sought. [ 29 ] I agree that Bhasin did not oblige Abstak proactively to disclose that it was considering the Wood land.

I do, however, think that Abstak’s response when questioned by Telsec about the Wood land came perilously close to misleading. [ 30 ] Further, I agree that Telsec was aware at all material times that its property was tied up for the time frames set out in the Agreement. Abstak was under no duty to protect Telsec from the vagaries of the real estate market during this time period. However, it does not follow that Abstak could string Telsec along, then abandon the SDAB appeal on a pretext.

I find that Abstak did exactly this. [ 31 ] Telsec argues that Abstak abandoned the appeal out of concern that it would be successful and that it would then be held to a deal it no longer wanted. Abstak protests, saying in its brief that certain steps it took at the beginning of February 2009 indicate that it was not prepared to drop the appeal but instead “had no choice but to continue with what was a futile effort in the end result to advance

the appeal because it had no agreement with Wood to acquire its land in place and had no choice but to proceed with the appeal and hopefor the best.” However, there is nothing in the evidence before me to indicate that this state of affairs had changed by February 25, 2009.Indeed, Abstak states in its brief that it did not have a deal with Mr. Wood at that date. [32] Given the efforts it had made in advance of the appeal and the fact that all that remained was to attend the hearing itself, Icannot accept Abstak’s contention that it abandoned the appeal because it could not succeed.

In particular, I find this positioninconsistent with Abstak’s assertion that it believed in early February that the appeal was futile. If that were the case, why would Abstakcontinue to prepare? Why would Mr. Homersham attend at the SDAB on February 12? Why would he adjourn the hearing to February26? Abstak’s position does not make sense in light of these actions.

Instead, I find that Abstak abandoned the appeal at the eleventh hourwhen it had become sufficiently confident of acquiring the preferred Wood land. [33] Given my finding above that Abstak breached the Agreement by failing to use its best efforts to pursue the developmentpermit at the SDAB appeal, it is perhaps unnecessary for me to arrive a conclusion in respect of the duty of honest contractualperformance. Nevertheless, I find that Abstak mislead Telsec about its reason for abandoning the SDAB appeal and, in so doing,breached the duty established by the Supreme Court of Canada in Bhasin. IV.

Damages [34] Having found that Abstak breached the Agreement, I turn now to the question of Telsec’s damages. Three issues are relevantto that determination: the appropriate time for the assessment of damages; any reduction for the possibility that the SDAB appeal wouldhave been unsuccessful; and mitigation. A. What is the Appropriate Time to Assess Telsec’s Damages? [35] Telsec asserts that as a general rule in cases of failed real estate transactions, damages should be assessed as at the time of thebreach of contract.

It cites the decision of the British Columbia Court of Appeal in Mavretic v Bowman (1993), (BCCA), 76 BCLR (2d) 61. The majority in that case made these comments at paras 6, 9, 10 and 13: Cases dealing with this type of claim for damages for breach of contract usually commence with the proposition that the innocent party(the vendors in this case) should be placed in the same position as if the wrongful party (the purchaser in this case) had performed theobligation under the contract. ...

In my view, the authorities seem to support the proposition that the normal or usual approach is to assess damages as at the date of thebreach unless there are circumstances existing that make the assessment at that date inappropriate. ... Fixing the date for assessing damages at the date of trial, as in the case at bar, creates, in my view, additional difficulties. The realestate market may be volatile, reaching high points and depressed conditions very quickly from time-to-time. ...

During any period themarket could have reached high and low points several times – such a luck of the draw approach could only be appropriate in specialcases. ... Trials are adjourned and market conditions change; it is not inconceivable that trials could be delayed to gain the benefit of a risingmarket. Such an approach surely would not be beneficial for actions of this type.

In my view, the fact that the value is higher at the trialdate than at the completion date does not constitute circumstances that should encourage deviation from the normal or usual approachthat damages be assessed at the date of the breach of the contract. [36] Abstak takes the position that it does not need to address the appropriate date for assessment of damages because the actualsale of the Telsec land “sets the limit” on Telsec’s damages. The difficulty with this is that the sale of the Telsec land occurred in 2012,some three and a half years after Abstak’s breach of the Agreement.

This seems to me to engage the very question Abstak seeks toignore. [37] Telsec cites a number of cases in which the courts have grappled with this issue. Where some special circumstance exists,particularly where the plaintiff has sought specific performance but ultimately been awarded damages instead, the courts have thought itappropriate to assess damages at the date of trial. Such cases appear to be in the minority and in my view rightly so. [38] In the circumstances of this case, I am satisfied that Telsec’s damages crystallized and should be assessed as at the date ofAbstak’s breach of the Agreement.

This approach necessarily will take into account the falling real estate market at that time. This makessense because those market conditions are rationally connected to the breach. By contrast, the rising market years after the breach ismere happenstance. Assessing damages long after a breach of contract renders those damages dependent upon factors unconnected to theparties and their dispute including, significantly, lead times for bringing matters before the Court.

This surely can be justified only inspecial circumstances that are not present here. [39] That being the case, I accept Telsec’s assertion, based on the uncontested evidence of its valuator, that the value of the Telsecland at the time of the breach of the Agreement was $775,000 per acre. Telsec’s damages, being the difference between this value andthe price set out in the Agreement ($1,175,000 per acre) is $400,000 per acre or $2,000,000 for the five acre parcel covered by theAgreement. B.

Should the Damages be Reduced by the Likelihood of Success at the SDAB? [40] Abstak suggests that Telsec’s damages should be reduced to account for the possibility that the SDAB appeal would have

been unsuccessful and Abstak would have been entitled to walk away from the Agreement. Its expert estimated the chance of success at 20-30%. [ 41 ] Telsec’s position is two-fold. First, it asserts that since it was Abstak’s unilateral refusal to proceed with the appeal that renders the success of that appeal unknown, it should be Abstak that bears the risk that the appeal would have been unsuccessful.

Alternatively, Telsec asserts that even if this Court considers such a contingency, its expert testified that the likelihood of a successful appeal was 90-100%. [ 42 ] Having considered the reports and testimony of both experts, I prefer the evidence of Mr. Donaldson, Telsec’s expert. In my view, Mr. Ham, Abstak’s expert, proceeded from some rather troubling assumptions. He made several statements in the course of his testimony asserting his belief that the SDAB is biased against applicants for development permits. The following sample exchanges will serve to illustrate Mr. Ham’s opinion: Q. Okay.

Could we turn to page 4 of your opinion? At the beginning of that you talk about your experience concerning the decision of the authority on a development permit and how that is looked at by the SDAB? A. Yes. Q. Provide those comments? A. Thank you. Typically when you’re appealing to the SDAB, at least in my instance, typically it’s on behalf of an applicant who has been refused. That’s not always the case but it’s the most common case. And what you then have to look at is – is trying to say, what are the issues and how are we going to advance them?

And you have to look at the – at it from a perspective of whether the SDAB is going to accept a certain argument. And you know always that you’re at a disadvantage when you’re appealing a refusal from the development authority because the SDAB perceives the development authority, which is an arm of the City, as being a protector of the public interest, which is what it’s supposed to be. And so simplistically they’re the good guys and if you’re the developer who’s appealing, you’re typically the bad guys. ... Q. Well, what – I – sir, I find that, with respect, somewhat patronising.

You’re saying that, yes, we have a quasi-judicial tribunal, and we have access to the Court of Appeal, but we’re going to assume that we’ve got a lot of lay people on this tribunal; they may be bamboozled by what the planners put in front of them, they see these guys frequently. They’re not going to get it. That’s really what you’re saying, isn’t it? These – the – the City’s going to be able to pull the wool over their eyes and turn this down? That’s – A. That’s what – yes, that’s what happens very frequently. ... A.

It is still a lay tribunal, it is still got people on it who know little or nothing about planning, some of whom are there as community representatives, to support and represent its communities and so on. So in any circumstance where you’re going forward to a SDAB, particularly Calgary’s, you are not going before an independent tribunal, in the sense of unbiased. Now, if you say – Q. So you’re saying that the tribunal is a biased tribunal, that’s your evidence to the Court? A. It is in a very strict sense.

It has a tendency to support the approving authority, which is much greater than the tendency to overturn its decisions. ... Q. All right. So you’re saying that the SDAB is biased, and you can’t expect you’re going to get a fair hearing? A. In my view, yes it is. And it’s not – it is not an unbiased tribunal. [ 43 ] I note that while Mr. Ham acknowledged that questions of law may be appealed from the SDAB to the Court of Appeal, he clearly believed that this offered little real relief: Q. ...And how are [reasons of the SDAB] rendered? What form do they take? A. Well they’re written reasons.

They’re very extensive with all kinds of finding of fact. They’re essentially – an attempt is made to appeal proof them. Q. And appeal proof them from whom? A. The Court of Appeal. Typically – Mr. Grol has a masters degree in administrative law from somewhere I believe in the Netherlands. He’s quite astute and one of his goals is by finding a whole series of facts then basing the decision on that, which may well be the case. But it makes it very difficult to seek leave to appeal. [ 44 ] Based on his view of the SDAB’s lack of objectivity, Mr.

Ham testified that he begins his assessment by assuming that an applicant’s chance of success on appeal is not more than 50/50: Q. Now sir, you make the point in your report that the chances of winning appeals are typically less than 50/50? A. Yes. Q. Now, I’m just trying to understand why you said that and where it took you. Is it the case that you used that then as a starting point, in terms of, well, you’ve only got a 50 per cent chance of winning before the board, so you’ve got these other four or five issues, and so I deduct and arrive at my 20 to 30, is that sort of the process you went through?

A. Yes, I start at 50/50 – Q. Right. A. - because the SDAB tends to be supportive of the decisions of the approving authority. [ 45 ] Using this approach and adding his understanding that there were a number of issues to be addressed before the SDAB, Mr. Ham arrived at his conclusion that the appeal had only a 20-30% chance of success. He did acknowledge that if some of the issues already were resolved, for example by a revised site plan, the chance of success would increase, though only to about 40%. [ 46 ] Frankly, I find Mr. Ham’s opinion of the SDAB disturbing.

This Court cannot accept, let alone ground its judgments on, the proposition that a properly constituted administrative tribunal is systematically biased. I also find disquieting his rather cavalier dismissal of the right to bring questions of law before the Court of Appeal. To accept his opinion would, in my view, bring virtually any decision of the SDAB into question and thereby create a great deal of mischief. As his assessment of the potential success of the appeal in this case is premised on his fallacious assumptions, I reject his opinion in its entirety. [ 47 ] I prefer the evidence of Mr.

Donaldson who, as noted above, assessed the likelihood of success of the SDAB appeal at 90- 100%. [ 48 ] Accordingly, I decline to make any reduction in Telsec’s damages on this basis. C. Did Telsec have an obligation to mitigate? [ 49 ] Abstak asserts that Telsec had an opportunity to mitigate its damages when an offer was made in August 2012 to purchase the Telsec land for $1,100,000 per acre.

It relies on numerous cases in support of its argument that mitigation must always be considered in cases of breach of real estate contracts. [ 50 ] As I found above, the most appropriate time to assess Telsec’s damages is the time of Abstak’s breach of the Agreement. That being the case, it is not reasonable to assert a failure of mitigation based on an offer to purchase more than three years later and I reject Abstak’s argument. V. Conclusion [ 51 ] In the result, I find that Abstak breached the Agreement and that Telsec is entitled to damages in the amount of $2,000,000 plus pre-judgment interest.

As it was Abstak that breached the Agreement, I reject Abstak’s claim for return of its $100,000 deposit. VI. Costs [ 52 ] The parties may make written submissions on costs within 30 days of the date of this judgment. Heard on the 12 th – 16 th days of September, 2014 and the 26 th and 27 th days of January, 2015. Dated at the City of Calgary, Alberta this 21 st day of December, 2017. C.M. Jones J.C.Q.B.A. Appearances: John J. Marshall, QC John J. Marshall, QC Professional Corporation and

Beth P. Younggren Norton Rose Canada LLP for the Plaintiff Robert J. Simpson, QC Rose LLP for the Defendant