Scott Wheatley v. Wheatley Holdings Inc., 2020 SKPC 3

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2020 SKPC 3 Date: January 2, 2020 File: 314 of 2019 Location: Regina _____________________________________________________________________________ Between: Scott Wheatley and Wheatley Holdings Inc. - and - Darryl Brennan and Ronald Eftodie Sharon Martin For the Plaintiffs Sterling McLean For the Defendants _____________________________________________________________________________ JUDGMENT DEMONG , J _____________________________________________________________________________ Introduction [ 1 ] The plaintiffs bring this action against the defendants, jointly and severally, seeking to recover the sum of $7,500.00 which they say is due and owing to them pursuant to a settlement agreement that had been entered into in the spring of 2019.

The defendants have filed a Reply and argue that there was no settlement agreement. In the alternative, they argue that if there was an agreement, payment was contingent upon the sale of a certain parcel of land to a third party. Since the anticipated sale did not proceed as planned, and because there has been no sale of the land in the interim, they maintain that the plaintiffs’ action should be dismissed as premature.

Evidence, Analysis and Findings of Fact [ 2 ] Respectfully, the evidentiary foundation upon which both the claim and the defense are based leaves much to be desired. Mr. Wheatley was the only witness called by the plaintiffs, and I was left with the distinct impression that he was unfamiliar with many of the legal niceties which predated, but which formed the foundation of, his legal action. Mr. Brennan and Mr. Eftodie were called by the defense and I came to that same conclusion in respect to their legal acumen. I also conclude that some of their evidence was less than credible.

I will speak more of this shortly. [ 3 ] It seems to me that the people who could have best shed light on the substantive matters in dispute would have been the lawyers who were engaged by each of the parties to facilitate the arrangement which is the subject matter of the dispute. These were, respectively, Mr. Fritzler acting for the plaintiffs at the time, and Mr. Mclean, who was acting for the defendants. However, neither of them gave evidence at trial.

From what I can glean, I am satisfied, more likely than not, that the following occurred. [ 4 ] On November 5, 2010, the plaintiffs commenced QBG Action No. 2037 of 2010, seeking to recover the sum of $30,000.00 jointly and severally from each of the defendants and two other parties known as Conley Management Ltd. and Dallas Conley.

This action related to an alleged non-payment for goods and services that the plaintiffs asserted they had provided to those named defendants in that action. [ 5 ] At some point in time the plaintiffs issued a Certificate of Pending Litigation in QBG Action No. 2037 and duly registered it at Information Services Corporation. The Certificate was registered against the title of certain property in Balgonie which I will describe as ‘Lot 6’.

The effect of registering a Certificate of Pending Litigation is to put potential purchasers on notice that if the property is sold to them, that property is not being transferred free and clear of liens or encumbrances. [ 6 ] On or about March 7, 2011, the plaintiffs in the Queen’s Bench action obtained judgment in default of defense against Conley Management Ltd. and Dallas Conley. The action against Mr. Brennan and Mr. Eftodie remained ongoing. [ 7 ] By all accounts the plaintiffs were not successful in their efforts to recover against the defaulting defendants in that action.

By all accounts the ongoing action as against Mr. Brennan and Mr. Eftodie waned for several years. [ 8 ] During this time, Mr. Brennan and Mr. Eftodie each became, or at least remained, registered owners of an undivided one-half interest in Lot 6. They remain so up until this day. [ 9 ] On or about March 17, 2019, Mr. Brennan and Mr. Eftodie entered into an Option to Purchase Agreement with a third party (who was not called to give evidence in these proceedings).

The agreement contemplated that the third party would make a deposit of $5,000.00 in order to eventually purchase Lot 6 and two adjoining lots in Balgonie. The agreement anticipated transfer of the land on April 15, 2019, in exchange for the balance of the purchase price which equated to the sum of $67,500.00. The agreement was subject to the proviso that all liens and encumbrances would be removed from the lands in question.

At the time of execution of the Option to Purchase Agreement, the Certificate of Pending Litigation remained on the title of Lot 6. [ 10 ] The evidence satisfies me that the value of Lot 6, or the amount of money that Mr. Brennan and Mr. Eftodie would receive under the Agreement would be one third of the total price for all three parcels of land, or the sum of $24,166.00, more or less. [ 11 ] On or about April 25, 2019, Mr. Brennan and Mr.

Eftodie sought and obtained an Order dismissing (for want of prosecution) the plaintiffs claim in Action No. 2037. [ 12 ] The evidence satisfies me that it would have been within the plaintiffs’ strict legal rights to attempt to appeal that Order, if that appeal was filed within 30 days of the Order having been made – up until May 24, 2019. [ 13 ] I accept counsel’s characterization of the law - to the effect that the dismissal for want of prosecution of QBG Action No. 2037 would formally conclude that action (subject to a successful appeal) and therefore, the Certificate of Pending Litigation could also be vacated.

This, because the Action upon which the Certificate was based would no longer exist.

[ 14 ] Each of Mr. Brennan and Mr. Eftodie gave evidence to the effect that, as a matter of simple courtesy, and out of sympathy to Mr. Wheatley’s inability to collect on his judgment against Conley Management Ltd, and Dallas Conley, they contacted Mr. Wheatly in either late April or early May of 2019 and offered him the sum of $7,500.00 when the sale of Lot 6 went through – not because they had to obtain his consent to the sale - but rather out of the goodness of their hearts because they felt bad that Mr.

Wheatley had not had any success in recovering any money from Conley et al . [ 15 ] I do not accept this evidence. I prefer the evidence of Mr. Wheatly. He has explained that the defendants contacted him by telephone (although he cannot recall the precise date) and explained to him that they had a purchaser for Lot 6. He stated, and I accept, that Mr. Brennan - with the actual or ostensible authority of Mr. Eftodie - asked him to “lift the litigation” and that if he did, he was “to trust them that after sale of the land they would give him $7,500.00”. I find that Mr.

Wheatley’s version of the conversation is consistent with what happened next. I also find, more likely than not, that at the time this phone call took place, Mr. Wheatley agreed to this arrangement both in his personal capacity and on behalf of his corporation. [ 16 ] The Court was not provided with any further details regarding this arrangement. I do not know if Mr. Brennan advised Mr. Wheatley who the anticipated purchaser was, or when the sale was to proceed, or any other term or condition of the Option to Purchase Agreement.

On the rather nominal facts before me, I conclude that the plaintiffs and the defendants simply agreed that in exchange for the plaintiffs’ promise to “lift” (end) the litigation, the plaintiffs would receive the sum of $7,500.00 when Lot 6 was sold. While I am satisfied that all of the parties anticipated that this would happen soon, I cannot, on the facts before me, find that the agreement entered into between the parties was subject to a further understanding that the plaintiffs would receive nothing if this particular sale fell through.

Therefore, I cannot, on the facts before me, conclude that the consideration passing to the plaintiffs under the agreement, was only a chance to obtain payment of $7,500.00 if the sale occurred pursuant to this particula r Option to Purchase. I therefore decline to accept the defendant’s assertion that there is no longer an agreement in place. [ 17 ] There is no question that at some point in time Mr. Mclean and Mr. Fritzler would have been in communication in relation to this arrangement. I am also satisfied that each of Mr. McLean and Mr.

Fritzler understood that the plaintiffs’ right to appeal the dismissal of QBG Action No. 2037 exposed Mr. Brennan and Mr. Eftodie to the possibility that it would prove successful; that if successful, it would continue to act as the foundation for the still existing Certificate of Pending Litigation registered against Lot 6; and, that in consequence, the sale of the lands would not likely proceed – because, of course, the purchase agreement required all liens and encumbrances be removed from title. In short, this ‘cloud on title’ would have to be dealt with. [ 18 ] I am satisfied that at some point in time, Mr.

Maclean, on behalf of the defendants, made an overture to the plaintiffs by contacting Mr. Fritztler. I know this because Mr. Fritzler sent a letter to Mr. Mclean on May 6, 2019 referring to Mr. Mclean’s letter of May 2 and “our telephone conversation”. However, I do not know the substance of the May 2 letter from Mr. McLean. It was sent as an offer on a without prejudice basis. At trial Mr. McLean claimed privilege on that document as was his right. As such, its contents, or the presumed terms of the ‘offer’ has not been divulged to the Court. [ 19 ] Regardless of those contents or terms, they persuaded Mr.

Fritzler to agree, on behalf of his clients, to lift this cloud on title. On May 6 th he responded to Mr. Mclean as follows: Further to your letter of May 2 nd and our telephone discussion I enclose the consent order dismissing the claim. I require your express undertaking in writing to provide my office with the sum of $7,500.00 full and complete satisfaction of the action and any appeals or I will be filing a notice of appeal prior to May 24 th . [Sic] [ 20 ] I am satisfied that the consent order that Mr. Fritzler referred to was in relation to the consent order of Mr.

Justice Chicoine dated May 7 th , which issued on May 10. That consent order vacated the Certificate of Pending Litigation. [ 21 ] On May 10, 2019, Mr. Mclean responded in writing to Mr. Fritzler’s May 2 nd letter. His response, in part, reads: By this letter we confirm that there is an accepted Offer for the sale of Lot 6. We have in our solicitor’s trust account, a deposit of $5,000.00 to be applied to the purchase price. Because of the “cloud on the title” the date for possession was set but will now have to be extended.

… We further confirm that from the proceeds of the sale of lot 6 we have been directed and instructed by our clients to pay to you or your clients …. the sum of $7,500.00 in full and final satisfaction of any claim they may have to this property. [Emphasis added] … We will keep you informed of our progress on the sale of the lot. [ 22 ] While Mr. Mclean had, in effect, now provided “written confirmation to provide Mr.

Fritzler’s office with the sum of $7,500.00, it was not in full and final satisfaction of “any action and any appeals” but rather “in full and final satisfaction of any claim they may have to the property”. Mr. McLean further nuanced that confirmation by inserting the further clause by indicating that payment would come from “the proceeds of the sale of Lot 6”. [ 23 ] The sale did not go through. The Court was not provided with any reasons why it did not go through other than that the purchaser backed away from the Option to Purchase. [ 24 ] On June 25, 2019 Mr. Fritzler sent a letter to Mr. McLean.

It reads in part: I am sure that you are acutely aware of the fact that my client agreed to forego appealing the Chamber’s decision dismissing an action I consented to vacating of his interest against the property on your client’s promise to pay $7,500.00 in full and final sale under the action [sic]. My understanding is that your clients have lost the ability or the inclination to sell the property and have to date not provided the sum of $7,500.00. Your clients have the property and my client is without the promised money.

It follows that there can be a binding contract found here to the sum of $7,500.00 and my client did everything required of him to empower yours to effect sale. I would encourage you to have your clients effect a payment notwithstanding the status of any proposed sale so that I may forego a small claims action on the agreement in the circumstances. [Emphasis added]. [ 25 ] Mr. Fritzler’s characterization of his client’s rights are different than what, in my view, the original agreement contemplated. Under the original agreement, the money was not promised regardless of whether the sale went through or not.

The original agreement contemplated that payment would be received when Lot 6 was sold. However, the plaintiffs seek to have this Court conclude that Mr. Fritzler’s letter of May 6 constitutes, in effect, a written variation of the original oral agreement, such that payment was to be made regardless of the sale of the property. [ 26 ] I am tempted to come to that conclusion, but it would be an inference on my part. Mr. Wheatley did not give evidence to that effect, nor did Mr. Fritzler, nor did the defendants or their counsel. In addition, it would appear to run contrary to Mr.

Fritzler’s June 25 letter which, in a somewhat garbled fashion appears to confirm the nature of the original oral agreement, when it speaks to the following: “my client agreed to forego appealing the Chambers decision dismissing an action I consented to vacating his interest against the property on your client’s promise to pay $7,500.00 in full and final sale under the action”. I read this rather convoluted sentence as confirming that Mr. Fritzler, and therefore his client, were each aware that payment was to be made following a sale of the property. That conclusion is reinforced when one considers Mr.

Fritzler’s additional entreaty to the effect that he “would encourage [Mr. McLean] to have [his] clients effect a payment, notwithstanding the status of any proposed sale”.

[ 27 ] In essence, this dispute boils down to whether or not Mr. Fritzler’s imposed trust condition, as set forth in his May 2 nd letter to Mr. McLean, should be treated as an amended offer by the plaintiffs to the defendants - such that regardless of the sale of Lot 6, Mr. McLean would provide Mr. Fritzler’s office with the sum of $7,500.00. I conclude that it does not. I suspect that neither of the parties turned their minds to the chance that this particular sale might not proceed as scheduled. However, in my view, nothing really turns on this.

Having found that the oral agreement contemplated that the plaintiffs would receive $7,500.00 when the land is sold, the plaintiffs’ position has not changed in any meaningful way.

The only distinction is that now, instead of an existing Certificate of Pending Litigation registered against the land, with an existing action in support of that Certificate, the plaintiffs now have a contractual arrangement where payment of a certain amount must be made when the land is ultimately sold. [ 28 ] Under the circumstances, the condition upon which payment is predicated has not yet occurred, and the plaintiffs remain free to take whatever action they deem necessary to advise the world at large of their existing interest in the land.

This does not, however, include the present action, since the condition precedent entitling the plaintiffs to actual payment has not yet crystallized - the money is not yet due and owing. For these reasons I conclude that the action is premature, and the plaintiffs’ action against the defendants is hereby dismissed. [ 29 ] One would have thought that the parties to this dispute would have given serious consideration to resolving this matter without the need to proceed to trial. Neither party is any further ahead by virtue of this matter having come forward.

In my view, this is an appropriate case to exercise my discretion regarding costs in order to reflect this result. Therefore, even though the defendant has been successful, I decline to award any costs to either party. ______________________________ Demong, J.