North Pacific Properties Ltd v Bethel United Churches of Jesus Christ Apostolic of Edmonton, 2020 ABQB 791

Court of Queen’s Bench of Alberta Citation: North Pacific Properties Ltd v Bethel United Churches of Jesus Christ Apostolic of Edmonton, 2020 ABQB 791 Date: 20201216 Docket: 1103 18278 Registry: Edmonton Between: North Pacific Properties Ltd. Plaintiff - and - Bethel United Church of Jesus Christ Apostolic of Edmonton Defendant Corrected judgment: A corrigendum was issued on December 21, 2020; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice A. Loparco _______________________________________________________

Table of Contents I. Introduction . 2 II. Position of the parties . 3 III. Issues and Brief Conclusion . 4 IV. Evidence at Trial 5 V. Background and chronology of events . 5 a. The Land Agreement 5 b. The Prodor Lands . 9 c. Sale of the Prodor Lands and Assignment of the Bethel Lands . 10 d. Work on the Bethel Lands . 11 e. The Expropriation . 13 f. Attempt to Accelerate Closing . 14 g. Further attempts to negotiate an Amendment to the Land Agreement 15 h. Survey of Bethel Lands . 16 i. Subdivision Discord . 17 j. Resolution Attempts . 19 VI. Legal issues . 22 a.

Were the parties ad idem on the terms of an Extension Agreement? . 22 b. If the Extension Agreement was not reached, did Bethel breach the Land Agreement on or before August 1, 2011? . 27 c. What damages are available to the Plaintiff as a result of the breach? . 44 d. Is there any merit to the counter-claims? . 61 VII. Conclusion . 63 I. Introduction [ 1 ] This lawsuit was like a Jenga ® tower: it started with the sale of not less than 55 acres of land with a transfer back of 14 acres to the Defendant.

But after determining that there was a shortfall in the acres sold and then a further expropriation of another portion of the lands, the entire deal collapsed because the parties could not determine who should take less.

Unfortunately, they had no prescribed means of resolving their dispute prior to closing. [ 2 ] This Court must interpret the terms of a contract for the sale of land (“Land Agreement”) [1] between the Defendant, Bethel United Church of Jesus Christ Apostolic of Edmonton (“Bethel” or the “Church”) and West Jasper Properties Inc. (“West Jasper”) (not a party to this action) and the rights arising from an assignment of the Land Agreement. [ 3 ] Prior to the closing date, West Jasper assigned the Land Agreement to the Plaintiff, North Pacific Properties Ltd. (“North Pacific”).

North Pacific intended to develop the lands into a residential neighbourhood in west Edmonton. [ 4 ] After the assignment, North Pacific discovered that the surface area of lands was incorrectly defined in the Land Agreement (“not less than 55 acres”), as only 52.65 acres were available. Further compounding the problem was the fact that Alberta Infrastructure expropriated 2.86 acres (“Expropriation”). If the 14 acres to be transferred back to Bethel (“Bethel Retention”) remained the same size, North Pacific would only receive a net total of 35.79 acres compared to its expected 41 acres.

In order to solve the problem, it asked Bethel reduce the size of the Bethel Retention, reduce the purchase price, or a combination of the two. [ 5 ] Before North Pacific could close on the transaction, it had to satisfy a condition precedent and obtain municipal subdivision approval that defined the Bethel Retention. These issues led to various contractual disputes. [ 6 ] The crux of the contractual

interpretation comes down to whether 7 words included in the definition of property sold are a fundamental term of the contract: “…which contains not less than 55 acres.” [ 7 ] A number of steps were taken along the way to attempt to rectify and fulfill the contractual terms. The parties, through counsel and directly, negotiated a possible extension of the condition period and closing date (“Extension Agreement”), but ultimately,

Bethel took the position that the specific extension terms were never agreed to. [ 8 ] In the end, Bethel declared the Land Agreement to be null and void since North Pacific did not obtain subdivision approval prior to the closing date. II.

Position of the parties [ 9 ] North Pacific submits that the Extension Agreement is valid and enforceable, and that Bethel repudiated the Extension Agreement and the Land Agreement on September 1, 2011, when it advised North Pacific that the Land Agreement was null and void. [ 10 ] North Pacific further submits that regardless of the validity of the Extension Agreement, Bethel breached the Land Agreement before August 1, 2011, and North Pacific is entitled to damages for the breach. [ 11 ] Bethel’s position is that the parties were not ad idem with respect to the terms of the Extension Agreement.

It further states that it did not breach the Land Agreement since the words “not less than 55 acres” was not labeled a contractual guarantee, representation or warranty, and must nevertheless be read in conjunction with the attached schedules (including diagrams and the land titles). [ 12 ] With respect to the Expropriation, it submits that North Pacific is responsible for the loss since it agreed to take over the negotiations with Alberta Infrastructure and absorb any consequence; failing that, its only remedy was to terminate the Land Agreement and claim nominal expenses.

Bethel states it was under no obligation to renegotiate the terms of the Land Agreement. [ 13 ] Bethel further argues that North Pacific breached the Land Agreement by failing to pay property taxes, purporting to reduce the size of the Bethel Retention, failing to obtain subdivision approval, and failing to remove conditions pursuant to the Land Agreement.

It submits in the alternative that the Land Agreement was void for lack of certainty, void ab initio as the parties were not ad idem on the essential terms, or that the Land Agreement was frustrated by North Pacific’s inability to secure subdivision. [ 14 ] In its Counter-claim, Bethel claims that North Pacific caused stockpiles of clay to be deposited on the Lands, resulting in trespass, nuisance, and/or waste. It also seeks repayment of the municipal property taxes during the term of the Land Agreement and damages for slander of title resulting from a caveat North Pacific registered on its lands. III.

Issues and Brief Conclusion a. Was there a valid Extension Agreement pursuant to which the parties agreed to extend the Condition Period and the Closing date in the Land Agreement? No. The parties were not ad idem on the essential terms of the Extension Agreement, which required specific deadlines for the Condition Period and the Closing Date. b. If the Extension Agreement is not valid, did Bethel breach the Land Agreement on or before August 1, 2011? Yes. Bethel breached its contractual obligations since the term to provide “not less than 55 acres” was fundamental to the Land Agreement. c.

What is the quantum of damages, if any, to be awarded to North Pacific? North Pacific is entitled to $5,770,000 plus interest and costs for the damages arising from the breach of the Land Agreement. d. Does Bethel have any counterclaims for damage to the Lands, slander of title or municipal property taxes? All counterclaims are dismissed. IV. Evidence at Trial [ 15 ] A number of individuals testified at trial. In a case of this nature, where most of the relevant facts are introduced by documentary evidence and the issues to be resolved relate to the legal

interpretation of a contract for the sale of land, very little turns on credibility findings. I will deal with any discrepancies or concerns in relation to the parties’

interpretation of the documents or the facts as required in the chronology of events and my analysis of the legal questions. [ 16 ] The following individuals testified:

o Ron Burek testified on behalf of North Pacific. Mr. Burek, an experienced contractor and developer, is the founder and current owner of the shares of North Pacific. He was involved in the dealings with Bethel throughout. o Len Taschuk formerly owned shares in North Pacific before selling them back to Mr. Burek. Since 2011, he was no longer employed with the company. Mr. Taschuk was in charge of dealing with Bethel at the material times but had little independent memory of the events. o Michael Grange testified on behalf of Bethel. Mr.

Grange is a chartered accountant who acted on behalf of Bethel in all of its dealings with North Pacific. He was also involved in the initial acquisition of the Bethel Lands. He was an advisor to the church on business issues. o Renee Merrifield was called by Bethel to testify about her knowledge of work on the Bethel Lands.

She is the CEO of Troika, a company in the land development business that worked with North Pacific on the adjacent Prodor Lands. o North Pacific called Ed Jackson, who was qualified as an expert witness in the area of land appraisals and acquisitions and development, including an analysis of the expected range of profits in the industry for residential development projects in Alberta. o Bethel called Brian Gettel, who was also qualified as an expert witness in the area of land appraisals. [ 17 ] Mr.

Parker, who was Bethel’s lawyer until September 2011, drafted the terms of the Land Agreement, and represented Bethel throughout most of the legal matters involving North Pacific. He did not testify. [ 18 ] North Pacific had several lawyers representing it throughout, including, Mr. Yurkovich, and Mr. James-Scott Lee. Neither of them testified. V. Background and chronology of events a. The Land Agreement [ 19 ] The chronology of events is lengthy, but I find it necessary to explain certain details of the transaction in the order in which they occurred.

This way, the reader can appreciate the complexity of this litigation and relate the facts to the many legal issues raised. [ 20 ] Bethel purchased a large parcel of land, located at 199 street and 98 th Avenue in Edmonton, in 2003 and 2004 for $1.3M. Mr. Grange testified that there was a sign off Highway 16A advertising the sale of approximately 55 acres. He testified that Pastor Orrain Simpson envisioned the Church growing into a larger space.

Bethel therefore anticipated keeping a portion of the lands for its own growing congregation – to develop services and facilities adjacent to the Church such as a community centre, a gym, and a seniors’ home - and then sell any surplus acreage to help finance its projects. It had no specific plan or time constraints. [ 21 ] On September 1, 2006, Bethel and West Jasper entered into the Land Agreement for the purpose of selling a portion of its lands (“Bethel Lands” or “Lands”). The Land Agreement was amended by a first amending agreement dated April 6, 2007, and a second amending agreement dated November 6, 2007.

The deadline to satisfy the Mutual Covenant and close the transaction was extended to August 1, 2011 (“Closing Date”). [ 22 ] The Land Agreement stated that the Bethel Lands contain “not less than 55 acres.” Pursuant to the Land Agreement, Bethel was to retain 14 acres (the “Bethel Retention”) for the development of buildings associated with the Church. West Jasper agreed to pay $3.5M for the transfer of Lands, while Bethel agreed to buy back the 14-acre Bethel Retention for $1.

In essence, given the transfer back for consideration, the parties are each both vendor and purchaser in this Land Agreement, although Bethel is defined as the “Vendor” and West Jasper as the “Purchaser.” [2] [ 23 ] An individual by the name of David Gibson was initially involved on behalf of West Jasper in negotiating the Land Agreement with Bethel [3] . In conjunction with extending the Offer to Purchase, Mr. Gibson obtained an appraisal prepared by Holland Appraisal (“Holland Appraisal”). He reviewed the appraisal and shared it with Bethel.

The appraisal stated that the Bethel Lands were 55 acres, more or less, and estimated the market value based on that number of acres. [ 24 ] Before accepting the Offer to Purchase, Bethel retained its own appraiser, James Wall (“Wall Appraisal”). Mr. Grange reviewed the Wall Appraisal, which identified that Bethel Lands were 52.67 acres, [4] more or less, and estimated the market value based on that number of acres. Mr. Grange shared the appraisal with Bethel’s Board but was not certain he provided it to Mr. Gibson. [ 25 ] During his testimony at trial, Mr.

Grange acknowledged that he did not raise the fact that the Lands were less than 55 acres with West Jasper prior to accepting the Offer to Purchase (“Acreage Shortfall ” ), which provisions formed the terms of the Land Agreement. [ 26 ] While acknowledging in retrospect that the description of the “Property” in the Land Agreement was an error, Mr.

Grange testified that it was merely an “oversight” and not intended to be a fundamental term or guarantee of the Land Agreement. [ 27 ] The pertinent terms of the Land Agreement are summarized as follows: • Property is defined as: “...collectively, those lands outlined in black in

Schedule “A” and which are legally described as set out in

Schedule “B” attached to this Offer, which contains not less than 55 acres, located within the City of Edmonton…” (s. 1.1 (g)); o

Schedule “A” Black Outlined Schematic of Property;

o

Schedule “B” Legal Description of Land; o

Schedule “C” Permitted Encumbrances; o

Schedule “D” Bethel Church Lands; o The Schedules were attached to and incorporated in the Land Agreement but had the notation “preliminary subject to change”; • Entire Agreement : This Offer, upon acceptance by the Vendor, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties.

There are no representations, warranties, conditions or other agreements, express or implied, statutory or otherwise, between the parties in connection with the subject matter of this Offer, except as specifically set forth herein and therein; • Amendments : This Offer may only be amended, modified or supplemented by a written agreement signed by the Vendor and Purchaser; • Waiver: No waiver of any provisions of this Offer shall be deemed to constitute a waiver of any other provision (whether or not similar) unless otherwise expressly provided, nor shall any such waiver be effective unless in writing duly executed by the party to be bound thereby; • Purchase: Subject to the terms and conditions herein contained, upon acceptance of this Offer by the Vendor, the Vendor agrees to sell, assign and transfer all rights, title and interest in the Property free and clear to the Purchaser and the Purchaser agrees to purchase the Property from the Vendor, as, at and from the time of Closing; • Purchase Price: $3,500,000 plus applicable taxes and interest as may be payable under the terms of the Land Agreement (s. 2.2); o the Purchase Price was payable to Bethel as follows: 1) $50,000 deposited in an interest-bearing trust account at the time of execution of the Final Agreement (s. 2.3(a)); 2) $200,000 deposited in an interest-bearing trust account on or before May 30, 2007 (s. 2.3(

b) as amended); 3) $3,250,000, plus interest at a rate of 6% per annum on unpaid amounts to be paid on or before August 1, 2011 (s. 2.3(c)); • Bethel Property Retention Entitlement : The Purchaser would provide Bethel with a net fourteen (14) acre parcel of land in the location attached the Land Agreement as

Schedule “D” (the “ Bethel Retention ”) for the sum of $1.00+GST. Bethel agreed that the location of the Bethel Retention could be changed if required by drainage or the City of Edmonton Planning Department requirements and such changes would be acknowledged and agreed upon by both parties acting reasonably (s. 9.1 and

Schedule “D”); • Representations and Warranties : Bethel represented and warranted that it was the sole legal owner of the Property and that there would be no expropriation of any part of the Property (s. 3.1(a) & (k)); o Bethel’s representations and warranties would be true and correct in every material respect at the time of closing (s. 8.2(a)); o If the representations and warranties were not satisfied on closing, the purchaser was entitled pursuant to

article 8.3, without prejudice to the exercise of any other right or remedy under the Land Agreement, at law or in equity, to terminate the Land Agreement by notice in writing to Bethel. At that point, the purchaser would be entitled to the return of its deposits.

The purchaser was also entitled to waive any non-compliance with the representations and warranties (s 8.3); • Title and Inspection of Documents : Bethel agreed to, within five (5) days following the acceptance of the Offer, make available to the Purchaser “all title documents, real property reports, copies of encumbrances, environmental reports, leases, plans and reports and other documents in its possession or under its control related to the Property...” (s 4.1); • After September 1, 2006, Bethel must not do anything to encumber the Bethel Lands and in particular, must not sell or agree to sell any part of the Bethel Lands (s 5.1(a) & (b)); • Mutual Covenant : Bethel and the purchaser mutually covenanted that the purchaser would “make application to and have the City of Edmonton approve the subdivision of the Property out of the Property” and the purchaser having satisfied any conditions of subdivision imposed by the City including the requirement that a new Plan of Subdivision be registered... (s. 7.1(a), as amended) (“ Mutual Covenant ”); o the Mutual Covenant could not be unilaterally waived by either party and the Land Agreement would be null and void if the Mutual Covenant was not satisfied by August 1, 2011 (the “Condition Period”) (s. 7.1); • Conditions Precedent , which had to be fulfilled by the Purchaser prior to the expiration of the Condition Period, included: o to apply for and obtain rezoning of the Bethel Lands from the City of Edmonton (“City”)(“ Rezoning Condition Precedent “) (which was to the sole benefit of the Purchaser and could be waived by the Purchaser or it could provide notice of satisfaction to the Vendor) (s. 6.1(a)); o satisfaction of the Mutual Covenant; o Purchaser financing; o Purchaser having obtained zoning satisfactory to its requirements; • Vendor Covenants : Bethel would lend reasonable assistance to West Jasper in fulfilling all of the Conditions Precedent, including executing such documents, disclosing such information concerning the Lands and providing access to the property as necessary (s. 5.1 (c));

• Both parties would proceed diligently and in good faith in making any inquiries, holding any discussions, seeking any approval or taking any action in pursuance of the satisfaction of the conditions precedent, including the Mutual Covenant (s. 8.1 & 8.4); • the rights and obligations of West Jasper under the Final Agreement could be assigned by West Jasper to North Pacific at West Jasper’s sole discretion (Second Amending Agreement); and, • Time of Essence : Time shall be of the essence of this Offer in all respects and any waiver of any time provision shall not be effective unless in writing and signed. o West Jasper paid the two deposits required by the Land Agreement, which Bethel continues to hold. b.

The Prodor Lands [ 28 ] Immediately adjacent to the Bethel Lands is another even larger tract of land, 91.75 acres, which the parties have called the “Prodor Lands”, named after the previous owner.

They were owned by West Jasper. [ 29 ] West Jasper and then later, North Pacific’s intention (as the assignee of the Land Agreement and purchaser of the Prodor Lands, discussed below), was to develop the Bethel and Prodor Lands collectively as a single project, which would be rezoned, subdivided, and improved, so that serviced residential lots could be sold to residential housebuilders as part of a residential development called Stewart Greens (“Stewart Greens”). [ 30 ] The Purchaser expected to benefit from economies of scale that could be achieved by developing the two parcels of land together as a single project. [ 31 ] While the Bethel Lands remain undeveloped, the Prodor Lands have been developed with a mix of residential housing. c.

Sale of the Prodor Lands and Assignment of the Bethel Lands [ 32 ] In 2007, Arnie Gable, on behalf of West Jasper, approached Ron Burek, who controlled North Pacific, about buying the Prodor Lands and taking an assignment of the Land Agreement for the Bethel Lands. Mr. Gable advised that the two parcels together were comprised of at least 150 acres, which North Pacific initially agreed to purchase for $20M. [ 33 ] Mr. Burek began to study the drawings and suspected that Mr.

Gable included property owned by the City in his calculation of the total acreage. [ 34 ] West Jasper unilaterally amended the legal description of the Stewart Green lands to be described as 150 acres ‘more or less’. Mr. Taschuk agreed to the amendment on behalf of North Pacific. [5] [ 35 ] Mr. Burek deposed that this amendment, in addition to Mr. Gable’s apparent desperation to sell the lands, caused him to be suspicious. He calculated a rough measurement of the property off a map with the assistance of the software program AUTOCAD.

He determined the area of private land and the City-owned land and determined that 6 acres belonged to City and not West Jasper. [ 36 ] He then asked Mr. Taschuk to retain Brian Gettel to provide a short narrative valuation, which is dated November 21, 2007 (“ Short Narrative ”). The Short Narrative provided some key findings as of that date: • the total area of the Stewart Green subdivision was 144.41 acres (as opposed to the 150 acres represented by Mr. Gable). Attached to the Short Narrative were the 6 legal titles, including 4 relating to the Bethel Lands.

Page 2 of the Short Narrative lists all 6 parcels individually along with their respective acreage; • that the entire parcel was comprised on organic soils, which are defined as having accumulations of moss or sedge peat of at least 12 inches thick and while drainage ditches were present, it was probable that excavation of the organic soils would be necessary and clay fill would be required to replace the excavated materials; • that a geotechnical report would be in order; • that soils are a key limitation and that the lands had a very significant physical impediment in the form of organic soils, which can exert a significant negative impact on the value of the lands; • that an adjustment was required for the poor soil conditions but that ascertaining the adjustment was difficult without any geotechnical information; • that the value of the Stewart Green lands was between $150,000 and $165,000 per acre, which included for a downward adjustment of $100,000 per acre on account of the soil conditions, acknowledging that it is a very subjective process without a geotechnical analysis; and,

• Based on Mr. Gettel’s evidence at trial, the downward soil adjustment was arrived at by way of information provided by Mr. Taschuk on behalf of the beneficial owners of the Lands; [ 37 ] As a result of the apparent discrepancy in land size, Mr. Burek demanded that the agreement be rescinded or the purchase price be reduced to $14,260,405. West Jasper ultimately chose to accept the reduced purchase price. [ 38 ] The original purchase price of the Assignment was therefore reduced by a total of $5,739,595 for both the Prodor and Bethel Lands. This was based on Mr.

Burek’s estimate of loss of expected profit and an estimated overpayment on the amount per acre. He calculated this based on his revised projected revenues for approximately 130 net acres of land (taking out the Bethel Retention and accounting for the total loss of 6.16 acres overall). [ 39 ] On December 13, 2007, West Jasper assigned the Land Agreement (“ Assignment ”) to North Pacific (also “ Assignee ”). At the same time, it sold the Prodor Lands to North Pacific. [ 40 ] Obviously, prior to the Assignment, North Pacific knew that there was a shortfall in the total acreage being offered by Mr.

Gable of 6.16 acres (150.16 vs 144.41 acres). However, Mr. Burek’s evidence at trial was that he did not know at that time what portion of those missing acres were from the Bethel Lands. [ 41 ] The Prodor Lands are not in dispute but are frequently discussed as they are relevant to the understanding of the Bethel Lands purchase and the issue of specific performance, discussed later. d. Work on the Bethel Lands [ 42 ] North Pacific, through a related company, was hired by West Jasper in 2006 to dig ditches to drain the peat on Mr. Burek’s advice. Mr.

Taschuk acknowledged in cross-examination that this work was done without Bethel’s knowledge since their first contact did not occur until March 2009. There is no evidence as to whether West Jasper was authorized to be on the Lands. [ 43 ] On or about October 4, 2007, and prior to the Assignment being formalized, North Pacific began to stockpile clay on the Bethel Lands to be used later for grading purposes. At some point in 2008, after the Assignment, North Pacific began removing peat from the Church Lands. Mr.

Burek estimated that an average of 2.5 metres in depth was excavated, but up to 4 metres in certain spots. [ 44 ] The peat removed was taken to the NW portion of the Prodor lands. It was to be used by a landscaping company who would mix it with soil and take it off site.

Some of the peat was sold and some was given away. [ 45 ] Bethel denies any knowledge of this work and states it did not grant North Pacific permission to be on the land. [ 46 ] The reason North Pacific commenced work on the Lands was to take advantage of the winter downtime of its construction crews and start the excavation of peat and debris, which would take several seasons to complete. [ 47 ] Mr. Burek received a geotechnical report in advance of the Assignment and knew that the Bethel Lands needed remediation since they were a dumping ground for the West Edmonton Mall construction.

He describes the Bethel Lands as low-lying with peat on top, requiring significant excavation of peat and debris, which would be replaced with clay fill packed to a density that can support a building. The amount required depended on the elevation of the site and drainage options. [ 48 ] In cross-examination, Mr. Burek testified that North Pacific returned the peat removed from the Bethel Lands in response to Bethel’s specific demand to restore the land to its original condition. He believed the return of the peat was logical since it had some future value and usefulness to Bethel.

The debris was not returned. [ 49 ] It was put to Mr. Burek that there was no correspondence making this request. He insisted that there was an email, although there were no documents in either party’s Affidavit of Records that would assist to establish his memory. [ 50 ] In re-direct, Mr. Burek was shown written correspondence dated April 3, 2012 from North Pacific’s counsel to Bethel’s counsel advising that North Pacific would require access to the Lands to restore them to the previous condition, including the removal of the stockpiles of clay as was requested.

In a further letter dated May 8, 2012, North Pacific’s counsel advised Bethel’s counsel that the work will start, including restoring the peat bog previously excavated. Bethel’s counsel responded acknowledging that the work can proceed. Mr. Burek confirmed in re-direct that it was based on this correspondence that he proceeded to return peat onto the Lands. He further testified that he was on site often both before and after the Land Agreement was terminated and had two other people on site who had discussions with Mr. Grange about this issue. [ 51 ] Ms.

Merrifield was called to testify as a lay witness to the state of the Bethel Lands. She was involved with the development of the neighbouring Prodor Lands initially through its joint venture (TMC Prairie Development Ltd with North Pacific), which was later terminated subsequent to Troika purchasing North Pacific’s shares pursuant to a shotgun clause. [ 52 ] Ms. Merrifield confirmed that the peat was removed and then returned to the Bethel Lands. She stated that she could not imagine anyone asking for peat to be returned to the lands and gave detailed cost estimates for its removal. e.

The Expropriation [ 53 ] In 2009, Alberta Infrastructure advised Bethel (initially by contacting Mr. Taschuk at North Pacific for reasons that remain unclear) that it intended to purchase or expropriate a portion of the Bethel Lands.

[ 54 ] The reason for the Expropriation was that the Prodor Lands and the Bethel Lands were separate legal titles, owned by different entities at the time (although North Pacific would be the eventual owners of both parcels once the Land Agreement closed). As a result of the need for an interchange between Anthony Henday Drive and Highway 16A, the Province needed to provide the Prodor Lands with new public road access, which required expropriation from the Bethel Lands. The lands required mostly fell within the Bethel Retention. [ 55 ] Mr.

Burek believed that the Expropriation would significantly diminish the value of the Lands by approximately $1.3-$1.5 million per acre based on his experience and revenue projections. Mr. Taschuk further deposed that value was based on the fact that the Lands were rezoned from agricultural land to high density residential and would result in a significant loss of revenue based on comparable estimates available to them. [ 56 ] Bethel agreed that North Pacific should negotiate with the Province over the Expropriation because it had more experience in such matters.

Since the Province would deal only with the registered land owner, Bethel granted a Power of Attorney to Len Taschuk. [ 57 ] North Pacific’s strategy was to persuade the Province that there was no need for any expropriation, because as soon as the parties closed the sale on the Bethel Lands, the two parcels would have a single registered owner and access to the Prodor Lands could be provided through the Bethel Lands. The Province would not agree unless both properties were amalgamated into one title under a single owner. [ 58 ] Bethel, however, had a different

interpretation of North Pacific’s role in the expropriation negotiations. It believed that Bethel would be relieved of its representation and warranty under the Land Agreement that there would be no expropriation of the lands prior to the closing because North Pacific would be made whole through its superior negotiating skills in extracting a high value for the portion of the lands expropriated.

Thus, it believed that the Power of Attorney and the actions of North Pacific in taking over the negotiations resulted in an expropriation agreement with this effect (“Expropriation Agreement”). [ 59 ] Bethel further believed that the Church would still receive its 14 acres and any expropriated lands would be deducted from North Pacific’s acres. According to Bethel, this understanding was confirmed in an email dated October 12, 2009 from Mr. Taschuk (not copied to Mr. Burek) showing a new drawing with the Bethel Retention outside of the area targeted for expropriation.

The Church conveyed its acceptance of this drawing on October 29, 2009. Bethel argues that this exchange confirms an agreement that Bethel would receive 14 acres despite the expropriation and that North Pacific would manage the negotiations and keep any funds received as a result. [ 60 ] Mr.

Taschuk deposed that he assisted with the Expropriation proceedings but did not guarantee that the negotiations would yield $1.5 million per acre from the Province or that North Pacific would agree to have the expropriated lands removed from its share of the Bethel Lands. [ 61 ] The only legal document that governs the parties’ relationship in this matter is the Power of Attorney, which was drafted by Bethel’s lawyer, Mr.

Parker. [ 62 ] Despite lengthy negotiations, the Province and North Pacific were at an impasse; the Province offered a price well below what North Pacific considered to be fair market value [6] . [ 63 ] On December 15, 2009, Mr. Taschuk forwarded a series of emails to Mr. Burek and advised that the Expropriation would be proceeding either under

section 30 or

section 8 of the Expropriation Act , RSA 2000 c. E-13 (“ Expropriation Act or Act ”), but that he understood that a

section 30 agreement would be preferable. [ 64 ] During the course of the Expropriation proceedings, the Province obtained an appraisal from Brian Gettel dated January 11, 2010, who estimated that the Bethel Lands collectively added up to 52.66 acres, prior to the expropriation (“Gettel Appraisal”). The Gettel Appraisal also noted that the lands had recently been drained and that soil remediation was underway.

He reiterated the presence of organic soils with depths of at least 12 inches and peat soil with depths up to 1.5 meters, which the current beneficial owner (North Pacific) advised would cost in the order of $100,000 per acre or more to excavate and replace with clay fill. He confirmed that the only activity to date had been the stockpiling of clay and that the next phase of the development process would be the registration of Plans of Subdivision, although it would take a number of years still to remediate the soil.

He concluded that the market value of the lands required for expropriation was $115,000 per acre for a total compensation of $327,980. [ 65 ] Mr. Burek testified that this was the first time he was aware that the Bethel Lands included less than 55 acres, contrary to the Land Agreement (i.e. the Acreage Shortfall).

He had been aware of a collective shortfall in the Prodor and Bethel Lands compared to the 150 acres originally represented by West Jasper, but he had not been aware of the specific shortfall from the Bethel Lands. [ 66 ] Further attempts by North Pacific to provide other options and convince Alberta Infrastructure to change its valuation were futile. Alberta Infrastructure continued to offer a s 30 agreement, but now based on the lower value in the Gettel Appraisal. North Pacific adamantly refused and advised it would contest the need for expropriation and the compensation offered. f.

Attempt to Accelerate Closing [ 67 ] In January 2010, North Pacific felt the only way to avoid expropriation was to consolidate the land titles. Counsel for North Pacific, Mr. Yurkovich, wrote to Philip Parker, counsel for Bethel, and enclosed a statement of adjustments to proceed with an accelerated closing of the Bethel Lands. The statement of adjustments credited North Pacific for the municipal property taxes paid by West Jasper and North Pacific and credited Bethel for interest of 6% on the remaining cash to close. [ 68 ] On February 4, 2010, Mr.

Yurkovich forwarded a cheque in the amount of $3,856,140.89 payable to Bethel based on its calculation of the balance of the Purchase Price. It was sent with trust conditions. [ 69 ] Mr. Parker responded to Mr. Yurkovich and advised Bethel could not meet until February 16, 2010. He also raised concerns

about the cash to close and indicated there was a shortfall in the balance provided because West Jasper agreed to pay the municipal taxes, which he believed bound North Pacific, and there was a nominal difference in the interest calculation. On behalf of Bethel, he sought a further payment of $54,856.97. [ 70 ] On February 10, 2010, Mr. Yurkovich replied to Mr. Parker seeking clarification and offered some explanation to the issues raised. He invited Mr. Parker to reply. [ 71 ] On February 12, 2010, Alberta Infrastructure signed its Notice of Intention to Expropriate pursuant to

section 8 of the Act . [ 72 ] On this same date, and before Mr. Parker could respond, North Pacific concluded that the amount of their cheque exceeded the Purchase Price because of an error in calculating interest. As a result, it rescinded the offer to close on the previous terms and withdrew from its representation of Bethel in the expropriation proceedings. [7] [ 73 ] Mr. Burek deposed that the offer to accelerate the closing was an attempt to help mitigate the Expropriation consequences, even though it did not make financial sense to North Pacific.

They subsequently discovered that the statement of adjustment had a clear error on the calculation of interest, which they were willing to accept, but when Bethel started to quibble about the taxes, they felt Bethel was not cooperating and consequently decided to rescind the offer and cease acting on the expropriation issue as well. [ 74 ] The letter also advised that North Pacific expected to deduct the Expropriated Lands from the Bethel Retention and that it would require the return of the cash to close unless the parties could work on a mutually satisfactory set of conditions to deal with

section 7.1 of the Land Agreement (Mutual Covenant re subdivision). [ 75 ] Mr. Burek testified that the funds were delivered on trust conditions, but that since North Pacific was not in position to subdivide, it could not have met all the conditions of closing without an amendment to the Land Agreement. He deposed that backing out of the accelerated closing was not done in bad faith. [ 76 ] Mr. Parker subsequently wrote to Mr. Yurkovich enclosing the correspondence that confirmed his understanding of the obligation to pay the property taxes. Mr.

Yurkovich’s reply denied that North Pacific was bound to any such obligation and demanded the return of the cash to close. g. Further attempts to negotiate an Amendment to the Land Agreement [ 77 ] On February 24, 2010, Mr. Taschuk met with Mr. Grange to discuss their various disputes, but no agreement was reached. [ 78 ] By way of a letter dated February 25, 2010, North Pacific advised Bethel of the Acreage Shortfall for the first time. Mr. Burek testified that he did not raise it immediately after receiving the Gettel Appraisal because he was trying to resolve the issue with Alberta Infrastructure.

Since they did not feel they were making any headway and it was clear that the impact on the Lands was now more serious, he determined it was time to also address the deficiency. [ 79 ] North Pacific advised Bethel that if the expropriation proceeded as proposed by Alberta Infrastructure, Bethel would only have approximately 49.71 acres to transfer to North Pacific. Further, since Bethel was required to transfer 55 acres under the Land Agreement, it would have to reduce the Bethel Retention in order to satisfy its contractual obligation to transfer a net area of 41 acres to North Pacific.

North Pacific proceeded to seek either a reduction in price or reduction in the Bethel Retention or the addition of other lands they can get from transportation to make them whole on the 55 acres. [ 80 ] In response, Bethel insisted that the Bethel Retention continued to be 14 acres and that there would be no reduction in the Purchase Price. Mr. Taschuk took the position that no interest on the cash to close would be owing in the future.

Further meetings and correspondence between the parties ensued but no resolution was reached. [ 81 ] After North Pacific withdrew as attorney, Bethel proceeded to negotiate with the Province directly through the assistance of legal counsel. It subsequently filed a Notice of Objection to Expropriate and briefs were exchanged. A series of meetings were held. Mr. Taschuk attended at least one of them and offered his assistance. [ 82 ] On April 29, 2010, counsel for Alberta Infrastructure, Mr. Holmes, wrote to Mr. Parker and suggested some solutions to the impending expropriation.

He outlined the steps the parties would have to “immediately conclude”, which included the consolidation of the four titles to the Church Lands and two titles to the Prodor Lands or a series of easements over both the Church Lands and the Prodor Lands. [ 83 ] On May 10, 2010, Mr. Parker passed along the letter to Mr. Yurkovich along with a

summary of the expropriation proceedings to that date. [ 84 ] On May 19, 2010, Mr. Yurkovich replied that North Pacific bore no responsibility for the expropriation proceedings and that any reduction achieved was solely for Bethel’s benefit. However, North Pacific indicated that it was prepared to execute the documents for the consolidation of title or an easement at Bethel’s cost. [ 85 ] Bethel deposes that it believed that it was out of time and it took no further steps towards the suggestions made by Alberta Infrastructure.

Unfortunately, what is clear in retrospect, is that this option, had it been pursued promptly, could have avoided the Expropriation altogether. [ 86 ] On June 11, 2010, the Province expropriated 2.86 acres of the Bethel Lands (the “Expropriated Lands”). [ 87 ] Bethel received payment from the Province in the amount of $327,980.00 for the Expropriated Lands and did not appeal or otherwise contest the Expropriation.

[ 88 ] Bethel asked North Pacific to pay the municipal taxes for 2010. North Pacific would only agree to do so on the understanding that they would be repaid at closing. No agreement on the issue was reached and thus Bethel paid all tax assessments from that point forward. h. Survey of Bethel Lands [ 89 ] Following the expropriation, North Pacific arranged to have a survey of the Bethel Lands performed.

The results of the survey were provided to North Pacific in December 2010. [ 90 ] The survey showed that pre-expropriation, the Bethel Lands consisted of 52.65 acres (“Survey”). [ 91 ] On January 4, 2011, North Pacific advised Bethel that the total area of land owned by Bethel following the expropriation was approximately 49.79 acres, leaving a total deficiency of 5.21 acres (2.35 was the Acreage Shortfall and 2.86 being the Expropriated Lands) from the 55 acres provided for in the Land Agreement. [ 92 ] Mr.

Taschuk presented a revised drawing of Stewart Greens in which the Bethel Retention was reduced to 8.79 acres. North Pacific took the position that the reduction would need to come out of the Bethel Retention since it was a result of Bethel’s disposition. It was prepared to waive Bethel’s obligation to provide not less than 55 acres on this condition. It referenced the description in the Land Agreement of the Bethel Retention as: “means that property described in

section 9.1 herein, as may be reduced from time to time via disposition by the Vendor.” Mr. Grange disagreed with this

interpretation of the Land Agreement. [ 93 ] North Pacific offered Bethel the option of addressing the shortfall by reducing the Bethel Retention, reducing the Purchase Price by $1.5M per acre, or some combination of the two. [ 94 ] Despite numerous meetings and communications about the need to address this matter and apply for the subdivision, the parties were entrenched in their positions.

The main issues were the interest to be paid on closing, the payment of municipal taxes, the error in the description of the size of the Bethel Lands in the Land Agreement, the Bethel Retention, the Expropriated Lands, and lot grading. i. Subdivision Discord [ 95 ] North Pacific’s ability to apply for subdivision was essentially stymied since the application required the consent of Bethel as the registered owner of the Bethel Lands. [ 96 ] In light of the Acreage Shortfall and the Expropriated Lands, the parties disagreed on both the size and placement of the Bethel Retention.

Bethel insisted that the parties had come to an agreement represented by the 2007 Neighbourhood Structure Plan (“2007 NSP”), which was reflected in a wall-sized copy it posted in the church boardroom.

North Pacific, however, attempted to reason that that plan was defunct as a result of the now reduced available acres and that it needed Bethel’s cooperation to come up with a new plan it could use as the basis of a subdivision plan that could be submitted for City approval. [ 97 ] The Subdivision and Development Regulation , Alta Reg 43/2002 , s 4(1), [8] requires a detailed subdivision plan with the owner’s authorization be submitted to the City for approval. [ 98 ] North Pacific thus argued that the Mutual Covenant could not be satisfied without the consent, cooperation and assistance of Bethel. [ 99 ] Throughout 2010 and after discovering the Acreage Shortfall, Mr.

Burek worked with Stantec on revised subdivision plans, which were not shared with Bethel. Mr. Burek testified that during this time, he kept the Bethel Retention in same place at 14 acres because the focus was on changes to the 2007 NSP to redesign the collector road to gain greater land use efficiencies. By September 2010, he was not ready to go to City Council as there were major revisions requested by the City. Contrary to Bethel’s position, Mr. Burek states that they could not subdivide because rezoning approval was needed first.

He states they had to amend the NSP, re-zone, then sub-divide. [ 100 ] It was not until January 4, 2011 when North Pacific, for the first time, provided Bethel a drawing indicating a reduction in the Bethel Retention by 5.21 to include the Acreage Shortfall and the Expropriated Lands. This is one year after Mr. Burek states that he became aware of the Acreage Shortfall (after the Gettel Appraisal in January 2010). [ 101 ] Around April 11th, 2011, even though the City approved of the last drawing, Mr. Burek told Stantec to hold off on submitting the NSP until Bethel consented. Mr.

Burek states that North Pacific could not deal with the size of Bethel Retention at later time because that would change zoning. [ 102 ] On April 12, 2011, Mr. Taschuk forwarded to Mr. Burek the October 12, 2009 drawing he had sent Mr. Grange, which showed: “the retention lands after the expropriation.” He also noted that Bethel did not object to the drawing. [ 103 ] By April 14, 2011, it was apparent to Mr. Burek that meeting Closing deadline of August 1, 2011 was not favourable. He proposed to the City that they subdivide only the Bethel portion so they could meet deadline, but the City refused.

The City’s concern was that the land would be subdivided without agreements in place for servicing and it was not prepared to take that risk. [ 104 ] On April 20, 2011, Mr. Grange replied to Mr. Taschuk’s email, which asked what portion of the lands should be reduced. Mr. Grange stated that Bethel would prefer a reduction from the north side of the road “if legal determination requires us to reduce the land.” Mr. Burek testified that he felt this was a move in the right direction, although was doubtful that they could meet the August 1, 2011 deadline.

Resolution would need a legal determination or arbitration first, which would require an extension to the Land Agreement

deadlines. [ 105 ] On June 1, 2011, Mr. Burek advised Bethel of the departure of Mr. Taschuk from North Pacific (he left in April 2011). Although Mr. Burek was previously not an owner of North Pacific, he maintained control and direction of the company informally and was consulted on most matters. At this time, Mr.

Burek threatened to terminate the Land Agreement and request the payment of the deposits with interest. [ 106 ] With the Closing Date approaching and the parties at a stalemate, North Pacific wrote to Bethel in June of 2011 and outlined options it was prepared to consider: o Resolve all of the disputes under the Land Agreement before August 1, 2011; o Change the August 1, 2011 deadline to a later date, which would allow time for dispute resolution; o Replace the Land Agreement with a new mutually agreeable contract; or o Terminate the Land Agreement and have North Pacific pursue a claim against Bethel for breach of the Land Agreement. [ 107 ] Bethel believed terminating the Land Agreement would have no repercussions.

Mr. Grange thus conveyed to Mr. Burek that the Church wished to terminate and asked that “the lands be leveled” and noted that “any land dug out and debris removed may remain as is. It does not appear to make sense for North Pacific to incur any cost to return debris back to this land.” [ 108 ] Mr. Taschuk testified that North Pacific had invested over $10M to date and parting ways not an option without serious consequences. [ 109 ] On July 12, 2011, Mr.

Burek made it clear that the exercise of this option was a breach of Bethel’s obligations under the Land Agreement and in that case, North Pacific would pursue an action against the Church for damages. Mr. Burek offered Bethel the opportunity to revoke its decision to terminate the Land Agreement, which Bethel did. [ 110 ] On July 18, 2011, Mr. Parker reached out to North Pacific and reminded them of the August 1, 2011 closing date. On July 20, 2011, Mr. Grange followed up on the Closing Date as well and confirmed his expectation that transaction would close on August 1, 2011.

He also indicated that he was seeking a second opinion on their disagreements and options for resolution. [ 111 ] Mr. Grange deposed that he spoke to Mr. Lee of Heenan Blaikie LLP who advised him that the subdivision could be concluded in four weeks. [ 112 ] As the time to meet the Mutual Covenant drew near, both sides dug in their heels; Bethel insisted on nothing less than 14-acres for its retention and North Pacific insisted on 41 acres or a reduction in the price in the area of $1.5M per acre. j. Resolution Attempts [ 113 ] On July 27, 2011, Mr.

Parker, legal counsel for Bethel, sent North Pacific a letter stating that the Closing Date for the transaction was August 1, 2011 and identified issues that needed to be completed. He concluded his letter by stating “please provide your comments including an extension of the closing date if your client wishes.” [ 114 ] On July 28, 2011, counsel for North Pacific, Mr. Lee, sent a letter to Mr. Parker proposing “that the parties enter into an amendment extending both the Condition Period and the Closing Date" as defined in the Land Agreement. Mr.

Lee enclosed a proposed form of amendment (“Draft Third Amending Agreement”) and noted that it “remains subject to review and comment by my client.” It proposed to extend the Condition Period to August 22, 2011 and the payment deadline to October 4, 2011. [ 115 ] By Friday, July 29, 2011, North Pacific had not received a response to Mr. Lee's July 28, 2011 letter. As Monday, August 1, 2011 was a statutory holiday in Alberta, North Pacific was concerned. [ 116 ] On July 29, 2011, Mr. Burek sent a letter on behalf of North Pacific directly to Mr.

Grange. [ 117 ] The July 29, 2011 letter indicated that North Pacific’s failure to meet the deadline was attributable to Bethel’s failure to lend reasonable assistance as required by the Land Agreement. Mr.

Burek reiterated the proposal that the parties “enter into a further amending agreement which would provide for an extension of the Condition Period and the Closing such that the parties, acting diligently and reasonably, would be able to fulfill their mutual covenants.” The letter also proposed binding arbitration to resolve any issues before Closing. [ 118 ] The letter also stated that if an extension was not agreed to before August 1, 2011, North Pacific “would have no other choice but to pursue a claim for breach of contract, lost profits and damages.” [ 119 ] On July 29, 2011, Mr. Parker advised Mr.

Lee by voicemail that Bethel agreed to an extension of the closing date beyond August 1, 2011. This Court does not have evidence of the contents of the message, but the subsequent letter Mr. Parker sent confirms it occurred. It is worth noting that at this time, the only deadlines proposed were those in Mr. Lee’s Draft Third Amending Agreement. [ 120 ] On August 3, 2011, North Pacific received a letter from Mr. Parker, referring to Mr. Lee’s letter dated July 28, 2011, and Mr. Parker’s voice message of July 29, 2011, which confirmed that Bethel had agreed to an extension of the closing date (the “Parker Letter”).

In this letter, Bethel sought confirmation of when North Pacific would be able to register the subdivision plan. Mr. Parker further queried whether the Closing Date could be earlier than the proposed date of October 4, 2011. He did not mention an extension of the Condition Period.

[ 121 ] On or about August 4, 2011, North Pacific received a letter (dated August 3, 2011) from Mr. Grange on behalf of Bethel, stating that Bethel agreed to an extension of the condition period and the closing date on the terms proposed in North Pacific’s letter of July 29, 2011 (the “Grange Letter”). [ 122 ] North Pacific arranged to have a more formal amending agreement prepared. However, another misunderstanding was brewing. North Pacific believed that the Grange Letter agreed to arbitration to resolve the dispute on the contractual

interpretation, whereas Bethel’s position was that the nuance in the language used (i.e., alternatives to arbitration) merely indicated it would consider arbitration alternatives but that there was no agreement to arbitrate. [ 123 ] On August 25, 2011, Mr. Lee sent a letter to Mr. Parker attaching "a form of third amending agreement to the Purchase Agreement". There was no firm Closing Date or end of the Condition Period. It also proposed deleting North Pacific’s covenants, including the obligation to subdivide the Bethel Retention. Mr.

Burek confirmed that none of these terms had been discussed previously. [ 124 ] On September 1, 2011, North Pacific received a letter from new counsel for Bethel, Mr. Pruski (litigation counsel in this matter) advising that, in Bethel’s view, the Land Agreement was null and void and Bethel would not be extending the closing dates in the Land Agreement (the “Termination Letter”). [ 125 ] When asked in cross-examination to explain the apparent change in direction, Mr. Grange testified that he wanted the matter to come to an end.

He testified: ‘I looked at it and went to counsel and said, Counsel, what can I do, we need to stop this, this is – this is the end of it, I can’t deal with this anymore. And we – we terminated the contract.” [ 126 ] On September 14, 2011, through counsel, North Pacific sent a letter to Bethel expressing surprise at the tone and position of the Termination Letter.

North Pacific gave Bethel another opportunity to proceed to arbitration to resolve any remaining issues in dispute, and to extend the closing dates in the Land Agreement to allow sufficient time to arbitrate outstanding issues and seek subdivision approval. [ 127 ] No response was received.

On September 26, 2011, North Pacific sent Bethel a letter repeating its position and requesting a reply by September 29, 2011. [ 128 ] On September 28, 2011, North Pacific again proposed that Bethel consent to rezoning and subdivision, rescind the Termination Letter, extend the closing dates in the Land Agreement, and reserve all other rights under the Land Agreement. [ 129 ] In a letter from counsel dated October 5, 2011, Bethel rejected North Pacific’s proposal and makes an offer to settle the disputes (“Bethel’s Offer”).

It is important to reproduce portions of this letter as Bethel characterizes the lack of response as a failure by North Pacific to mitigate its losses: In relation to the aforementioned correspondence, my client takes the position that neither was an agreement reached with respect to extending the Conditions Date nor did it agree to arbitration.

On this level, by its terms, the original offer to purchase requires all amendments to be in writing, which was never the case for the amendments suggested….As such, my client maintains that the offer to purchase [Land Agreement] is null and void according to its terms, and as a result, your client is entitled to the return of its deposits paid, subject to their obligation to return the lands to the state they were in prior to your client having carried out work on same. … My client has advised that based on its communications with yours, it has been suggested that North Pacific is applying for subdivision approval of Bethel’s lands.

Please take this as your formal notice that North Pacific currently has no ability to initiate such an application in its own right or on behalf of Bethel. … ...I do note that my September 1, 2011 letter expressly stated that our client was prepared to enter into a new agreement that accurately reflects the arrangement my clients felt that they originally had with yours. …In particular, I believe both you and your client will agree that the offer to purchase [Land Agreement] originally executed to govern this transaction was poorly drafted.

It has caused each of our clients no end of grief, and this forms part of the reason underlying our proposal to execute a new agreement. … …For the sake of clarity, my client is seeking a purchase price as described at Clause 2.2 of the void agreement, that being $3.5 million exclusive of GST, plus additional interest and amounts as may be payable under

Section 2.3, namely, interest that has accrued at a rate of six percent per annum on unpaid amounts from the date the void agreement was signed until closing. Additionally, my client is seeking that all property taxes that have accrued or been incurred since the void agreement was first executed be paid by your client. Further, our client is seeking one of the two options with respect to the parcel of lands that it was to retain for its own use under the original agreement: 1. A 14-acre parcel, at the location approximated by the void agreement.

Your client would still pay the full purchase price of the lands, but would be given the benefit of the monies paid for the expropriation of a portion of the lands originally intended to be sold; or 2. Your client pays the full purchase price, Bethel retains the benefit of the funds from the expropriation and Bethel’s 14-acre retention is reduced by the amount of land expropriated.

This is not Bethel’s preferred option, but Bethel is prepared to offer this concession to conclude the sale of its property. [ 130 ] This letter is far from an olive branch that could have settled the parties’ differences on the terms of the Land Agreement. First,

it is clear that Bethel considers the Land Agreement null and void and merely offers new terms suitable to its position. Second, it only offers to consider a price or land size change as it relates to the Expropriated Lands and offers no means to settle the issue of the Acreage Shortfall, even though it acknowledges that the Land Agreement was poorly drafted.

Finally, it does not offer a means to determine an appropriate price abatement or compensation – rather, it assumes that the expropriation funds are sufficient to cover this loss. [9] [ 131 ] As will be discussed more fully under the damages’ assessment portion of this decision, apart from the continued disagreement about interest and property taxes, had North Pacific accepted this offer, it may have been prevented from pursuing fair compensation for its losses. [ 132 ] As a result, North Pacific commenced this Action and filed a certificate of lis pendens against title to the Lands. [ 133 ] North Pacific refused to remove their purchaser’s caveat and the certificate of lis pendens until November 13, 2014. [ 134 ] On November 13, 2014, after disposing of the Prodor Lands, North Pacific advised Bethel, through counsel, that it had sold the Prodor Lands and was abandoning its claim for specific performance of the Land Agreement.

VI. Legal issues a.

Were the parties ad idem on the terms of an Extension Agreement? [ 135 ] North Pacific submits that the Extension Agreement is valid and enforceable, and that Bethel repudiated the Extension Agreement and the Land Agreement on September 1, 2011, when it advised North Pacific that the Land Agreement was null and void and that it would no longer honour any of its obligations under the Land Agreement. [ 136 ] Bethel denies the parties were ad idem on the Extension Agreement on the basis that North Pacific’s offer was never accepted and the Extension Agreement did not satisfy the Statute of Frauds (1677), 29 Car II, c 3.

It therefore submits that the Land Agreement was terminated according to its terms. i. Analysis [ 137 ] I conclude that the parties were not ad idem on the Extension Agreement. The very purpose of the extension was to extend the deadlines for the Condition Period and the Closing Date.

The specific dates were fundamental to the purpose of the extension. [ 138 ] By June of 2011 and weeks away from the Closing Date, it was clear that North Pacific and Bethel were deadlocked. [ 139 ] A review of the key events is necessary to appreciate the urgency under which the parties were operating: • On Wednesday, July 27, 2011, North Pacific received a letter from Mr. Parker, Bethel’s lawyer reminding them of the Closing Date and asking for suggestions for an extension. • On July 28, 2011, counsel for North Pacific, Mr.

Lee, proposed the Draft Third Amending Agreement with revised dates (subject to review by his client). • On July 29, 2011, Mr.

Burek sent a letter directly to Bethel proposing that the parties “enter into a further amending agreement which would provide for an extension of the Condition Period and the Closing such that the parties, acting diligently and reasonably, would be able to fulfill their mutual covenants and the Conditions Precedent....” The letter also demanded that an arbitration clause be added to the extension agreement: “In this proposed extension, we would also suggest that there be a provision providing for arbitration should the parties be unable to resolve their issues ahead of Closing.

Failing agreement to an extension, containing an arbitration clause, we would have no other choice but to pursue a claim for breach of contract, lost profits and damages.” • On August 3, 2011, North Pacific received a letter from Phillip Parker, on behalf of Bethel, which referred to Mr. Lee’s letter dated July 28, 2011, and confirmed Mr. Parker’s voice message of July 29, 2011. In the letter Mr. Parker agreed to an extension of the closing date.

He queries when the sub-division plan could be registered and whether closing could be “earlier than October 4, 2011.” Finally, he notes that North Pacific is suggesting an arbitration clause but he does not state his position on it. [ 140 ] On August 4, 2011, North Pacific received the Parker Letter referencing Mr.

Burek’s fax of July 29 th and stated that : Bethel is in agreement with North Pacific that “ in order to follow through with the intent of the agreement, the parties enter into a further amending agreement which provide for an extension of the Condition Period and the Closing such that the parties, acting diligently and reasonably, would be able to fulfill their mutual covenants and the Conditions Precedent and register a Subdivision Plan with the Alberta Land Registration District .” It is Bethel’s understanding that lawyers for both parties are currently working on the terms of this extension. … In conclusion, we are in agreement with extension of the condition period and the closing date such that North Pacific can fulfill the contract.

Bethel is aware that North Pacific has verbally stated they are not in a position to differ from their views with respect to the contract. However, Bethel is prepared to sit with North Pacific to re-clarify the issues before going to arbitration. This is in keeping with North Pacific and Bethel’s wishes to keep legal and other costs to a minimum.

Once again, Bethel reiterates their position that they will continue to work with North Pacific to secure an appropriate closing to the agreement. (Emphasis in original) [ 141 ] By Friday, July 29th, when Mr. Parker left a voicemail in response to Mr. Lee’s July 28 letter, I conclude that there was only an “agreement to agree” on the extension of the Condition Period and the Closing Date. Although the Court has no evidence of what was specifically stated in the voicemail, I can infer that it was premised on the Draft Third Amending Agreement (as confirmed by reference in Mr. Parker’s subsequent letter).

The Draft Third Amending Agreement, although subject to North Pacific’s review, had specific dates proposed of August 22nd for the Closing Period and October 4, 2011 for the Closing Date. No arbitration clause was proposed at that time. [ 142 ] As per his testimony, Mr. Burek’s follow up letter on July 29th merely intended to restate the offer on the table and ensure that Bethel received it given it was a long-weekend in Alberta. The Parker Letter agreed to the revisions proposed by the Draft Third Amending Agreement. However, it did not reference Mr.

Burek’s letter, nor did it formally accept the arbitration demand made by Mr. Burek. [ 143 ] The Grange Letter merely reiterated what was already in the Parker Letter, except that it added a minor clarification in that it stated that Bethel agreed that both the Condition Period and Closing [Date] would be extended (as opposed to just the Condition Period as noted in Mr. Parker’s letter). This is obvious since it also quoted directly from Mr.

Burek’s letter and indicates that it is needed so the parties, acting diligently and reasonably could fulfill their covenants and conditions. [ 144 ] The only terms on the table at this point were those in the draft Third Amending Agreement, including the dates. Although Mr. Burek clearly added arbitration as a required term, Bethel had already accepted the draft Third Amending Agreement terms in principle by way of Mr. Parker’s voicemail and letter. Moreover, with respect to the added arbitration requirement, which came after Mr. Parker’s letter, it is clear that both Mr. Grange and Mr.

Parker’s subsequent response to this additional term, as will be discussed below, did not convey a clear acceptance of it. [ 145 ] Despite this apparent meeting of the minds on the Draft Third Amending Agreement, this did not satisfy the requirement that Amendments be in writing and signed by the parties. The parties never got to this stage because what happened next was that Mr. Lee sent a revised draft on August 25, 2011, substantially revising the terms and leaving the dates open-ended. Because the first draft was subject to review, despite Bethel accepting it, North Pacific could withdraw it.

However, the revised draft on August 25th constituted a new offer (and a withdrawal of the previous offer).

Resultingly, there was no longer a meeting of the minds (consensus ad idem). [ 146 ] The new August 25, 2011 Third Amending Agreement introduced the following changes: An arbitration clause was added; the Condition Period would be a date mutually agreed upon between the parties or 21 days following the release of the arbitrator’s final award; the date of payment of August 1, 2011 was removed and replaced with “Time of Closing”; and, the Rezoning Covenant, the Mutual Covenants were deleted and replaced with a clause requiring the Purchaser to make application to the City for rezoning. [ 147 ] Mr.

Grange testified that when he received the August 25th letter from North Pacific’s counsel, he was no longer in agreement. He appeared clearly frustrated when he recounted how he felt when he received this letter and explained that he was worried closing on the Land Agreement would go on in perpetuity. [ 148 ] He deposed that while he was not against arbitration, he had not agreed to it as he needed more time to consider it in light of his desire to keep costs down.

Finally, he testified that although Bethel was not in a particular rush when the Land Agreement was signed, by this time, the Church was growing and was anxious to close. [ 149 ] The parties both cite Leemhuis v Kardash Plumbing Ltd , 2020 BCCA 99 at para 16 , citing Salminen v Garvie , 2011 BSCS 339 at paras 17, 27, but for opposite outcomes: The test for determining consensus ad idem at the time of contract formation is objective: it is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract… […] [i]n determining intention to contract, a court is not confined to the four corners of the agreement, but may look at ‘all the circumstances’ or ‘all the material facts’. [ 150 ] Furthermore, Mr.

Grange deposed that he had understood, based on his conversation with Mr. Lee that North Pacific anticipated needing another four weeks to subdivide the Bethel Retention. This understanding was confirmed by the Draft Third Amending Agreement, which was sent to Bethel on July 28, 2011 and extended the Condition Period until August 22, 2011 and the Closing Date until October 4, 2011. [ 151 ] Mr. Grange also deposed that his August 3, 2011 response to Mr. Burek was with that short timeline in mind.

It cannot simply be assumed that just because Bethel was in no particular hurry to sell the Lands that it would also specifically waive the “Time of Essence” clause in the Land Agreement or that deadlines are expendable. [ 152 ] I conclude from the surrounding circumstances and Mr. Grange’s testimony, which I found credible on this point, that the very purpose of the Extension Agreement was to extend the specific dates.

The August 25th revisions radically altered what Bethel was prepared to accept. [ 153 ] This is not the case of parties having agreed to the essential terms, leaving the minuting of the agreement to lawyers (see Buterman v St Albert Roman Catholic Separate School District No 734 , 2017 ABCA 196 at para 44 ) [ 154 ] Although Mr. Grange states in his letter that counsel was working on the terms, those terms never materialized in a manner that were acceptable to both parties.

[ 155 ] Finally, while Bethel may not have been in a specific hurry to close the deal, it was clear that the other disagreements that had been percolating were causing strain and uncertainty. There may have been other reasons why they preferred a shorter deadline, as alluded to in the Parker Letter when he asked whether closing could even be “sooner than the proposed date of October 4, 2011.” [ 156 ] As is clear from the correspondence, the extension of dates was required for the Condition Period and the Closing Date – these are the essential terms. Other issues sought to be included after Mr.

Lee’s letter of July 28, 2011, including the arbitration clause proposed by Mr. Burek on July 29th, were not incorporated into the Parker and Grange Letters. [ 157 ] In addition to not satisfying the requirement that Amendments be in writing and signed by the parties, the correspondence exchanged does not satisfy the Statute of Frauds . [ 158 ]

Section 4 of the Statute of Frauds states that: No Action shall be brought whereby [… ] to charge any person [… ] upon any contract or sale of lands [… ] unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized. [ 159 ] Unlike in Wasylyshyn v Wasylyshyn , 2008 ABQB 39 , in this case, the subsequent written document did not accord with the initial key terms of what the parties were prepared to agree to. [ 160 ] In Wasylyshyn , Marshall J. specifically held at para 35 that: The terms of an agreement regarding land must be found in writing authored by the Defendant.

The solicitor for a party can certainly provide such writing, being an agent with sufficient authority. The writing can be found in more than one document. To satisfy the Statute, however, the writing must disclose all the essential terms of the contract .

It is trite law that the essential terms of a sale of land must include the parties, property and the price .... (Emphasis added). [ 161 ] The exchange of letters between counsel of July 28, 2011 and August 3, 2011 attempt to extend the life of the Land Agreement but that specific purpose morphed significantly with respect to its deadlines – the terms that Bethel needed to secure to ensure the disputes did not drag on indefinitely. [ 162 ] Therefore, as in 1247532 Alberta Ltd v Valpy Corporation , 2007 ABQB 547 , North Pacific’s belief that there was an agreement to extend the deadlines and its subsequent reliance on the unsigned amending agreement does not establish an enforceable agreement. “At best, the Plaintiff can establish that the Defendant was open to discussions which the Plaintiff hoped would lead to an enforceable contract” ( ibid at para 41). [ 163 ] In the case at bar, the letters between counsel were working at cross-purposes: North Pacific was seeking to alter the Land Agreement in a fundamental way (e.g., by adding arbitration and removing deadlines) and Bethel was trying to minimize the changes required (e.g., by agreeing to short extensions and offering ways to keep legal costs to a minimum). [ 164 ] The subsequent silence by Bethel ought not to have been interpreted as acceptance, particularly in light of the requirement that amendments be finalized in writing and signed by the parties.

It would have been incumbent on North Pacific, who advanced the last proposal, to follow up and ensure all details were agreed to and formalized. [ 165 ] In Ko v Hillview Homes Ltd , 2012 ABCA 245 at para 43 , the underlying agreement created “impossible mysteries.” In this case, the mystery was the indefinite time periods, which, given the parties’ intractable positions on their rights, would likely not have been resolved in a timely manner without deadlines and a means to resolve their disputes. [ 166 ] As in Ko , “[w]hat terms are essential depends on the type of contract” and that the balance of price, and the possession date in a time-sale agreement are essential (paras 91-92). [ 167 ] The Extension Agreement is therefore void for uncertainty. ii.

Was there a stand-alone agreement to arbitrate? [ 168 ] Despite the conclusion that there was no Extension Agreement, I considered whether there was an agreement to arbitrate arising from the above exchange of correspondence. I conclude that no such agreement was reached. [ 169 ] I find the wording of Mr. Grange’s August 4th reply open to two different

interpretations and therefore unclear on its face. [ 170 ] Mr. Grange’s words could be read as Bethel simply adding a pre-condition to arbitration (i.e., the parties will first sit down to narrow the issues prior to attending arbitration); or, it could be interpreted as Bethel saying that it does not wish to incur the costs of arbitration and believes the parties should first try to resolve the issues on their own before deciding to commit to arbitration (i.e., explore arbitration alternatives). Mr. Grange testified credibly to the latter

interpretation, which I accept. [10] [ 171 ] Given that Mr. Burek’s letter makes it clear that there can be no Extension Agreement without such clause, and given that the Parker Letter merely mentioned it without clearly accepting it as an amendment to the prior proposal (which he agreed to in his July 29 voicemail) this lends further support to my conclusion that the parties were not ad idem on any agreement to arbitrate. b. If the Extension Agreement was not reached, did Bethel breach the Land Agreement on or before August 1, 2011?

i.

North Pacific’s position [ 172 ] North Pacific submits that regardless of the validity of the Extension Agreement, Bethel breached the Land Agreement before August 1, 2011, and North Pacific is entitled to damages for the breach. [ 173 ] More specifically, North Pacific argues that Bethel breached the following obligations under the Land Agreement: • Bethel’s obligation to transfer “not less than 55 acres” of land when it owned only 49.79 acres; • Bethel’s obligation to transfer legal title to all of the Lands when it did not have legal title to all of the Bethel Lands after the Expropriation; • Bethel’s representation and warranty that it was the sole legal owner of the Bethel Lands ; • Bethel’s obligation not to do anything to encumber the Bethel Lands and in particular, not to sell or agree to sell any part of the Lands when, after the expropriation, it had encumbered or sold a part of the Bethel Lands; • Bethel’s obligation to diligently and in good faith hold any discussions, seek any approval or take any action in pursuance of the satisfaction of the conditions precedent, including the Mutual Covenant, when Bethel refused to support the application for subdivision; and • Bethel’s obligation to lend reasonable assistance to North Pacific in fulfilling all of the conditions precedent, including executing such documents, disclosing such information concerning the Lands and providing access to the Bethel Lands as necessary, when Bethel refused to support the application for subdivision; ii.

Bethel’s position [ 174 ] Bethel submits that North Pacific’s characterization of the breach of the Land Agreement to provide a net 41 acres is incorrect as the words in the Land Agreement provide no such representation or warranty. Moreover, it states, that definition encompasses much more, including two schedules that conflict with the 7 words in the definition of Property. [ 175 ] It further argues that the legal descriptions were appended as

Schedule B and formed part of the definition of “Property”; they contained approximate areas qualified by the words “more or less”, and were capable of accurate quantification within 2 decimal places, as was done in the appraisals. [ 176 ] With respect to the Expropriation, Bethel submits it was

an act of government, compelled by a statute that no person may contract out of, and is therefore not a breach of the Land Agreement by Bethel. It further argues that Bethel reached an agreement whereby North Pacific took on the negotiation of the Expropriation on the understanding that it would keep the proceeds received in exchange for Bethel retaining its full 14-acre Bethel Retention. It states North Pacific repudiated this agreement. [ 177 ] In the alternative, if the Expropriation was a breach, Bethel states it was a breach of the representations and warranties in the Land Agreement, for which the remedy is prescribed by

article 8.3 of the Land Agreement entitling North Pacific to terminate and seek only nominal expenses. It states that in no case does the Land Agreement provide for a reduction of the Bethel Retention. [ 178 ] Bethel states that it was under no obligation to renegotiate the terms of the Land Agreement or accept less than 14 acres as a result of the change in available land size.

It submits that the parties had agreed to the 2007 NSP, and North Pacific sent drawings even after the extent of the Expropriation was known, confirming the 14 acres would remain, and it is therefore bound by that representation. [ 179 ] Finally, it states that the Land Agreement terminated in accordance with its terms after August 1, 2011 as North Pacific failed to subdivide the Bethel Retention or tender the cash to close. iii. Legal Questions [ 180 ] The parties’ respective positions on this l

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