ABS Trucking Ltd v RIC New Brunswick Inc, 2018 ABQB 1049

Court of Queen’s Bench of Alberta Citation: ABS Trucking Ltd v RIC New Brunswick Inc, 2018 ABQB 1049 Date: 20181220 Docket: 1703 01383 Registry: Edmonton Between: A.B.S. Trucking Ltd. Plaintiff/Appellant - And - RIC New Brunswick Inc. Defendant/Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice B.A. Browne _______________________________________________________ Introduction [ 1 ] ABS appeals a decision of Master Smart dated January 19, 2018, and filed February 15, 2018, wherein the learned Master dismissed the ABS Statement of Claim upon the application by RIC for

summary dismissal.

Standard of Review [ 2 ] The parties agree that the standard of review for this appeal is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 at para 30 .

Summary Dismissal [ 3 ] A party may apply to the Court for

summary dismissal in respect of all or part of a claim on the ground that there is no merit to the claim or part of it: Alberta Rules of Court , Alta Reg 124/2010, R 7.3(1)(b). [ 4 ] If the Court is able to use the existing record to make a fair and just determination on the merits,

summary dismissal is appropriate: Ghost Riders Farm Inc v Boyd Distributors Inc , 2016 ABCA 331 at paras 10-11 ; Stoney Tribal Council v Canadian Pacific Railway , 2017 ABCA 432 at para 11 . The preliminary burden is on the applicant. Then, the onus shifts to the respondent to show that the case has merit. Facts [ 5 ] The Appellant’s (ABS) Statement of Claim alleges fraudulent concealment (of contaminated land) which requires that the Respondent (RIC) perpetrated some kind of fraud. The claim alleges that RIC concealed a material fact, which ABS, in exercising reasonable diligence, did not discover. [ 6 ] A brief

summary of the facts is in order. In late 2015, Amrit Grewal (Grewal), who is the sole shareholder and director of ABS, was interested in purchasing the particular piece of land that is the subject matter of this action (the Land) and which was owned by RIC. [ 7 ] Grewal (ABS) hired Dylan Kelley (Kelley) as a real estate person to negotiate the purchase of the land in question. The agent, Kelley, testifies that he took his instructions from Grewal.

Eventually, he was acting as agent for both Vendor and Purchaser. [ 8 ] It is noteworthy that Grewal did not swear an affidavit in support of this application but rather deferred to his engineer, Binod K. Bhardwaj (Bhardwaj). The Court has received reports from Kelley and Bhardwaj about Grewal’s knowledge, but all of those statements are hearsay. Little, if any, weight can be given to them. [ 9 ] RIC received an unsolicited call from Kelley, as agent for ABS, inquiring about the possible purchase of the Land.

The Land had not previously been listed for sale. [ 10 ] RIC states that they had not previously submitted a zoning application for this land to the City of Edmonton. Kelley understood that the proposed use of the land by ABS was soil dumping or truck parking. [ 11 ] Prior to signing any documents, on December 11, 2015, Kelley sent an email to a representative of RIC advising RIC that the Land was almost entirely in the flood area and the position of the City was that they would not approve the use of the Land for anything other than natural and recreational purposes.

Kelly testifies that problems with the land were discussed many times with Grewal. [ 12 ] On January 12, 2016, a purchase agreement was signed between RIC and ABS with a purchase price of $4.5 million and a deposit of $50,000 (Contract).

Paragraph 6.3 of the Contract reads: 6.3 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 the Property, any neighbouring lands, and this transaction, including any warranty, representations or collateral agreement relating to the size measurements of the Land and Buildings or the existence or non-existence of any environmental condition or problem. [ 13 ] Additionally, there were a number of condition precedents to the sale: i.

The Plaintiff conducting due diligence before January 27, 2016; ii. The Plaintiff obtaining Environmental Phase 1 Report before January 27, 2016; iii. The Plaintiff obtaining Geotechnical Report before January 27, 2016. [ 14 ] On January 28, 2016, a number of reports were provided by RIC to Kelley, as agent for Grewal and ABS:

a) Phase I Environmental Site Assessment, dated May 2013;

b) AMEC proposal to carry out a Phase II Environmental Site Assessment;

c) Site Access, Easement and Reclamation Agreement;

d) Area Structure Plans;

e) Celanese Environmental Report. [ 15 ] A simple reading of the Executive

Summary of the first report puts anyone reading this report on notice that there are serious problems with the Land:

In

summary, the nature and degree of the subsurface impact to the subject site by the former Celanese operation requires further assessment. This further assessment can be conducted after completion of the development “site specific chemical criteria” and acceptance of this criteria by Alberta Environment....The environment quality of the fill materials placed on the subject site is unknown and therefore soil sampling and chemical testing of the fill materials is required. [ 16 ] ABS does not deny receiving these reports. [ 17 ] On January 29, 2016, the Contract was amended.

The deposit was increased to $150,000 and the dates for the conditions including due diligence were extended to February 28, 2016. The closing date was to be the day after the conditions were removed. [ 18 ] On February 29, 2016, the Contract was amended again. The deposit was increased by $300,000 and was made non- refundable and the condition precedents were removed. [ 19 ] On or about April 13, 2016, the City refused a proposed change in zoning from agricultural to general industrial use made by ABS. [ 20 ] The deal did not close and ABS commenced this action seeking recovery of the deposit of $300,000.

Arguments of the Parties [ 21 ] ABS argues that RIC knew the Land could not be put to any use and that RIC concealed it. In other words, ABS argues that RIC knew that the Land could not be used for any purpose until the contamination was cleaned up, and did not disclose this to ABS. [ 22 ] RIC relies on paragraph 6.3 of the Contract, which provides that there are no warranties, representations or collateral agreements regarding any environmental condition or problems.

RIC argues that significant documents were provided to ABS to allow them to investigate and carry out their due diligence regarding the use of the Land and they should have been well aware of the issue of the contamination as it is in the documents that were provided. [ 23 ] RIC submits further that there is no evidence that the Land could not be put to any use whatsoever. Analysis [ 24 ] After reviewing the evidence of all of the parties, I am satisfied that ABS was aware of the contamination of the Land. Information in that regard was provided to them in the January 28 documents.

In addition, the Contract for the purchase and sale of land includes paragraph 6.3 which limits liability for environmental issues in any event. [ 25 ] The evidence before the Court indicates that Grewal (ABS) approached RIC to purchase the Land. [ 26 ] There is no evidence that confirms that the Land could not be used for any purpose. Kelley indicates that he advised Grewal on a number of occasions that there were problems with the Land but Grewal wanted to proceed in any event. [ 27 ] There is no evidence that there was coercion on ABS to buy the Land, remove the conditions, or make the deposit non- refundable.

Those were all decisions that were made by Grewal. There was no attempt to conceal potential use or non-use of the Land or the contamination of the Land. [ 28 ] I note again that Grewal chose not to swear or affirm an affidavit for the

summary dismissal application. Bhardwaj and Kelley both talk about information they received from Grewal, but this is hearsay. [ 29 ] I agree with Master Smart’s decision. Therefore the Contract stands and there is no basis whatsoever for an argument that RIC fraudulently concealed any information from ABS. Costs [ 30 ] As the successful party, RIC shall have its costs of this appeal. Heard on the 7 th day of November, 2018. Dated at the City of Edmonton, Alberta this 20 th day of December, 2018. B.A. Browne J.C.Q.B.A. Appearances:

Murray L. Engelking, Engelking Law for the Plaintiff Coralie J. Moher, Witten LLP for the Defendant