Modern Paving Ltd. v. Donovan Homes Ltd., 2011 NLCA 39

Date: 20110613 Docket: 09/109 Citation: Modern Paving Ltd. v. Donovan Homes Ltd., 2011 NLCA 39 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN : MODERN PAVING LIMITED APPELLANT AND : DONOVAN HOMES LIMITED RESPONDENT Coram: Welsh, Harrington and Hoegg, JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (General), 200401T2759 Appeal Heard: February 14, 2011 Judgment Rendered: June 13, 2011 Reasons for Judgment by Hoegg, J.A. Concurred in by Welsh and Harrington, JJ.A. Counsel for the Appellant: David Buffett, Q.C. Counsel for the Respondent: James Vavasour, Q.C. and David Goodland

Hoegg, J.A.: [ 1 ] The Appellant, Modern Paving Limited (“Modern”), is an established company experienced in the construction of infrastructure for land development. The Respondent, Donovan Homes Limited (“Donovan”), is an established property developer. This appeal concerns whether Modern and Donovan had a binding contract to develop a large tract of land in St. John’s into residential building lots. BACKGROUND [ 2 ] Modern and Donovan had a history of successful business relations, having worked together on some fifteen projects prior to the one involved in this litigation.

In the past, however, their relationship had been different. Donovan had been the developer, and as such had retained Modern on a contractual basis to do specific infrastructure work. Donovan had paid Modern for the infrastructure work, and had kept 100% of the profits from its development project. In this case, Modern and Donovan, at Modern’s invitation, embarked upon a project to jointly develop the subject land with a view to sharing the profits. [ 3 ] Donovan maintains that the parties had a binding and enforceable contract to develop the land and that Modern breached it.

Modern maintains that its dealings with Donovan had not progressed beyond an agreement to agree, with the result that the parties were not contractually bound to each other to develop the land jointly. [ 4 ] Three witnesses testified at trial. Mr. Robert Cameron, president of Modern at all times material to this matter, and John Ryan, president of Donovan, testified for Donovan. Mr. Rick Stead, co-owner of Modern at the material times, testified for Modern. [ 5 ] On September 24, 2003, Mr. Cameron contacted Mr.

Ryan, advised him of an opportunity to develop approximately six hundred residential building lots on land located off Kenmount Road, and inquired whether Donovan was interested in partnering with Modern to do so. Mr. Ryan indicated that Donovan was interested. [ 6 ] A few days later, on September 30, 2003, Mr. Cameron and Mr. Ryan together visited the Kenmount Road land site. After visually assessing the land, they agreed it had potential for residential development.

At that meeting they discussed what expertise each could contribute to the project, being aware from previous dealings that Donovan’s expertise was in sales and marketing and Modern’s expertise was in property infrastructure work. They decided that Modern would be responsible for infrastructure work and related costs, including survey, legal and engineering costs, and Donovan would be responsible for sales and marketing of the lots and related costs, dealing with and obtaining development permits and approvals from various regulatory agencies, and overall supervision and management of the project.

The gentlemen proposed that Modern and Donovan would split the profits 50/50. Mr. Cameron advised Mr. Ryan that he would have to discuss the proposal with the owners of Modern before committing. [ 7 ] A day or two later, Mr. Ryan and Mr. Cameron met again. Mr. Max Bennett of Modern was also present. Mr. Bennett indicated that Modern’s principals wanted an arrangement which would give Modern a greater share of the profit split. Mr. Ryan told them that he was not interested in the project unless the profits were shared 50/50. [ 8 ] Mr.

Cameron subsequently conferred with the shareholders of Modern, who reluctantly agreed to the 50/50 profit split arrangement. Mr. Cameron advised Mr. Ryan of Modern’s agreement, and the two gentlemen agreed that Modern and Donovan had an agreement to develop the land. Mr. Ryan and Mr. Cameron decided that Mr. Cameron would approach the owners of the Kenmount Road property to indicate their interest in acquiring the land. This was because Mr. Cameron knew the owners from previous dealings. [ 9 ] The owners confirmed to Mr. Cameron their desire to sell the land. Mr.

Ryan then drew up the offer to purchase the land and gave it to Mr. Cameron to present to the owners. The offer was dated October 3, 2003. Mr. Ryan structured the offer according to a scheme he had previously used in his development projects. By having a first charge on the property, Modern’s front-end expenditures for infrastructure costs would be protected if the property market slumped. [ 10 ] Modern put this offer on its own letterhead and sent it to the owners.

A subsequent offer, with a couple of changes inconsequential to this litigation, was sent to the owners on Modern’s letterhead on October 7, 2003 with Modern’s deposit cheque of $50,000. The $50,000 deposit was shared equally by Modern and Dovovan. (Donovan provided its cheque for $25,000 to Modern on October 7, 2003, and Modern cashed it three days later.) The Purchase and Sale Agreement for the land was executed by the owners on October 8, 2003. Mr. Cameron testified that the property was acquired on behalf of both Modern and Donovan. Mr. Cameron subsequently contacted Mr.

Ryan and confirmed to him the property had been acquired. [ 11 ] A development/option agreement remained to be executed. On October 20, 2003, Mr. Cameron requested Mr. Ryan to draft it. Mr. Ryan drafted a development/option agreement as between the owners of the first part and Donovan/Modern of the second part. Mr. Ryan provided it to Mr. Cameron who, as a result of discussions with the owners, provided a new development/option agreement to the owners containing minor changes to the body of the agreement, and stating the agreement to be between the owners of the first part and Modern of the second part.

This agreement was ultimately executed. Notwithstanding that the property was being held in Modern’s name, Mr. Cameron confirmed in his testimony that the property was purchased on behalf of both Modern and Donovan. [ 12 ] Sometime between October 3, 2003 and November 12, 2003 the owners of Modern, Mr. Rick Stead and Mr. Larry Stead, decided they were not prepared to honour the 50/50 profit sharing arrangement to which Modern and Donovan had agreed. Modern’s change of position was conveyed to Mr. Ryan by Mr. Cameron at a meeting on November 12, 2003. Mr. Cameron told Mr.

Ryan that if Donovan was not prepared to agree to a new risk/profit split, then Modern would do the land development without Donovan. Mr. Cameron was embarrassed and felt awkward about conveying Modern’s change of position to Mr. Ryan. [ 13 ] Mr. Ryan refused to renegotiate the risk/profit split and declined reimbursement of Donovan’s $25,000 contribution to the deposit. The next day, November 13, 2003, Mr. Ryan wrote a letter to Mr. Cameron outlining a chronology of their dealings to date and the basis of their contract, and indicating a desire to move forward on their project.

In a subsequent telephone conversation with Mr. Ryan, as well as at trial, Mr. Cameron agreed that this correspondence was an accurate representation of what had transpired between the parties.

[ 14 ] Mr. Ryan and Mr. Cameron met again on November 19, 2003 at Mr. Cameron’s invitation. This meeting, during which Mr. Cameron expressed his displeasure with Modern’s shareholders to Mr. Ryan, appears to have been an attempt by Mr. Cameron to put the parties back together. Nothing was resolved. On November 25, 2003, Mr. Cameron and Mr. Rick Stead visited Mr. Ryan. At that meeting Mr. Stead advised Mr.

Ryan that Modern was not prepared to continue with the deal without renegotiating the risk/profit sharing arrangement and that if Donovan wasn’t prepared to renegotiate that aspect of their agreement, the deal was “off”. Mr. Ryan refused to alter the previous agreement. During this meeting Mr. Ryan asked Mr. Stead if he was suggesting that Mr. Cameron did not speak for Modern. Mr. Stead stated that Mr. Cameron did not speak for Modern because, Mr. Stead said, “It is not his money”. Mr. Cameron got upset with Mr. Stead, there was an argument, and the meeting ended. Mr. Cameron called Mr.

Ryan later that day and apologized for the dispute at the meeting. [ 15 ] Modern subsequently proceeded to develop the subdivision without the involvement with Donovan. Donovan filed suit for breach of contract on July 5, 2004. The Trial Judge’s Decision [ 16 ] The trial judge found that Modern and Donovan had entered into a binding and enforceable oral contract to jointly develop the subject land. He found that the essential elements of a contract – offer, acceptance, consideration and intention – were present.

He found that Modern and Donovan had agreed on the essential terms, including the apportionment of risk and profit and that net profits would be split 50/50, and that Modern’s subsequent change of mind did not affect the fact that there had been a previous agreement. He found that there was no uncertainty respecting the essential terms of the contract, and that the details and terms left to be determined were not fundamental to the formation of the contract, did not affect the core of the agreement, and their absence did not invalidate it. [ 17 ] The trial judge also found that Mr.

Cameron, who was continuing as president of Modern under its new ownership by Messrs. Stead, had authority to bind Modern at the material times. He found that Mr. Cameron’s authority had been explicitly stated and endorsed by Modern’s owners on numerous occasions throughout the parties’ dealings. He also observed that Modern did not provide evidence denying Mr. Cameron’s actual authority at trial, despite Mr. Rick Stead having had the opportunity to testify on this point when he gave evidence.

THE APPEAL Modern’s Position [ 18 ] Modern appeals, arguing that the trial judge committed legal and factual errors in finding that the essential elements of an enforceable contract existed and in finding that Mr. Cameron had authority to bind Modern. Modern lists twelve grounds of appeal. Most of them relate to alleged erroneous findings or inferences of fact.

A few allege error respecting the trial judge’s conclusion that a deal had been reached. [ 19 ] The essence of Modern’s challenge to the trial court’s ultimate determination is that the terms of the purported contract are so uncertain as to void it for uncertainty and/or that the terms remaining to be determined are so fundamental to an enforceable agreement that without them no contract can exist.

Modern emphasizes in argument that the parties did not agree on a mechanism for determining future terms, and argues that the level of uncertainty in the terms left to be determined is beyond the ability of the court to remedy (by implying terms to give efficacy to the contract) or would be so demanding of the court to remedy as to be contrary to public policy.

Modern says that the uncertainty and lack of essential terms reduce any agreement there may have been to nothing more than an agreement to agree with no intention to create legal relations. [ 20 ] Modern also argues that the trial judge’s failure to find that damages were capable of being determined is fatal to his judgment. At trial, the judge was advised by both parties that there would be no evidence called “with respect to damages and the quantum aspects”, and was specifically requested to decide only whether a contract existed. The trial judge referenced this fact in his decision.

In these circumstances, Modern’s argument respecting the trial judge’s failure to determine whether damages were capable of calculation cannot be considered. Donovan’s Position [ 21 ] Donovan’s position is that the trial judge did not commit a palpable and overriding error with respect to any of his factual findings or in reaching his ultimate determination that an enforceable contract exists. Donovan says that the trial judge’s factual findings are amply supported by the evidence.

Donovan’s position on the alleged uncertainty of essential terms is that there was no uncertainty concerning the agreed terms essential to the contract. With respect to the argument that the contract lacked terms essential to the contract, Donovan says these undetermined details were not material or fundamental to the core of the contract, and that if any difficulties regarding them arose, they could be resolved by the parties. Donovan emphasizes that uncertain terms or undecided details did not cause disagreement between the parties or lead to Modern’s breach of the agreement.

Rather, Donovan maintains the sole reason Modern repudiated the contract was because it resiled from the previously agreed 50/50 profit split and Donovan refused to renegotiate it. ISSUE [ 22 ] The issue before this Court is whether the trial judge made factual errors or misinterpreted or applied the evidence or law in such a manner that caused him to err in concluding that the parties had an enforceable contract to develop the land in question. LAW AND ANALYSIS

Standard of Review [23] Both parties accurately state the law concerning the standards of appellate review. However, Modern simply states that thetrial judge made both legal and factual errors, without identifying which of its grounds of appeal raise error in law to which thecorrectness standard would apply or which are governed by the standard of palpable and overriding error affecting the result.

Donovansubmits that none of Modern’s grounds of appeal raises an error of law, so the applicable standard of review of the case by this Court isthat of palpable and overriding error affecting the result. [24] The standards of review to be applied by an appellate court are set out by the Supreme Court of Canada in Housen v.Nikolaisen, 2002 SCC 33 , [2002] 2 S.C.R. 235. They are concisely summarized by Cameron J.A. of this Court at paragraph 6of Ring v. Canada et al., 2010 NLCA 20: The standard of review applied by an appellate court depends upon the nature of the matter being reviewed.

A pure question of law isreviewed on a standard of correctness and an appellate court is free to replace the opinion of the trial judge with its own. Findings of fact,on the other hand, cannot be reversed unless the trial judge has made a palpable and overriding error. A determination of whether a legalstandard was met involves the application of a legal standard to a set of facts which is a question of mixed fact and law.

A question ofmixed fact and law is subject to a standard of palpable and overriding error unless it is clear that the trial judge made some extricableerror in principle with respect to the characterization of the standard or its application, in which case the error may amount to an error inlaw and the applicable standard is correctness. These principles are well established: Housen v. Nikolaisen, 2002 SCC 33 ,[2002] 2 S.C.R. 235. [25] In Oppenheim v. Midnight Marine Limited, 2010 NLCA 64, Barry J.A. discussed the standard to be applied when a court isreviewing the construction of a contract.

He quoted in detail from Canadian Contractual

Interpretation Law (Markham ON:LexisNexis, 2007) in which the evolution of what is now regarded as the modern approach to contractual

interpretation is extensivelydiscussed. The modern approach involves considering the words and terms of a contract in the context of the evidence as a whole,including extrinsic evidence. A majority of the Oppenheim court endorsed the modern approach, and concluded that unless the issuecan be classified as a pure question of law isolated from the context of a case, or the decision maker of the decision under review appliedthe wrong law, the construction and

interpretation of a contract is a question of mixed fact and law for which the reviewing standard is ofpalpable and overriding error. [26] Barry J.A. also discussed how the Supreme Court of Canada determined whether a question of law might be extricable from anissue of mixed fact and law: [29] … At para. 27, they referred to Canada (Director of Investigation and Research) v.

Southam Inc., (SCC),[1997] 1 S.C.R. 748, at para. 39, for an illustration of how an error on a question of mixed fact and law can amount to a pure error of lawsubject to the correctness standard: … if a decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considersonly A, B, and C, then the outcome is as if he or she had applied a law that required considerations of only A, B, and C.

If the correcttest requires him or her to consider D as well, then the decision-maker has in effect applied the wrong law, and so has made an error oflaw. [30] The majority in Housen, at para. 28, noted the difficulty of drawing the line.

They pointed out how matters of mixed law andfacts “fall along a spectrum of particularity” and, as stressed in Southam, whether a purely legal question may be extricated from whatappears to be a question of mixed fact and law often comes down to “whether the dispute is over a general proposition that might qualifyas a principle of law or over a very particular set of circumstances that is not apt to be of much interest to judges and lawyers in thefuture”. [27] Green J.A. (as he then was) also concluded that the construction of a contract is a question of mixed fact and law in SeadaneInternational Inc. v.

Morgan International Marketing Co. et al. (1999), (NL CA), 180 Nfld. & P.E.I.R. 97. Other Canadian appellate courts have done so as well. (See Petty v. Telus Corp. 2002 BCCA 135, Hayes Forest Services Limited v.Weyerhaeuser Company Limited, 2008 BCCA 31, and Algoma Steel Inc. v. Union Gas Ltd. (2003), (ON CA),63 O.R. (3d) 78 (C.A.)). [28] If the construction and

interpretation of a written document is a question of mixed fact and law, surely the determination of theexistence of an oral contract is as well, given that there is less fact finding involved when written words and terms have been committedto writing. An oral contract by definition involves establishing what was said and agreed to before the exercises of applying the law tothe facts and interpreting the contract even begin. This view is consistent with that expressed by Finch J.A., (in dissent although not onthis point) in Truong v.

British Columbia, 1999 BCCA 513, to the effect that the existence of an oral contract is always a question ofmixed fact and law. [29] As regards the existence of an oral contract, the facts as found by a trial judge deserve deference, and are subject to a standardof palpable and overriding error on review. Once facts are found, legal principles come into play to determine whether, as a matter oflaw, a contract exists. The statement of legal principles is a pure question of law, but the ultimate conclusion, of whether a contractexists, involves application of the legal principles to the found facts.

This exercise is one of mixed fact and law, and, in the absence of anextricable error in principle, is subject to the standard of palpable and overriding error. [30] The existence of the oral contract in this case involved finding facts and drawing inferences to which the trial judge applied thelegal elements of offer, acceptance, consideration, intention, certainty of terms and completeness of the contract before concluding thatthe contract was enforceable. The presence of these elements depended entirely on the factual matrix as determined by him.

Theelements are the legal standards or the law which he applied to the factual matrix in order to reach the ultimate decision. [31] There is no question but that the factual errors alleged by the appellant are reviewable on the standard of palpable andoverriding error. Determination of the standard of review to be applied to the trial judge’s ultimate decision in this case, as noted by

Barry J.A. in Oppenheim , involves first deciding whether the correct law was applied by the trial judge. If it was not, that would be a legal error to which the standard of correctness would apply. The Elements of a Contract [ 32 ] In McCabe v. Verge , [1999] N.J. No. 272 (NLCA) , a decision of this Court concerning whether the parties had concluded a contract of settlement, Green J.A. (as he then was) made the following statement: [21] Accordingly, there was a valid contract of settlement entered into during the telephone conversation.

All of the elements of offer, acceptance, consideration, intention to create legal relations and certainty of terms were present ….. [ 33 ] Justice Green’s statement characterizes “certainty of terms” as an element of a contract. It is well established that certainty of a contract’s essential terms and completeness of a contract, in that it must contain the terms essential to its operation, are required in order for a contract to be enforceable. (See Imperial Oil Ltd. v. C & G Holdings Ltd., Gardiner and Neville (1986), 58 Nfld. & P.E.I.R. 326 (NLTD) ; May and Butcher Limited v.

The King , [1934] 2 K.B. 17 (H.L.) and Hunt River Camps/Air Northlander Ltd. v. Canamera Geological Ltd. (1998), 168 Nfld. & P.E.I.R. 206 (NLCA) .) [ 34 ] In Imperial Oil , Goodridge J. discussed the requirement that the essential terms of a contract must be settled in order for it to be enforceable. At paragraph 144 he stated: The underlying principle is that all of the terms of the agreement between the parties must be settled. There may, of course, be things left to be determined.

In making this statement, Justice Goodridge relied, as does the Appellant, on the English House of Lords decision in May and Butcher , wherein the completeness of a contract was in issue. In May and Butcher , the parties had not agreed on the sale price for a quantity of war surplus goods the plaintiff wished to acquire from the defendant for resale. The court found, in two concurring judgments, that agreement on price was an essential term without which there was no contract. [ 35 ] May and Butcher is often relied on for the principle of completeness in contract law, which is an issue arising in this case.

In Lord Buckmaster’s concurring judgment, he stated: “It has long been a well recognized principle of contract law that an agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all” (my emphasis). Viscount Dunedin, in his concurring judgment, expressed the principle more fully: To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties.

Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. … As a matter of the general law of contract all the essentials have to be settled. What are the essentials may vary according to the particular contract under consideration.

We are here dealing with sale, and undoubtedly price is one of the essentials of sale, and if it is left still to be agreed between the parties, then there is no contract. (My emphasis.) [ 36 ] In Hunt River Camps the defendant Canamera reneged on paying an agreed amount for the supply of stand-by air transport services for a specific period of time. The evidence in that case established that the parties had agreed on an arrangement and its terms, including the amount of payment.

Canamera sought to renegotiate the payment terms part way through the contract without success, and ultimately refused to pay the agreed amount after the term of the contract expired, apparently because it did not use the air transport services as much as it had thought that it would. Canamera argued at trial that the contract was void for uncertainty, saying it was so devoid of the detail required to make it workable and devoid of essential terms that it was not legally enforceable.

The trial judge and this Court did not agree, holding that it was apparent that the real intention of the parties was to contract for stand-by air services, the essential terms were understood and agreed and the missing terms were not essential to the operation of the contract. [ 37 ] The authorities leave no doubt that essential terms which go to the core of an agreement must be settled in order for a contract to be enforceable. Equally, there is no doubt that non-essential terms and details do not have to be settled in order for legal effect to be given to the reasonable expectation of the parties.

Indeed, in the case of a contract meant to endure over an extended period of time, it may be that details or other non-essential matters are not even able to be determined at the time the parties agree to contract. [ 38 ] In this case, the trial judge quoted with approval, at paragraph 31 of his decision, a succinct statement from Domo Gasoline Corp. v.

Shell Canada Products Ltd. , 2006 MBQB 23 which identifies four essential elements of a contract: For a contract to exist, basic principles of contract law require four elements: offer, acceptance, consideration and intention. [ 39 ] He went on in subsequent paragraphs to identify certainty of terms and completeness of the contract as live issues necessary to be decided.

He considered whether the terms already negotiated were clear enough to give effect to the reasonable expectations of the parties and whether the allegedly “missing” terms were so “critical” or “essential” to the operation of the contract that their absence would void it. He therefore correctly established the legal principles or standards to be applied to the found facts. There is no suggestion that he ran afoul of any legal principle in his application of the law. Accordingly, the trial judge made no error of law to which a correctness standard would apply. Factual Errors

[ 40 ] It is important to note the trial judge was not required to make findings based on the credibility of witnesses or the reliability of their evidence. What the appellant disputes is the trial judge’s

interpretation of the evidence which enabled him to make certain factual findings and to conclude that the elements essential to the existence of an enforceable contract were present and that it was not void for incompleteness. [ 41 ] In considering the appellant’s grounds of appeal, I will consider the alleged factual errors before reviewing the trial judge’s ultimate decision that an enforceable contract exists. Mr. Cameron’s authority to act for Modern [ 42 ] Modern alleges the trial judge erred in finding that Mr. Cameron had authority to bind Modern in contract to Donovan.

It is difficult to understand the basis for Modern’s argument on this issue. There is no evidence from any witness, including Mr. Stead who was the only witness called by Modern, to the effect that Mr. Cameron lacked actual authority to act on behalf of Modern. Neither was there any suggestion or evidence that Mr. Cameron did not act with ostensible authority. [ 43 ] Mr. Cameron and Mr. Ryan both touched on this issue in their testimony. They each testified to a verbal exchange between Mr. Ryan and Mr. Stead at the November 25, 2003 meeting. Mr. Ryan recounted that, in making the point to Mr.

Stead that he and Mr. Cameron had already agreed to the 50/50 profit split, he asked Mr. Stead if he was suggesting that Mr. Cameron did not speak for Modern. Mr. Ryan told the court that Mr. Stead responded positively to the question, upon which an argument ensued between Mr. Stead and Mr. Cameron and the meeting ended. Mr. Cameron’s evidence about this exchange was very similar. This evidence, in essence, is a story told by both Mr. Ryan and Mr. Cameron which incorporates a hearsay statement made by Mr. Stead. It is not evidence that Mr. Cameron acted without authority to bind Modern. Mr.

Stead had plenty of opportunity to clarify or otherwise testify on this point when he gave evidence at trial, and he did not do so, as the trial judge observed. More importantly, however, Modern did not take issue with Mr. Cameron’s authority to act for it regarding any other communications made or actions taken by Mr. Cameron at any time before and after October 3, 2003. It is only with respect to the profit split arrangement that Modern suggests Mr. Cameron’s authority is lacking. The uncontradicted evidence of Mr. Cameron respecting that one occasion, which was corroborated by Mr.

Ryan, is that he sought and received authorization from his principals to agree to the terms of the contract including the 50/50 profit split. [ 44 ] The whole of the evidence admits of no other conclusion but that Mr. Cameron acted with Modern’s actual authority in contracting with Donovan. Accordingly, the trial judge did not err in concluding that Mr. Cameron had authority to bind Modern. Impact of Mr. Ryan’s and Mr. Cameron’s previous dealings [ 45 ] Modern argues that the trial judge erred in stating that Mr. Ryan’s and Mr. Cameron’s previous dealings with each other may have impacted on their expectations.

Modern says that their past relations were irrelevant because of Modern’s ownership change, and also because the parties’ previous dealings were different in type and magnitude. [ 46 ] The trial judge’s comment in this regard is not stated to relate to the type of past work or the nature of the past legal relationship between the parties. I take the trial judge’s comment to relate to the past positive interpersonal relationship between the gentlemen.

Moreover, the trial judge qualified the effect of his comment by stating that the parties’ past dealings possibly could have had a bearing on the parties’ expectations, but that the key point was that both Mr. Cameron and Mr. Ryan said they intended their discussions to be the beginning of a contractual relationship. The fact that the parties’ past dealings may have impacted on their expectations is amply supported by the evidence of Messrs. Cameron and Ryan who both said they had worked well with each other in the past and felt they could in the future.

In any event, this comment, if it is a finding, has not been shown to have affected the result given the trial judge’s emphasis on the key point. Evidence of the 50/50 profit split [ 47 ] Modern argues that there is no evidence on which the trial judge could rely in finding that it agreed to the 50/50 profit sharing arrangement. Again, it is difficult to see the basis for Modern’s position on this point. Mr. Cameron’s evidence is clear: he testified that he and Mr.

Ryan discussed the 50/50 profit sharing arrangement on September 30, 2003, and that he did not commit Modern to it until after he had Modern’s agreement a day or two later. Mr. Ryan’s evidence supports the content, timing and sequence of Mr. Cameron’s evidence in this regard. There is no evidence contradicting Mr. Cameron’s and Mr. Ryan’s evidence on this point, including from Mr. Stead. Mr. Stead simply said he did not at any time agree with the 50/50 profit split. He did not disagree that Modern initially agreed to the profit split nor did he say that Mr. Cameron conveyed incorrect information to Mr.

Ryan respecting Modern’s agreement to it. On the evidence, the trial judge was entitled to find that Modern and Donovan had agreed to the 50/50 profit split. In fact, it is difficult to see how he could have decided otherwise. He did not err. Statement “we’ve got to get things moving” [ 48 ] Modern also says that the trial judge, in his decision, erroneously attributed the statement “we’ve got to get things moving” to Mr. Cameron when it was Mr. Ryan who made this statement. The record shows that Mr. Ryan did use this phrase in his evidence, but Mr.

Cameron also used words to this effect in his testimony when describing a discussion he had with Mr. Ryan after Modern’s shareholders received the letter of October 21, 2003 from their legal counsel. Accordingly, there is no reason to think that the trial judge’s statement at paragraph 18 of his judgment is wrongly attributed. He did not err.

The Ultimate Decision [ 49 ] The remaining grounds of appeal involve alleged errors which bear directly on the trial judge’s decision that offer, acceptance, consideration, intention, and certainty of essential terms were present so as to establish the existence of an enforceable contract, and that

any terms remaining to be worked out were not so fundamental as to render it void for incompleteness. Thus, the principal question to beanswered is whether the trial judge made a palpable and overriding error affecting the result when applying the law to the facts.

If hedid not, then his decision must stand. [50] The bases for the trial judge’s determinations that offer, acceptance, consideration, and intention were present are succinctlystated at paragraph 59 of Donovan’s factum: The trial judge found offer and acceptance to have been present as a result of the discussions that had taken place between Cameron andRyan.

Consideration was achieved by way of the Respondent providing initial advice, (which included the drafting of the Purchase andSale Agreement) and also by the Respondent tendering 50% of the deposit ($25,000.00) required as a term in the purchase and saleagreement.

The last component required in order for a court to find the existence of a contract is “intention” and the trial judge foundthis existed as a result of the testimony of Cameron and Ryan, who he held were quite clear in their respective testimony, that a deal hadbeen completed. [51] Modern, for its part, does not offer any argument supporting the absence of offer, acceptance, and consideration, and it is clearfrom the record that there is ample evidence, which, when considered in relation to these three legal elements, supports their presence. [52] The essence of Modern’s challenge to the trial judgment is that the parties did not have an intention to contract.

Modernsupports this argument by arguing that the terms negotiated are too uncertain to demonstrate intention, and that there are terms missingwhich are essential to the contract, and without which the contract is incomplete and therefore void. [53] Modern uses the concepts of uncertainty of terms and incompleteness of the contract somewhat interchangeably in itsargument. There is a fine distinction between the two, as was noted by Green J.A. at paragraph 25 of Hunt River Camps: As I observed in Imperial Oil Ltd. v. Young et al. (1998), (NL CA), 167 Nfld. & P.E.I.R. 280; 53 A.P.R. 280(Nfld.

C.A.) in a passage in which the majority judgment did not disagree: The notions of uncertainty and incompleteness in contract law are conceptually distinct, but in practice the arguments as to theirapplication often shade into one another. Incompleteness refers to the notion of putative contractual parties failing to express or otherwiseindicate adequately by their words or actions, objectively determined, that they have completed an agreement.

Uncertainty, on the otherhand, presupposes that the parties have in principle reached an agreement but it is impossible for the court, within the rules of evidence,to give any clear or substantial meaning to the agreement which is sought to be enforced, with the result that the court has no choice butto declare the agreement or a particular clause void and unenforceable.

In practical terms, however, whether the use of vague language isindicative of uncertainty as to what is meant by the agreement or is indicative of a failure to be complete enough to convince the courtthat a meeting of the minds on the essentials of the agreement has occurred, really does not matter to the end result.

In either case, it isthe infelicitous use or non-use of language which creates the problem for enforceability, leading the court to conclude that it cannot makea contract for the parties where they have not sufficiently indicated what their intentions and expectations are. (My emphasis.) [54] It appears from Modern’s submission, as well as from its acknowledgement that there was at least an agreement to agree, thatthe main thrust of its argument is that the contract is so devoid of terms essential to its fulfillment that the trial court had no basis onwhich to find that the parties had a meeting of minds.

This is essentially an incompleteness argument although the characterization ofthe alleged contractual defects matters not, as Green J.A. stated in Hunt River Camps. What matters is whether the use or non-use oflanguage sufficiently indicates the intentions and expectations of the parties. [55] The trial judge found that the terms necessary or essential to conclude the contract between Modern and Donovan were thedelineation of the parties’ respective areas of responsibility and the risk/profit share. He found these essentials had been negotiated; theywere clear and settled. I agree.

The parties had what they needed to give effect to their intention to develop the land, as shown by theirrespective actions in moving forward with the project after October 3, 2003. [56] Modern lists the following several terms or items which it asserts are necessary to conclude the deal but are conspicuouslyabsent. Manner of holding the land [57] Modern argues the manner in which the land was to be held is a missing essential term.

The evidence indicates that the partiesagreed to move forward with the acquisition of the property, with Modern acquiring it on behalf of both of them, and that they wouldwork out the vehicle for holding the property later, keeping in mind that both parties wanted to avoid any perception by their other clientsof conflicts. The parties themselves did not see this issue as fundamental to the contract, nor did the deal hinge in any way on how theproperty would be held.

The evidence supports the fact that all of the witnesses saw this issue as a detail to be determined in due course,none saw it as a deal breaker, and it did not break the deal. It was therefore open to the trial judge to see it the same way, and to find thatit was not an essential term of the contract or necessary to conclude the bargain. Obligations of each party [58] Modern argues that the obligations of each party remained to be determined, and that without such determination, there is nocontract. The obligations of each party in a contract such as this would be fundamental to the deal.

However, the evidence of both Mr.Cameron and Mr. Ryan establishes that the obligations of each party were worked out by them on September 30, 2003 and formallyagreed to on October 2 or 3, 2003. There was no dispute between the parties as to their respective obligations. They were settled and theparties were moving forward on them. It was therefore open to the trial judge to find that the obligations of each party were settled andcertain.

Arbitration clause [ 59 ] Modern also asserts that the agreement did not provide for an arbitration clause to resolve impasses or matters presenting other difficulty as the project progressed. The parties did not provide for an arbitration clause when negotiating the contract in late September. They planned to provide a dispute resolution mechanism in due course, as the documentation suggests. The parties had no disagreement regarding its absence and did not see its absence as an impediment to moving forward on the project.

Accordingly, it was open to the trial judge to find that such a clause was not so essential that its absence would void the agreement. Mechanism to set market values and marketing costs [ 60 ] Modern argues that a “[m]echanism to set market values” and clarification of “[w]hat is meant by marketing costs” are missing essential terms. The parties agreed that Donovan would be responsible for marketing the lots under the agreement. Donovan was an experienced developer and marketer of lots. That experience was part of the value Donovan was bringing to the project, which Mr. Cameron understood. Mr. Cameron and Mr.

Ryan did not regard it necessary to specify these marketing details, just as the two gentlemen did not find it necessary to define what was meant by infrastructure costs and how they would be set. Mr. Ryan and Mr. Cameron had mutual respect for each other’s expertise, and were clearly comfortable leaving these details to be determined as the project progressed. Indeed, it may not even have been possible to detail these items at the early stage of the project.

On the evidence, it was open to the trial judge to find that these details were not terms essential to the existence of the contract or necessary to conclude the bargain. Assumption of risk [ 61 ] Modern argues that the contract did not address assumptions of risk, and that there is no evidence supporting the trial judge’s finding that Donovan agreed to assume risk related to the project. In support of this argument, Modern relies on Mr.

Ryan’s statement in evidence that he did not think that Modern understood or put stock or value in what Donovan Homes was bringing to the deal and suggests that this evidence proves that there was no meeting of the parties’ minds or intention to contract. [ 62 ] The essence of the deal was that Modern would contribute to the project what it did best, specifically, construct the infrastructure for the lots, and Donovan would contribute what it did best, i.e. market and sell the lots once they were ready for sale. Implicit in the agreement was that each party would carry the expenses related to its responsibility.

The costs related to infrastructure were to be borne by Modern, which was the party better able to determine and manage them. Likewise, costs associated with the marketing and selling of the lots would be borne by Donovan, who knew the ins and outs of such costs. The agreement provided that each party bore the risks and costs associated with its area of responsibility under the agreement. In this respect, each party was carrying risk related to its responsibilities.

Additionally, each party was carrying its one-half share of the deposit for the land purchase, as well as the value of its time and effort invested as matters progressed. In this regard I note Mr. Ryan’s contribution of both the purchase and sale agreement and the development/option agreement. [ 63 ] It appears that Mr. Cameron understood the arrangement and that the new owners of Modern may not have. The new owners maintained that Donovan was carrying no risk related to the project.

Donovan was not carrying any risk associated with infrastructure costs, but it was carrying its one half of the $50,000 deposit payment and time and effort already invested and would be carrying risk associated with the ongoing investment of its time and development experience, and expenses related to the marketing and selling of the lots.

In previous dealings, Donovan paid all of the costs associated with its development projects, including the infrastructure costs which it paid out on a contractual basis as incurred, all soft costs, and all marketing and sale costs, and therefore earned for itself 100% of the profits. In this deal, Modern was contributing the infrastructure and soft costs as incurred, and in return was to receive 50% of the ultimate profits from the sales of the lots.

The 50/50 profit split reflected the division of responsibility between each party and the contribution each was making to the project inclusive of the related risk. [ 64 ] Mr. Ryan did say he felt the new owners of Modern did not understand the value Donovan was bringing to the project. Perhaps not. It appears as though Modern’s failure to fully appreciate Donovan’s contribution to the project may have caused Modern to repudiate the contract. Whatever its reason for repudiation, it was not open to Modern to do so after it had agreed to the essential terms and the parties had acted in furtherance of the contract.

It is not Donovan’s fault that Modern failed to understand the value of Donovan’s contribution or had other second thoughts about the agreement. [ 65 ] The sole contentious issue between the parties, which is the issue that led to this litigation, was Modern’s repudiation of the 50/50 profit sharing arrangement. Missing terms or details did not cause any disagreement and did not cause Modern to breach the contract. There is no evidence or indication that any of these “missing” terms and details could not have been worked out between the parties. In fact, the evidence of Mr. Ryan and Mr.

Cameron is to the effect that they had successfully collaborated on past projects, and they felt that the remaining details could be worked out as the project proceeded. Mr. Ryan and Mr. Cameron both testified that terms remaining to be decided were not regarded by them as posing an impediment to the project, and Mr. Stead’s evidence confirmed it. [ 66 ] The trial judge’s findings that the allegedly missing terms were not essential or necessary are consistent with the principles espoused in Imperial Oil , May and Butcher and Hunt River Camps .

The questions in those cases were the same as the ones here: were the essential terms of the contracts certain and were the contracts complete? In both May and Butcher and Imperial Oil , essential terms going to the core of the bargains were missing. Thus, those cases are distinguishable on their facts. [ 67 ] The facts of this case are remarkably similar to the facts in Hunt River Camps . None of the absent details or terms Canamera asserted as essential to the contract had caused difficulty for Canamera or led to the breach.

In finding that Canamera and Hunt River had a valid and enforceable contract Green, J.A. held at paragraph 31 that: … It was sufficient for the judge in the circumstances to satisfy himself that the absence of express provisions dealing with these matters would not have been such an obstacle to the proper operation of the agreement that it could not be said to be enforceable at all. [ 68 ] The same reasoning is applicable to the agreement between Modern and Donovan.

It was open to the trial judge, on the whole of the evidence and for all of the reasons stated above, to find that the details remaining to be determined were not so essential to the

contract that it could not properly operate without them. [ 69 ] Accordingly, it has not been shown that the trial judge committed a palpable and overriding error in his fact finding or in his application of the law to the facts. His determination that offer, acceptance, consideration, intention, and certainty of essential terms were present and that the missing terms were not so essential as to preclude the operation of the contract and give effect to the parties’ intentions stands. [ 70 ] In the result, the appeal is dismissed.

The respondent shall have its taxed party and party costs. ______________________________ L. R. Hoegg, J.A. I Concur: ________________________ B. G. Welsh, J.A. I Concur: ________________________ M. F. Harrington, J.A.