Grimsley v. Roe, 2018 BCSC 985

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Grimsley v. Roe, 2018 BCSC 985 Date: 20180618 Docket: S25426 Registry: Cranbrook Between: Charles Grimsley Plaintiff And Kenneth Dean Roe, Katherine Marie Roe, and Canadian Mountain View Paradise Guide & Outfitters Ltd. Defendants Before: The Honourable Mr. Justice A. Saunders Reasons for Judgment Counsel for the Plaintiff: K. Tse Counsel for the Defendants: R.S. Miles Place and Date of Trial: Cranbrook, B.C. November 21-24, 2017; and January 16-19, 2018 Place and Date of Judgment: Cranbrook, B.C.

June 18, 2018 Table of Contents Introduction .. 3 Background .. 3 The Contracts .. 5 The Loan Contract 5 The Asset Purchase Agreement 7 The Defendants’ Conduct of the Guiding Business .. 8 Evidence of the Impact of Clear-cut Logging .. 10 Claims and Defences .. 13 Analysis .. 14 Limitation Period Defence . 15 Commencement of the Limitation Period – Action on the Debt 17 Limitation Act, 1996 – Applicable Provisions . 19 Forbearance . 22 Postponement of the Limitation Period . 24 Postponement – January 2009 . 24 Postponement – 2013 and 2014 . 27 Defence of Frustration . 28

Conclusion .. 33 Introduction [ 1 ] The plaintiff seeks an order for the sale of the defendants’ interest in a Guiding Territory Certificate issued to the defendant Kenneth Dean Roe (“Dean Roe”) under the Wildlife Act , R.S.B.C. 1996, c. 488, (the “Certificate”), and related assets, under the terms of a loan contract (the “Loan Contract”) dated October 10, 2002, and an equitable mortgage created thereunder.

Although the plaintiff’s prayer for relief includes a claim for personal judgment against the defendants, the plaintiff concedes that the Loan Contract limits his rights of recovery to proceeding only against the value of the Certificate and its related assets, and to repayment of the defendants’ loan indebtedness, if any, only out of the proceeds of sale. [ 2 ] The defendants admit they were parties to the Loan Contract, that demand has been made for repayment, and that no amount of principal has been repaid.

Their main defences to the entire claim are based on the doctrine of frustration; and, on a limitations defence based on either the Limitation Act , R.S.B.C. 1996, c. 266 [ Limitation Act 1996], or its successor, the Limitation Act , S.B.C. 2012, c. 13, [ Limitation Act 2012] this action not having been commenced until April 2015. Background [ 3 ] In or about the year 2001 the defendant Dean Roe, facing unemployment due to the imminent closure of the Sullivan Mine in Kimberley, B.C., decided to embark on a new career as a guide outfitter. He learned through word of mouth that a Mr.

Hank Campsall, who held the Guide Outfitter Certificate for Management Unit 4-20, an area in the east Kootenays located to the west of Skookumchuck, B.C. (the “Guiding Territory”), was looking to sell his interest. Mr. Roe and his wife, the defendant Katherine (Katie) Roe, agreed to purchase it from him through a company they created for that purpose, the corporate defendant. [ 4 ] Mr. Campsall had originally purchased his interest in the Guiding Territory some years previously, with the assistance of lenders named Johnson and Gephardt. In about 1994 it became necessary for Mr.

Campsall to pay out his lenders, and to do so he obtained financing from the plaintiff, Mr. Grimsley. [ 5 ] Mr. Grimsley is a businessman from the state of Alabama, and a hunting enthusiast. He had hunted in British Columbia – primarily elk hunts – since the 1980s, and had used Mr. Campsall as a guide on elk and bear hunts. He had come to know and love this area of the east Kootenays. Mr. Grimsley agreed to lend Mr. Campsall US$220,000 to pay out Johnson and Gephardt, under the terms of a written loan contract dated June 11, 1994 (the “Campsall Loan Contract”).

That loan remained outstanding in 2002, when the Roes agreed to purchase Mr. Campsall’s interest in the Guiding Territory. [ 6 ] In the initial discussions between the defendants and Mr. Campsall, a purchase price of $100,000 was agreed to. In return for payment in that amount, the Roes would be entitled to apply to the government of B.C. to be named in his place on the Certificate . The Roes would also obtain the assets of Mr. Campsall’s guiding business, including a lodge located in the centre of the Guiding Territory, and two satellite camps. [ 7 ] As the discussions advanced, the Roes were told by Mr.

Campsall that there was another individual involved, Mr. Grimsley, and that as part of the purchase the defendants would have to assume Mr. Campsall’s liability to Mr. Grimsley to repay the US$220,000 owing under the Campsall Loan Contract. Under the terms of the Campsall Loan Contract, Mr. Grimsley would have been entitled upon Mr. Campsall’s sale of his interest in the Guiding Territory to 80% of the sale price, or the loan principal of US$220,000, whichever amount was greater, but Mr. Grimsley consented to the defendants assuming Mr. Campsall’s liability. [ 8 ] An arrangement was made for Mr. Roe to take Mr.

Grimsley on a hunt in the territory in early 2002, more or less as an ‘audition’ to assure Mr. Grimsley of Mr. Roe’s capabilities. It was during this hunt that Mr. Grimsley advised Mr. Roe that, as part of the deal, he would require a payment of $50,000. The Roes were surprised by this, but were able to obtain additional financing, and agreed to the deal on those terms. [ 9 ] Mr. Grimsley – who has some considerable degree of sophistication, having been in the community banking business in northern Alabama, and having served in senior positions in that state’s civil service – approved of Mr.

Roe’s guiding skills, and drew up the Loan Contract for the Roes’ review and signature. The Contracts The Loan Contract [ 10 ] The Loan Contract named the Roes and their business as “Borrower” and Mr. Grimsley as “Lender”. It stipulated that the Borrower would purchase from Mr.

Campsall his interests in the guiding territory; would be named as guide outfitter on the Certificate ; and would conduct guiding business on the territory and be responsible for repair of the lodge and other facilities. [ 11 ] The material clauses in the Loan Contract are as follows: 1) Borrower shall purchase from Franklin G. “Hank” Campsall all of his rights and interests in a guiding area in British Columbia, Canada, in Region 4-20 near Cherry Creek, registered in the name of Hank Campsall.

2) Borrower shall be named as the guide outfitter on the certificate and shall furnish Lender with a copy of the certificate and other evidences of government registration as the outfitter of the guiding area. 3) Borrower hereby assumes and agrees to repay, subject to terms to be negotiated pursuant to Item Six (6) of this contract, a loan in the principal amount of $220,000.00 US, said loan having been advanced by Lender and secured by a first mortgage on the guiding area pursuant to a loan contract dated June 11, 1999, signed by Hank Campsall and Artha Rose Campsall, individually and jointly, and doing business as Campsall Outfitters, as borrower, and signed by Charles S.

Grimsley as lender. 4) Borrower shall conduct guiding business on guiding area and pay all expenses of the business, including but not limited to insuring the lodge and its contents at replacement value, all leases, fees, and taxes, and maintaining the facilities in a reasonable state of repair.

Borrower shall list Lender as first mortgagee on the insurance policy, and proceeds from any insurance claims shall be paid to Lender in an amount up to and including the principal balance of the Loan. … 6) Repayment of Loan Principal by Borrower – For a period of three years commencing with the date of this contract, Borrower is not required to make principal payments to reduce the loan’s initial principal amount of $220,000.00 US. At the end of the initial three-year period, Borrower and Lender shall negotiate a loan repayment

schedule whereby Borrower shall amortize and fully repay the loan principal amount of $220,000.00 US over a period not to exceed ten years. All loan payments shall be made in US funds. … 9) Sale of the Guiding Area – Any sale of the guiding area and related assets, or transfer of the guiding certificate, shall be subject to the advance written approval of the Lender. If the guiding area and related assets are sold, the Lender shall receive the Lender’s Share of the proceeds of the sale, or the principal balance plus any interest owed on the loan, whichever is greater, in US funds.

The Borrower shall receive the remainder of the proceeds of the sale, if any. … 15) This loan contract shall constitute a first mortgage against the guiding area and related assets. This loan shall not constitute a claim against any assets of the Borrower other than the guiding area and related assets.

Borrower shall not sell, sublease, mortgage, or otherwise dispose of any assets of the guiding area, in whole or in part, without the written permission of the Lender. … 18) If Borrower fails to fulfill any condition of this contract, or if for any reason Borrower cannot legally hold the guiding certificate, Borrower agrees to immediately put the hunting area up for sale for purposes of repayment of the loan and any interest owed to the Lender.

In such case, borrower agrees to sign and transfer the certificate and any other necessary documents to the designee of the Lender. [ 12 ] The Loan Contract made no provision for periodic interest payments. Instead, Clause 7 stipulated that the Roes were to provide Mr. Grimsley annually with guiding services valued at 10 percent of the outstanding principal on the loan; or, if in a given year Mr. Grimsley opted not to receive guiding services, interest would be paid “in an alternate manner by mutual consent”. Clause 7 also provided that on sale of the guiding area, Mr.

Grimsley would receive a “cash interest” that would accrue from the date of the last payment of services in lieu of interest, to the closing date of the sale, at a rate of 10 percent per annum. [ 13 ] Clause 8 of the Loan Contract provided a formula by which Mr. Grimsley’s share of the proceeds of any sale would be determined.

His initial share was set at 70%; thereafter, his share would diminish in proportion to the percentage of the initial principal amount of the loan that had been retired, as reflected in the following: Lender’s Share = 70% - [(Cumulative Principal Paid in US$ ÷ $220,000.00 US) X 70%] [ 14 ] As noted above, Mr. Grimsley concedes that his right of recovery under the Loan Contract is limited to proceeding only against the value of the Certificate and its related assets, through repayment of the defendants’ loan indebtedness, and interest, out of the proceeds of sale.

He has no recourse against the Roes personally, or against their company. [ 15 ] In seeking an order for sale of the Guiding Territory, the plaintiff is relying on Clause 18 of the Loan Contract, with his share of the sale proceeds to be determined under Clauses 7 and 8 The Asset Purchase Agreement [ 16 ] The Asset Purchase Agreement (“APA”) is a typed document of 14 pages plus two Schedules, dated November 22, 2002. It was made between Mr. Campsall as “Vendor”; the Roes’ company, 655189 B.C. Ltd. (which I infer was the former name of the corporate defendant), as “Purchasers”; and Mr. Grimsley as “Financier”.

It provided for sale to the Purchasers of certain assets, listed in “Schedule ‘A’ – List of Supplies”, upon issuance of the Certificate to Mr. Roe, for a purchase price of $100,000. The APA made provision for the Purchaser, under the Loan Contract, assuming responsibility for Mr. Campsall’s indebtedness to Mr. Grimsley, for consideration of $50,000. The Loan Contract was attached to the APA as

Schedule ‘B’. [ 17 ] Several clauses of the APA address Mr. Grimsley’s interest in the Guiding Territory. The Vendor covenanted, under Clause 5.1, to provide title free and clear of all encumbrances, “save and except the financial charge held by Charles S. Grimsley, which financial obligation is to be assumed by the Purchaser”. Completion by the Purchaser was stated to be conditional upon several specified

conditions precedent, including execution of the Loan Contract, release of Mr. Campsall from his obligation under the Campsall Loan Contract, and Mr. Grimsley’s acknowledgement of receipt of the $50,000 transfer fee. That payment of $50,000 was also specified as being due to Mr. Grimsley at closing. [ 18 ] The Roes secured financing to cover the $100,000 purchase price under the APA, and the $50,000 due to Mr. Grimsley. They executed the Loan Contract on their own behalf, and the APA on behalf of the numbered company.

They did not obtain any independent legal advice. [ 19 ] Before signing the two agreements the Roes undertook no investigations and made no inquiries whatsoever of the various government ministries responsible for wildlife, forestry, and the environment, by way of due diligence, with respect to plans for competing usage – e.g. logging – or with respect, generally, to the continuing viability of commercial hunting in the Guiding Territory. [ 20 ] Following closing of the purchase, Mr.

Roe in due course received from the Ministry of Water, Land and Air Protection, a Guide Outfitter Certificate, granting to him the exclusive privilege of guiding in the Guiding Territory; and, from the Minister of Environment, Lands and Parks, an endorsed transfer of Mr. Campsall’s registered License, giving him license to enter on the Guiding Territory for hunting purposes. The Defendants’ Conduct of the Guiding Business [ 21 ] The evidence as to what transpired in the business over the years following the defendants’ purchase of the Guiding Territory may be summarized in general terms.

The business has never been profitable, and the Roes have only conducted minimal numbers of guided hunts since 2006, due, they say, to extensive clear-cut logging within the Guiding Territory. [ 22 ] From the point of closing of the sale, the defendants felt Mr. Campsall did not give them what they had bargained for. Some of the deficiencies described by Mr. Roe were in respect of tangible property. The itemized “List of Supplies” attached to the APA included a significant quantity of tack – riding and pack saddles, bridles and halters – that Mr.

Roe testified he had viewed prior to closing, and that appeared to him to be in good condition. After the closing, he testified, he discovered he was not given the tack he had viewed, but instead received a pile of “leftover junk”. Instead of receiving 50 pack tarps, he testified that Mr. Campsall gave him a quantity of used lumber tarps. Similarly, Mr. Campsall had shown him a 4-wheel drive “quad”; the one he received was a 2-wheel drive with a broken axle. (I note however that the List of Supplies refers only to a Quad 2x4, not a 4x4.) Mr.

Roe did receive ten horses as listed, but contrary to his understanding, he did not receive the horse Mr. Campsall had ridden during the “audition” trip. Mr. Roe testified the horses were dangerously wild, and several of them were old and in poor health. [ 23 ] The APA also listed intangible property, specifically what was referred to as a “Tourism business plan”. Mr. and Ms. Roe testified they understood that phrase to mean that commercial recreation tenure was included, i.e. a certificate that would allow them to conduct backcountry recreational tours in the territory. Ms. Roe also testified that Mr.

Campsall had told them they could “do tourism”. That turned out not to be the case; Mr. Campsall did not have commercial recreation tenure. Seven years later, in around 2009, the Roes were able to purchase a commercial recreation tenure from the B.C. government, for another $150,000, and for a while they tried to incorporate that type of commercial activity into their business plan. Ms. Roe testified that they “gave up” their commercial recreation tenure a couple of years ago. [ 24 ] Mr. Roe had also understood the sale would include a list of clients Mr. Campsall had guided, but when he later approached Mr.

Campsall and asked for the list, Mr. Campsall demanded an extra $5,000 to compensate his daughter, who had put the list together. [ 25 ] Notwithstanding these initial difficulties, the Roes did conduct a number of guided hunts in the Guiding Territory in the years up to and including 2005. Following closing of the purchase, there was only time to conduct one hunt in 2002. In 2003, they conducted four hunts in the summer, until hunting was prohibited due to a fire closure. There were 15 hunts in 2004, and another 15 in 2005, which Mr. Roe described as successful.

In 2004 and 2005, the defendants provided hunts to Mr. Grimsley in lieu of interest, as contemplated by the Loan Contract. Mr. Grimsley has not hunted on the Guiding Territory since then. [ 26 ] Another 13 hunts were conducted in 2006, but they yielded only two elk, and two mule deer. I accept Mr. Roe’s evidence that on those hunts, the number of sightings and the number of opportunities for ‘kills’ were dramatically reduced from what had previously been the norm.

A measure of a successful season, he said, would have been at least one ‘kill’ on 50 percent of the hunts. [ 27 ] From 2007 to 2015, very few hunts were conducted – in most years only one or two, and never more than 5. The Roes have at least performed a minimum number of hunts required to keep their Certificate in good standing, but they shifted the focus of their guiding to a territory in the north of the province, where their son holds a guiding certificate, and to another territory in the Columbia Valley, where the certificate for a time was held by Katie Roe.

I accept the Roes’ evidence that they occasionally offered hunts to Mr. Grimsley in their northern territory, which he did not accept. Evidence of the Impact of Clear-cut Logging [ 28 ] The Roes say that this abrupt decline in their business was brought about by extensive clear-cut logging in the Guiding Territory, which began with logging road construction in late 2005. Mr. Roe only began to learn in early 2005 of planning by the logging tenure holder – at that time, Tembec Inc., and now Canfor – to construct new roads to facilitate logging because of the threat of pine beetle infestation. Subsequently Mr.

Roe attended many meetings with Tembec, and he and Mr. Grimsley hired a consultant to assist them in communicating with Tembec and government authorities, but they were unable to alter Tembec’s plans. The potential adverse impact of the logging was readily apparent; as Mr. Grimsley wrote in an email dated March 11, 2005: Adding insult to injury, [Tembec] are now also talking about amalgamating the three proposed cut blocks into one massive clearcut, which would look like a nuclear impact area right next to our lodge. …

[ 29 ] Mr. Roe testified that he walked over the planned logging blocks with one of Tembec’s foresters, in 2005. It became apparent to him that the planning process was well underway by that time, and he formed the impression that Mr. Campsall would been given notice by Tembec of the planning process sometime prior to the sale of the Guiding Territory. During the negotiations for the purchase of the Guiding Territory, Mr. Campsall had not told Mr. Roe about any plans to log the Guiding Territory. Mr.

Roe testified that until he obtained the Certificate he would not have been entitled to receive notice of logging plans – “You’re not in the loop until you acquire something”. However, there is no evidence that information as to logging plans or projections that would have had substantially similar material impacts on the Guiding Territory was not publicly available in 2002, or would not have been accessible had he made inquiries of Mr.

Campsall or Tembec. [ 30 ] The Roes say that the logging has removed natural cover for big game, making them more vulnerable to predators, and giving less shelter from inclement weather. Whether due to predation, or due to herds migrating to adjacent areas unaffected by logging, the defendants say the result of the logging has been a decrease in the population of various species throughout the Guiding Territory. The alteration of the landscape has also meant that hunters are no longer able to enjoy a ‘wilderness experience’.

Compounding these matters are the number of logging roads that have now been constructed through the Guiding Territory. These roads have opened up the area to local hunters who can hunt without a guide – putting increased pressure on the game population – and to other recreational users, all of which also detrimentally impacts the sense of isolation fundamental to the wilderness experience the defendants had previously been able to offer. As Mr.

Grimsley remarked in the aforementioned March 2005 email message: … if hunters want to watch four-wheel drives chase elk, they can go to Colorado and see it for $500 instead of paying $5000 to watch it in B.C. [ 31 ] Maps and aerial surveys of the Guiding Territory demonstrate the very extensive clear-cutting that has occurred. Perhaps the most striking example is that formerly, the road used to access the lodge ended at a staging area; the lodge was still about a 4-hour horseback ride away, along a trail through heavy forest.

Now, the road extends up to within a few hundred metres of the lodge; a buffer zone of trees has been left standing around the lodge building itself, but beyond that the forest has simply been, in a word, devastated by the clear-cutting. [ 32 ] There is however a large portion of the Guiding Territory to the north-west designated as a Caribou Recovery Area, where caribou hunting and logging are both prohibited, though hunting for other species is allowed. One of the plaintiff’s witnesses was a Mr. David Sims, who guided for Mr. Campsall every fall for 10 years.

He estimated that the Caribou Recovery Area is equal in area to about 25% of the area of the Guiding Territory that is actively utilized. [ 33 ] David Sims also testified that there has been logging in and around the Guiding Territory going back to the 1920’s. He said that during the years when he was guiding there, the logging company would come in “quite often” to take out a block because of pine beetle infestation. He acknowledged that there has now been significant logging road construction in the Guiding Territory, which has made vehicle access easier. [ 34 ] I accept Mr.

Roe’s testimony that in this business word-of-mouth referrals from satisfied clients “are everything”. I infer that the poor results in 2006 and subsequent years probably led to a decline in demand for the guided hunts in the Guiding Territory the defendants were offering. [ 35 ] As to the Caribou Recovery Area, Mr. Roe said in his direct testimony that there are no caribou there, but he offered no proof of this. Asked in cross-examination what effort he has made to cut new horse trails into previously unguided portions of the Guiding Territory, Mr.

Roe testified that he did so only in 2015. [ 36 ] No expert opinion evidence as to the extent of the logging or its impact was tendered by either party. The plaintiff did call anecdotal evidence from lay witnesses that conflicted with Mr. Roe’s evidence as to the amount of game the Guiding Territory continues to support. The most significant evidence came from Mr. Charlie Sims, brother of David Sims. Charlie Sims is now 63 years of age. He worked as a guide for Mr.

Campsall, has hunted in the Guiding Territory since he was 16, and has lived there for 43 years. [ 37 ] Charlie Sims testified that he tries to go out in the territory every day, walking or on horseback. His impression is that the amount of game, though it varies over the years, has been “fairly solid” since the early 2000’s.

Although he did hesitate when asked in his direct testimony whether hunting for game is still viable in the Guiding Territory, he affirmed that it was; he has continued to hunt there, and at higher elevations, finding elk, moose, wolves, black bears, grizzly bears, cougars, and mountain goats. He described the whole of the Guiding Territory generally as still being “well-huntable”. [ 38 ] There was also documentary evidence tendered as to annual quotas imposed by the B.C. government for the harvesting of particular species within the Guiding Territory.

However, no evidence was tendered as to how those quotas compared with quotas Mr. Campsall had been subject to, as to whether any changes in the quotas from year to year would have substantially impacted the viability of a guided hunting business on the Guiding Territory, or as to whether the quotas were as a direct or indirect result of clear- cutting. Claims and Defences [ 39 ] Prior to closing argument the parties were granted leave to amend their pleadings to conform with the evidence. [ 40 ] The plaintiff’s Amended Notice of Civil Claim is drafted broadly as a claim for breach of contract.

The plaintiff claims the right to have the Guiding Territory put up for sale under Clause 18 of the Loan Contract, by reason of several distinct breaches of the defendants’ obligations thereunder. The focus of the plaintiff’s claim at trial was on the defendants’ failure to negotiate a repayment schedule, and failure to repay the loan, despite repeated demands allegedly made by Mr. Grimsley beginning in 2007. There are, in addition, other breaches pleaded, e.g. failure to continue to conduct a guiding business on the territory, and failure to maintain the lodge in a reasonable state of repair.

[41] The defendants’ Further Amended Response to Civil Claim sets out a number of defences. The main defences advanced arefrustration of contract, and a limitations period defence. [42] Additional, ancillary defences pleaded were advanced less forcefully in closing argument. As a defence to the whole of theclaim, the defendants plead that over the years they provided guide outfitting services to the plaintiff or the plaintiff’s nominees in anamount exceeding the face value of the loan. They plead in the alternative that the Loan Contract is unenforceable due to a completefailure of consideration, as Mr.

Grimsley’s loan was not advanced to them but to Mr. Campsall, a third party. In the further alternative,they plead that the Guiding Territory as Crown land, and the Certificate, being subject to restrictions imposed by the Ministry of theEnvironment, cannot be granted as security for indebtedness, and therefore cannot be mortgaged, nullifying Mr. Grimsley’s purportedinterest. Analysis [43] I find no merit to the ancillary defences advanced. There is no basis on the evidence to find the value of guide outfittingservices provided to the plaintiff exceeded the face value of the loan. The defendants did provide Mr.

Grimsley with guiding services in2004 and 2005, but there is no evidence that these services exceeded the value of services the defendants were contractually allowed toprovide in lieu of interest. Further, while after 2005 the Roes occasionally offered Mr. Grimsley guiding services in other guidingterritories, he was not obliged to accept those offers, and I do not find that the making of those offers mitigated the defendants’ liabilityunder the Loan Contract in any manner. [44] There is no merit to the plea that the Loan Contract is unenforceable due to a failure of consideration.

The consideration thedefendants received in return for their payment of $50,000 to Mr. Grimsley, and their agreement to the terms of the Loan Contract, wasMr. Grimsley’s consent to the sale of Mr. Campsall’s interest in the Guiding Territory to them, subject to their assumption of liability forthe loan. [45] As for the nature of the defendants’ tenure, the fact that the Guiding Territory is Crown land, without title having beentransferred to the defendants, and the restrictions on the Certificate, only impact Mr.

Grimsley’s ability to register his mortgage interest;they do not impair the defendants’ ability to have granted an equitable mortgage over their interests in the Guiding Territory, or to havegranted Mr. Grimsley a right to have those interests sold upon breach of the Loan Contract’s terms. [46] I find that the plaintiff and the defendants were parties to the Loan Contract, and that the Loan Contract provided Mr.

Grimsleywith valid, enforceable rights to have the Guiding Territory sold upon non-payment of the loan, and to realize the defendants’indebtedness, including interest, out of the sale proceeds, all in accordance with the Loan Contract’s terms. [47] What remains to be determined is whether the plaintiff’s claim is defeated by either of the two defences advanced moststrenuously, those based on the limitation period and the doctrine of frustration.

Limitation Period Defence [48] The defendants plead the plaintiff’s claim is statute-barred under either the Limitation Act 1996, or its successor, the LimitationAct 2012, as this action was not commenced until the Notice of Civil Claim was filed on April 7, 2015. The plaintiff says in reply that therunning of time was postponed through the defendants’ repeated confirmations of his cause of action, or alternatively through aforbearance agreement. [49] For the reasons that follow, I find that the plaintiff’s cause of action on the debt arose as of October 10, 2005.

I further find thatthe defendants confirmed the debt in writing, first implicitly in an email dated January 14, 2009, later explicitly in a faxed letter datedNovember 21, 2013, and finally implicitly in a faxed letter dated February 15, 2014.

Those confirmations reset the running of thelimitation period, such that this action was commenced in time, in April 2015. [50] Given these findings, it is not necessary to deal with the issue of the defendants’ liability in breach of contract for failing tocontinue the guiding business on the Guiding Territory, failing to maintain the lodge in reasonable condition, and the other ancillarybreaches alleged. However, some comment as to the application of the limitations defence to those alleged breaches is appropriate. Thefacts underlying the allegations of those ancillary breaches were known to Mr.

Grimsley no later than April 14, 2008. He testified thatanother hunter who had been in the Guiding Territory had alerted him to the poor condition of the lodge. He then wrote a letter to theRoes detailing his concerns, including that no guiding business had been conducted by them in the Guiding Territory during the previousfall. The letter concluded: It is obvious that at this point, numerous conditions of this contract have not been fulfilled. [51] The six-year limitation period for any action in respect of those alleged contract breaches therefore began to run no later thanApril 14, 2008.

While the aforementioned correspondence of the Roes from 2009, 2013 and 2014 did confirm the debt, they did notconfirm the Roes’ liability in respect of those other alleged breaches of contract, and therefore do not reset the running of the limitationperiod for those claims; see Podovinikoff v. Montgomery (1984), (BC CA), 14 D.L.R. (4th) 716, at 721 (B.C.C.A.). As aresult, any actions by Mr.

Grimsley in respect of the defendants’ alleged breaches of contract, other than the claim in debt itself, wereextinguished as of April 14, 2014, and this present action was commenced too late to include those claims. [52] I therefore limit my analysis of the limitation and postponement issues to the debt claim. Commencement of the Limitation Period – Action on the Debt [53] The threshold issue is when the cause of action on the debt first arose; this will determine which Act is applicable, and when

time for commencement of the plaintiff’s action began to run. [54] The Loan Contract called for an initial grace period of three years. During that period, the Roes were obliged to make interestpayments, either in the form of guiding services or in an alternative manner by agreement. During this three year period no payment ofthe principal was required. [55] The Loan Contract provided that at the end of the initial three-year period the parties were to negotiate a loan payment schedulenot to exceed ten years. No such

schedule was ever negotiated. [56] I find it was the parties’ mutual intent that the debt would become due no earlier than the end of the three-year grace period,October 4, 2005. [57] Mr. Grimsley now argues, in response to the defendants’ limitation period defence, that when no repayment

schedule wasnegotiated the loan became a term loan with a total term of 13 years (the initial three-year grace period, plus the “period not to exceed 10years” provided for in Clause 6 of the Loan Contract), such that no repayment demand could be made prior to October 4, 2015. If Iaccepted this argument, the Limitation Act 2012 would apply, as there would have been no “pre-existing claim” within the meaning ofs. 30 of that Act when it came into force, and the two-year limitation period provided for under s. 6 of that Act would not even havebegun to run as of the date this action was commenced.

This action would, in effect, be judged to have been commenced prematurely;whatever the result of that finding, there would be no limitation defence available. [58] This

interpretation of the Loan Contract is, I note, consistent with a demand letter sent to the Roes by Mr. Grimsley's then-legalcounsel on November 13, 2013. Conversely, it must also be noted that Mr. Grimsley had taken a different position in previouscorrespondence with the Roes; in letters dated April 14, 2008, and January 6, 2009, he had asserted that repayment of the loan ought tohave commenced in 2006, on the first anniversary of the end of the three-year grace period, and that with no payment

schedule havingbeen negotiated the loan was then in arrears and the defendants were in breach of contract. [59] I do not accept this

interpretation now offered by the plaintiff. The provision in the Loan Contract calling for negotiation of aschedule under which the defendants would amortize the loan is inconsistent with the notion of a single payment being made at theconclusion of the 13-year term. Instead I find, based on the plain meaning of the Loan Contract, that the parties’ mutual expectationwhen the Loan Contract was entered into was that following the three-year grace period the loan would be amortized, i.e. gradually paidoff, under a repayment

schedule to be agreed to, and paid in full by a due date to be agreed upon, such date being no later than October2015. [60] I therefore find that when the three-year grace period ended and no repayment

schedule was negotiated, the loan, as a matter oflaw, became a demand loan. [61] At common law, the cause of action on a demand loan accrues and the limitation period begins to run at the first point where ademand could be made. Typically this is the date on which funds are first advanced. The making of a demand is not a conditionprecedent to bringing an action, so the limitation period begins to run immediately upon the loan being made: Kong v. Kong, 2014BCCA 508; Berry v.

Page (1989), (BC CA), 38 B.C.L.R. (2d) 244 (C.A.). [62] In the present case, however, the parties explicitly provided for a three-year grace period, during which payments toward theprincipal were not required. The loan, I find, thereby became due and owing as of the end of that three-year period, October 10, 2005; atthat point Mr.

Grimsley was able to bring an action under the loan contract and the limitation period commenced to run as of that date. [63] The cause of action against the defendants in debt was therefore a “pre-existing claim” under the transition provisions of theLimitation Act 2012, and the predecessor Act with its six-year limitation period governs. Unless the cause of action was later confirmedby the defendants under the postponement provisions of the Limitation Act 1996, an action on the debt would have to have beencommenced by no later than October 10, 2011, or the cause of action would be extinguished.

Limitation Act, 1996 – Applicable Provisions [64] The relevant postponement provisions of the Limitation Act 1996 are as follows: 5(1) If, after time has begun to run with respect to a limitation period set by this Act, but before the expiration of the limitation period, aperson against whom an action lies confirms the cause of action, the time during which the limitation period runs before the date of theconfirmation does not count in the reckoning of the limitation period for the action by a person having the benefit of the confirmationagainst a person bound by the confirmation.

(2) For the purposes of this section, (

a) a person confirms a cause of action only if the person (

i) acknowledges a cause of action, right or title of another, or (ii) makes a payment in respect of a cause of action, right or title of another, (

b) an acknowledgment of a judgment or debt has effect (

i) whether or not a promise to pay can be implied from it, and (ii) whether or not it is accompanied by a refusal to pay, …

(5) For the purposes of this section, an acknowledgment must be in writing and signed by the maker. [Emphasis added.] [65] The question of whether a particular document acknowledges a cause of action is determined not with respect to the content ofthe document in isolation, but with regard to the whole context in which it was communicated. The test is what a reasonable personwould determine the intention and purpose of the maker of a document to be from an examination of the document in the surroundingcircumstances; see the decision of Myers J. in George v.

McMahon, 2006 BCSC 1394, at paras. 8-12, in particular his reliance upon thedecision of the Supreme Court of Canada in Ryan v. Moore, 2005 SCC 38 [Ryan]. [66] Read narrowly, the requirement that the acknowledgment be “signed” would require a signature – handwriting of the maker’sname in cursive script, in a manner unique to the maker. This narrow view of what is meant by “signed” may have been the basis for thedecision in Byle v.

Byle (1990), (BC CA), 65 D.L.R. (4th) 641 (B.C.C.A.) [Byle], in which a lawyer’s memorandumconfirming a client’s instructions, sent to the opposing party under cover of a solicitor’s letter, was held not meet the statutoryrequirements as the memorandum itself did not bear a signature. I note that Byle predated the Supreme Court of Canada’s decision inRyan. [67] The statutory requirements that an acknowledgment of a cause of action be in writing and signed by the maker have their originsin the English Statute of Frauds Amendment Act, 1828, 9 Geo.

IV c.14, s.1, (Lord Tenterden’s Act), and were adopted into BritishColumbia law by way of the Statute of Limitations, R.S.B.C. 1897 c. 123, s.12: 12. In actions of debt, or upon the case grounded upon any simple contract, no acknowledgment or promise by words only shall bedeemed sufficient evidence of a new or continuing contract whereby to take any case out of the operation of

section 3 of this Act, or todeprive any party of the benefit thereof, unless such acknowledgment or promise shall be made or contained by or in some writing to besigned by the party chargeable thereby… Conditions set out in the Statute of Frauds were germane to limitations issues, because these earlier statutory provisions conceptualizedthe acknowledgment of an existing debt or contractual obligation as a new contract that would take the existing claim out of theoperation of the relevant statutory limitation and cause the running of time to begin anew. [68] The statutory requirement for a “signed” acknowledgment has seldom been strictly enforced.

The history of its treatment in thecontext of the Statute of Frauds is summarized by the authors of Cheshire, Fifoot & Furmiston’s Law of Contract, 13th ed. (London:Butterworths, 1996) at 219: The word ‘signature’ has been very loosely interpreted. In the first place, it need not be a subscription; that is to say, it need not be at thefoot of the memorandum, but may appear in any part of it, from the beginning to the end. In the second place, it need not, in the popularsense of the word, be a ‘signature’ at all. A printed slip may suffice, if it contains the name of the defendant.

This relaxation of thestatutory language was well established a hundred years ago and offers a striking instance of the way in which legislation may beoverlaid by judicial precedent. … [69] This more modern view is reflected in recent decisions that have held any form of written communication bearing the author’sname – including email messages – to meet the requirements of s.5(5) of the Limitation Act 1996: see, for example, Yehia (Re), 2012BCSC 1129 at para. 46; Temple (Re), 2012 ONSC 376, at para. 33; and also the decision of the New South Wales Supreme Court inMcGuren v.

Simpson, [2004] NSWSC 35. [70] In a recently released judgement, Rosas v. Toca, 2018 BCCA 191 [Rosas], the Court of Appeal confirmed that under orthodoxcommon law, an agreement by a creditor to forbear from collecting on a debt is unenforceable without fresh consideration from thedebtor; if such consideration is not found, the limitation period will continue to run.

However, the Court pronounced in favour of anevolutionary change in the common law, to recognize that parties already in a contractual relationship who elect to alter their contract toadapt to changing circumstances should be free to do so without the burden of additional consideration being required. Bauman C.J.B.C.wrote: [183] …When parties to a contract agree to vary its terms, the variation should be enforceable without fresh consideration, absent duress,unconscionability, or other public policy concerns, which would render an otherwise valid term unenforceable.

A variation supported byvalid consideration may continue to be enforceable for that reason, but a lack of fresh consideration will no longer be determinative. In the result, the Court held that each time the defendant debtor told the plaintiff creditor, “I will pay you back next year” and theplaintiff agreed to extend the time for repayment, the running of the limitation period was delayed. [71] For the reasons I set out below, I find no forbearance agreement was concluded between Mr. Grimsley and the Roes, andtherefore Rosas has no direct bearing on the present case.

It is implicit in the Chief Justice’s reasons (see para. 69) that while thestrictures around forbearance agreements are to be loosened, the statutory requirements of the Limitation Act 1996 (and, by implication,the successor legislation) surrounding acknowledgments of causes of action must remain in place, but I read the ratio of Rosas assupporting a liberal approach to determining whether those statutory requirements are met.

Forbearance [72] Before turning to the evidence of postponement, I deal briefly with the plaintiff’s position that the limitation period wasextended by a forbearance agreement – a new contract under which he agreed to delay his pursuit of legal remedies, in exchange forpromises made by the Roes. The plea of forbearance is set out in the Amended Notice of Civil Claim, as follows: 14. Since at least 2005, Grimsley and the Defendants have been in negotiations with respect to repayment of the Loan Contract. …theDefendants took the position that they did not have to provide a periodic repayment schedule.

Instead, the Defendants agreed to make onsingle payment by October 10, 2015, as part of their proposed one-payment repayment schedule. The Defendant [sic] began to refer to

October 10, 2015 as the ‘term date’ of the loan (the “Term Date”). … 21. When the Defendants promised to make one Term Date payment, and again when they promised, in 2007, 2008 and 2009, to list the Guiding Certificate for sale to repay Grimsley, Grimsley acquiesced to their requests and promises, and did forbear his right to sue immediately. [ 73 ] I do not find the evidence supports this allegation of forbearance. My findings surrounding this issue and the postponement of the limitation period generally are based primarily upon the written documents in evidence, and inferences that can be drawn therefrom.

I give considerably less weight to the testimony of the parties. The evidence of all the parties as to their communications, other than the written correspondence in evidence, during the ten years from 2005 to 2015, and as to their conduct over that time period, was fragmentary, vague, and at points inconsistent. In their testimony Ms. Roe and, in particular, Mr. Grimsley made efforts to put their conduct in the best possible light and tailored their recollections to suit their respective positions. As a result the credibility and reliability of their testimony suffered considerably. [ 74 ] Mr.

Grimsley testified that from 2002 to 2005, he and the Roes discussed instalment payments, and had what he referred to as “ongoing negotiations” through the life of the loan as to how he would be repaid. While I accept that there must have been some discussions as to the parties’ business relationship during the guided hunts the Roes took Mr.

Grimsley on up to the fall of 2005, his evidence was so vague that I cannot find there were any particular discussions or negotiations other than those explicitly or implicitly referred to in the documentary evidence. [ 75 ] I refer below in some detail to the parties’ correspondence in the years 2007-2014. Mr. Grimsley emailed the Roes on March 12, 2007, attaching a copy of the Loan Contract, and asking that they contact him to discuss how the loan would be repaid. He testified that he did not remember if the Roes responded to that email.

He gave no evidence of reaching an agreement to forbear from exercising his rights in exchange for the Roes undertaking any particular course of action, and no evidence of him having decided to forbear from asserting his rights as a result of any response on their part. The same is true of a more detailed letter he sent a year later, on April 14, 2008. [ 76 ] Mr. Grimsley wrote to the Roes again on October 15, 2008. He expressed hope they would find a buyer soon, but said nothing about forbearing from suit. [ 77 ] More correspondence was exchanged between the parties in January 2009. Mr.

Grimsley’s letter to the Roes of January 6 asserted the Roes were in continuing breach of their obligation to repay the loan; I find this inconsistent with Mr. Grimsley having made any decision to forbear, and he made no reference to having made any such decision. Both Mr. Grimsley and Ms. Roe recall having a telephone conversation in January 2009 in which they discussed listing the Guiding Territory for sale, but there is no evidence Mr.

Grimsley followed up to determine whether it was done, and no evidence that he placed any particular reliance on it. [ 78 ] That January 2009 exchange of correspondence ended with an email from Ms. Roe to Mr. Grimsley dated January 14. A typed draft of that email is in evidence. The final two paragraphs of the draft were deleted from the final email. In those final paragraphs Ms. Roe stated: If agreeable, in the mean time we will try and scrounge the money to pay you. I take that statement as reflecting Ms. Roe’s state of mind. It appears inconsistent with the parties having reached any agreement that Mr.

Grimsley would forbear from seeking repayment. [ 79 ] Finally, Ms. Roe having been of a mind in January 2009 to “scrounge the money” is also inconsistent with the plaintiff’s allegation that the defendants agreed to make a single “Term Date” repayment in October 2015. Further, the first reference to such a “Term Date” repayment in the documents does not appear until the November 13, 2013 demand letter from Mr. Grimsley’s lawyers. There is no reference in that demand letter to the defendants having agreed to such a repayment.

To the contrary, that letter’s explanation of the loan being payable through a single “Term Date” payment to be made on or before October 11, 2015 reads, frankly, as a contrived justification for Mr. Grimsley not having sued within six years of the loan first having come due. [ 80 ] The evidence does not support a finding that the limitation period was reset through any sort of forbearance agreement. Postponement of the Limitation Period [ 81 ] The following circumstances lead me to conclude that the Roes confirmed the cause of action in debt and reset the limitation period on three occasions.

Postponement – January 2009 [ 82 ] Mr. Grimsley emailed the Roes on March 12, 2007. He reiterated the terms of the Loan Contract, including the provision that a repayment

schedule was to have been negotiated. He stated that they needed to reach an understanding as to how the loan was to be repaid, and he asked the Roes to contact him. [ 83 ] Neither Mr. Grimsley nor the Roes testified as to what if anything transpired as a result of that email. Ms. Roe, however, testified that they listed the Guiding Territory for sale sometime in 2007. If that in fact occurred, I think it more probable than not that they would have advised Mr. Grimsley of that effort to sell. [ 84 ] The next evidence of communication between the parties is the aforementioned letter Mr.

Grimsley sent to the Roes on April 14, 2008, detailing his concerns with the status of the loan and the Roes not having operated in the Guiding Territory. Again, there is no

evidence as to what if anything the defendants did to reply to this letter, but Ms. Roe testified to further efforts she made to sell theproperty in or around 2008 and 2009. Mr. Grimsley repeated these concerns in a similar letter to the Roes dated October 15, 2008. Thatletter concluded: I sincerely hope that we can find a buyer soon and that we are still in agreement with the provisions of the contract related to a sale of thearea … I infer that Mr. Grimsley was aware of the Roes’ further efforts to sell by this time. [85] On January 6, 2009 Mr.

Grimsley emailed the Roes copies of his letters of April 14 and October 15, 2008, and sent them afurther letter of that date restating his concerns with the Roes’ adherence to the terms of the Loan Contract.

The letter explicitlyaddressed, among other issues, his concerns with the Roes having been in breach of the repayment provisions of the Loan Contract sinceOctober 2005, and that “[t]he mortgage is now 3 years in arrears”; with the deterioration of the lodge, which he stated was no longer in areasonable state of repair; and with the Roes having failed to provide him with current proof of insurance listing him as a loss payee. [86] It appears that in response to this letter the Roes sent Mr. Grimsley a copy of their insurance binder, because the nextdocumentary evidence is an email from Mr.

Grimsley to the Roes dated January 11, 2009 in which he stated that the insurance binderthey had sent him showed the insurance as having “lapsed on December 4, 2009”. (Mr. Grimsley appears to have been confused as to thedates; a policy expiry date of December 2009 would have meant that as of January 2009 the policy would still be valid for another 11months).

Katie Roe replied with an email dated January 14, 2009: Charley The insurance is purchased from year to year, I always renew it December 4th of the same year, this insurance is good until December4th, 2009, if you would like a copy of the previous year please let me know. We were at the Lodge and it looks great, just as it did when Dean was up there in October, attached are some pictures.

The only thingthat needs to be fixed is the stove pipe from the kitchen stove normal where [sic] and tear, and the snow removal on the roof even thoughthere is not allot [sic] on it and it is powder, as you can see by the pictures, this will be done on the weekend as we are going back upthere. We lit the living room stove and it was fine no smoke. Katie [87] As I described above, there is a draft of that email message in evidence which contained two paragraphs that did not find theirway into the final email, including a statement that the Roes would “try and scrounge the money” to pay Mr. Grimsley. Mr.

Grimsleytestified that at some point in time, all the content of that January 14 draft was somehow communicated to him, although not in writing. Ido not find that statement credible. [88] I find this January 14, 2009 email message, read in the context of Mr. Grimsley’s letters and the Roes having sent Mr. Grimsleya copy of the insurance binder, would reasonably have been understood as an acknowledgment by the Roes of their obligations under theLoan Contract, including – by implication – the existence of the debt itself.

It therefore served, I find, as confirmation of a present – or atleast, depending on their view of whether the debt had yet become payable, a contingent – cause of action. The printing of “Katie” at theconclusion of the email serves to meet the requirement that the acknowledgement be “signed by the maker”.

Postponement – 2013 and 2014 [89] That is not the end of the matter, because the resetting of the limitation period through Katie Roe’s January 14, 2009 email stillmeant that any action would have to have been commenced by January 14, 2015. [90] There was, however, later correspondence between the parties that also served as written acknowledgment of the debt, againresetting the limitation period. In reply to the aforementioned demand letter from Mr. Grimsley’s lawyers, the Roes wrote on November21, 2013: As per to your letter dated November 13th, 2013, you requested a draft repayment

schedule of the outstanding principle [sic] owed toMr. Charley Grimsley. The outstanding 220,000.00 US funds owed to Mr. Charley Grimsley will be paid out on or before October 11th, 2015 (the “TermDate”). If we cannot pay out the 220,00000 US due to unforeseen circumstances owing to Mr. Grimsley then we will put the huntingarea up for sale for the purposes of repayment of the loan 220,000.00. The letter bears the signatures of both Dean and Katie Roe. [91] Although this letter was marked “Without Pre Justice”, counsel for the defendants consented to it going into evidence for thelimited purpose of proving confirmation of the cause of action, provided it was found to bear that

interpretation. In doing so, counsel wasconceding the correctness of the view expressed in obiter by Lambert J.A. in Belanger v. Gilbert (1984), (BC CA), 14D.L.R. (4th) 428, 58 B.C.L.R. 191 (C.A.), where he said: [11] … In my opinion it is possible for a letter to be considered as a "without prejudice" letter and inadmissible in evidence in relation toits contents about the flow of settlement negotiations either on liability or quantum, but at the same time for the same letter to beadmissible in evidence for the exclusive purpose of s. 5 of the Limitation Act.

It is not necessary to decide that question on the facts ofthis case, and I explicitly do not do so. [92] Had the point been argued, I would have come to the same conclusion with respect to the November 21 letter, that it was

inadmissible in respect of matters under negotiation, but admissible as to the existence of the cause of action. There was never any doubtbetween the parties that the Roes were indebted to Mr. Grimsley. The only sense in which the letter expressed a term subject tonegotiation, making it subject to privilege, was as to the steps to be taken by the Roes, and the timing of same.

The letter constitutes afurther confirmation of the plaintiff’s cause of action in debt. [93] A final confirmation, chronologically, is in the form of a faxed letter from Dean Roe dated February 15, 2014. (There is noaddressee; however, the letter is headed with the reference “File number 18599” – the same file number that appeared on the November 13, 2013 demand letter from Mr. Grimsley’s lawyers – and is stated as being “in response to your letter dated January 14th, 2014”.

Theprevious document, chronologically, in evidence is a letter of January 31, 2014 to the same law firm, acknowledging its letter of January14, so the February 15 letter was certainly sent to that law firm, as well.) [94] The February 15 letter is marked “Without Prejudice”, but the defendants’ counsel appropriately consented at commencementof this trial to the letter going into evidence, as it contained nothing by way of negotiation, and was therefore not privileged in any sense.The letter discussed various terms of the Loan Contract; implicitly, therefore, it would reasonably have been understood asacknowledging the Roes’ indebtedness under the Loan Contract.

The letter ends with the typed name, “Dean Roe”, and the handwrittenfax cover sheet by which it was sent bears the writing, “From: D. Roe”, printed by hand. This letter, I find, also meets the statutoryrequirements for confirmation of a cause of action. [95] Both of these letters served to reset the six year limitation period again, such that this action was commenced in time in April2015. Defence of Frustration [96] The Further Amended Response to Civil Claim sets out a defence of frustration, in the following terms: Division 2 – Defendants’ Version of Facts … 11.

The defendants say, in the alternative, that any alleged loan agreement has been frustrated by the British Columbia Ministry ofForests having granted to Canfor, a logging company doing business in British Columbia, the right to clear cut the guiding territory,making it uninhabitable for wildlife while at the same time creating roads and trails which render the alleged exclusivity of the guidingrights allegedly sold to the defendants negatory. …

Part 3 – Legal Basis … 3. The Defendants say that performance of the Loan Contract was frustrated due to the intervening event of the pine beetle clear-cutlogging, which was a permanent change that affected the nature, meaning, purpose, effect, and consequence of the Loan Contract, andthe said clear-cut logging was not a foreseeable or contemplated event by either party at the time the Loan Contract was entered into. 4. By the fall of 2005, clear-cut logging was so severe as to render the Loan Contract frustrated.

Thereafter, the Defendants were entitledto treat it as of no further force and effect as a result of it being frustrated. [97] The doctrine of frustration serves to relieve parties to a contract of the burden of further performance of their obligations, whenunforeseeable circumstances arise that would make performance of the contract radically different than what was contemplated. Thedefence is described in Ballenas Project Management Ltd. v. P.S.D. Enterprises Ltd., 2007 BCCA 166: [26] Reference is made to the decision of the Supreme Court of Canada in Naylor Group Inc. v.

Ellis-Don Construction Ltd., 2001 SCC58 and to the Court’s discussion in paras. 53 – 56 of the law of rescission: 53. Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contractbecomes a “thing radically different from that which was undertaken by the contract”. 54. Earlier cases of “frustration” proceeded on an “implied term” theory.

The court was to ask itself a hypothetical question: if thecontracting parties, as reasonable people, had contemplated the supervening event at the time of contracting, would they have agreed thatit would put the contract to an end? The implied term theory is now largely rejected because of its reliance on fiction and imputation. 55. More recent case law, including Peter Kiewit, adopts a more candid approach.

The court is asked to intervene, not to enforce somefictional intention imputed to the parties, but to relieve the parties of their bargain because a supervening event … has occurred withoutthe fault of either party.

For instance, in the present case, the supervening event would have had to alter the nature of the appellant’sobligation to contract with the respondent to such an extent that to compel performance despite the new and changed circumstanceswould be to order the appellant to do something radically different from what the parties agreed to under the tendering contract. [27] The Supreme Court referred to its previous decision in Peter Kiewit Sons’ Co. v. Eakins Construction Ltd., (SCC),[1960] S.C.R. 361 and to the decision of the House of Lords in Davis Contractors Ltd. v.

Fareham Urban District Council, [1956] A.C.696 (H.L.). These cases do not obviate the need to show that the supervening event was not foreseeable. [98] I accept that the clear-cut logging since 2005 has radically altered significant areas within the Guiding Territory, making thoseareas unattractive for the Roes’ target market of hunters seeking a wilderness experience and unsuitable for guided hunting. However, I

find the defence of frustration is not made out. I come to this conclusion for four reasons. [ 99 ] First, by Mr. Roe’s own admission, planning for the logging seemed to have been at an advanced stage when he first learned of it, through Tembec’s forester, in 2005. Mr. Roe also admitted to having surmised that Mr. Campsall had been made aware of Tembec’s logging plans before the defendants’ purchase of the Guiding Territory.

The defendants have not proven that information about potential plans to log the Guiding Territory in a manner that would have had a substantially similar impact would not have been available to them had they made suitable inquiries of Tembec, or the B.C. government, or Mr. Campsall, in 2002. [ 100 ] Moreover, in evidence is a letter to Mr. Grimsley and Mr. Roe dated April 3, 2005 from the consultant who assisted the parties in dealing with the logging issues, Mr. David Phelps.

The letter contains the following explanation of the need for logging in the Guiding Territory: Much of the upper Lost Dog, Mather and Lake Creek drainages are forested by dominant pine stands in the 70 plus year class. These timber stands established naturally following extensive wild fires in the early to mid Twentieth Century and are now at the susceptible age for pine beetle attack. As part of the commercial public forestland base, inevitably these stands will be logged in order to harvest this susceptible forest.

As the most likely alternative there will be extensive dead, beetle attacked Lodge pole Pine stands with greatly increased susceptibility to fire because essentially this is a fire dependent ecosystem. With the prevailing winds and the location of your lodge there could be some instant destructive changes. Another hot dry summer with some electrical storms and the entire area is at significantly greater risk. Therefore, perhaps logging is the least of the evils provided that Mountain View Outfitters (MVO) is part of the planning process and provides management input to protect their interests.

The letter concludes: I feel obligated to say that given the forest type and age class in the area there will be significant and possibly dramatic changes over the next several years, indeed perhaps the immediate future.

You should be planning now to accommodate these changes into the operation of the guiding territory. [ 101 ] I infer from this letter that had the defendants done adequate due diligence in 2002 before acquiring the Certificate , either through making direct inquiries, or obtaining the advice of a consultant, they would have received similar advice: that due to its age and species mix the forest was vulnerable, that logging would have to be undertaken in the near future to mitigate the loss of timber quality due to infestation and/or the risk of fire, and that their tenure was inevitably going to be substantially detrimentally impacted. [ 102 ] The defendants have failed to prove an essential element of the defence of frustration, that the “supervening event” of the impact of logging conducted by Tembec was not foreseeable. [ 103 ] Second, while I have found that the logging has radically altered significant portions of the Guiding Territory, it has not been proven that the Caribou Recovery Area in the northwest – which forms a substantial portion of the Guiding Territory – could not support a viable guided hunting business.

Mr. Roe’s assertion that there is “no game” was unsupported by any objective evidence. I am unable to conclude on the evidence that the logging has so fundamentally affected all of the Guiding Territory that operating a guided hunting business under the conditions prevailing since the clear-cutting would be radically different than what was contemplated. [ 104 ] Third, even if I were to find that the clear-cutting has frustrated the defendants’ guiding business, that is not the same as frustrating the defendants’ obligation to repay the loan.

It is of course correct that the parties intended the provision to the plaintiff of guiding services in the Guiding Territory to serve as a potential substitute for yearly interest payments. It is undoubtedly also the case that the plaintiff saw his contractual entitlement to such guiding services as a significantly beneficial term of the Loan Contract. But the Loan Contract, fundamentally, was the plaintiff’s means of securing repayment of the principal he had lent Mr. Campsall. Nothing in the Loan Contract’s terms, and nothing in the circumstances which led to its formation, suggests the parties intended Mr.

Grimsley to bear the risk of unforeseeable downturns in the profitability of the defendants’ business. [ 105 ] Fourth, even if I were to find the Loan Contract had been frustrated, the defendants’ position that they ought to be relieved of the burden of repaying the loan would fail to account for the benefit they received from Mr. Grimsley’s initial performance of his contractual obligation. Reading the Loan Contract and the APA together, the defendants received, for the consideration of their $50,000 payment to Mr. Grimsley, Mr. Grimsley’s consent to them acquiring the Certificate and related assets from Mr.

Campsall, subject to the US$220,000 debt they agreed to assume. It is clear that the Roes could never have acquired the Guiding Territory from Mr. Campsall without provision having been made for Mr. Campsall’s indebtedness to Mr. Grimsley. Under s.5(2) of the Frustrated Contract Act , R.S.B.C. 1996, c. 166, if the Loan Contract was determined to have been frustrated, the defendants would still be obliged to account for the value of the benefit they received.

And, pursuant to s. 5(4), any diminution in the value of the Guiding Territory caused by the logging would not be borne solely by the plaintiff, but would be apportioned equally between the plaintiff and the defendants. [ 106 ] (I note that the Loan Contract called for a 70/30 distribution of sales proceeds in Mr.

Grimsley’s favour; it therefore is conceivable, depending on the present market value of the Guiding Territory, that a 50/50 apportionment of the loss caused by frustration of the contract, as mandated by s. 5(4), could result in a higher portion of the loss in value being borne by the defendants, than if the doctrine of frustration did not apply.) [ 107 ] For these reasons, the defendants cannot avoid their debt obligation to the plaintiff by way of the defence of frustration.

Conclusion [ 108 ] I order that the defendants’ interest in the Certificate and the related assets is to be sold. [ 109 ] The parties shall have joint conduct of sale.

[ 110 ] The plaintiff shall receive from the proceeds of sale, first, toward repayment of the principal, 70% of the proceeds, to a maximum of an amount equivalent to US$220,000.00, at the exchange rate prevailing as of the closing date; and second, contractual interest on the principal calculated as simple interest, at a rate of 10%, from October 10, 2006 (the first anniversary date of the Loan Contract in the year following the last of the guided hunts provided to the plaintiff in lieu of interest). [ 111 ] Unless there are issues I am unaware of, the plaintiff will be entitled to his costs at Scale B. [ 112 ] Consonant with the submissions of counsel for the defendants, the parties are at liberty to apply for directions and further orders if they are unable to agree as to the listing agent or the manner of sale. “A.

Saunders J.”