FH Development Group Inc., a body corporate Applicant v. New Bright Homes Limited, a body corporate Respondent Judge: The Honourable Justice Ann Smith, 2021 NSSC 246

SUPREME COURT OF Nova Scotia Citation: FH Development Group Inc. v. New Bright Homes Limited , 2021 NSSC 246 Date: 20210816 Docket: Halifax , No. 499464 Registry: Halifax Between: FH Development Group Inc., a body corporate Applicant v. New Bright Homes Limited, a body corporate Respondent Judge: The Honourable Justice Ann Smith Heard: May 25, 2021, in Halifax, Nova Scotia Counsel: Gavin Giles, Q.C. for the Applicant Andrew Christofi for the Respondent By the Court: Introduction [ 1 ] The Applicant, FH Development Group Inc., conveyed two lots in a subdivision to the Respondent, New Bright Homes Limited in 2006.

The Respondent subdivided both lots in 2015, then listed the subdivided lots for sale individually. When it learned of the subdivision, the Applicant protested, including a complaint to the Respondent’s real estate agent, who subsequently withdrew from the listing agreement. [ 2 ] The Applicant alleges that the 2015 subdivision of the two lots was contrary to restrictive covenants that attached to the original deeds to the Respondent, either because the covenants were part of a building scheme, or because the Respondent was estopped from acting contrary to the covenants.

For its part, the Respondent seeks a remedy for interference with contractual relations. Conclusions in Brief [ 3 ] This Court determines that the Applicant has not established that a building scheme existed; nor has it established that estoppel applies. The evidence, including the form and language of the deeds and the restrictive covenants, does not support the view that the Applicant was creating a building scheme. The claim that estoppel applies fails in part because the Applicant has not established that there was a shared understanding that subdivision of the lots was not permitted.

Evidence Before the Court [ 4 ] The evidence before the Court consisted of the Affidavit of the principal of the Applicant, Faisal Al-Hammadi, affirmed February 1, 2021, the Supplemental Affidavit of Mr. Al-Hammadi affirmed February 11, 2021, the Second Supplemental Affidavit of Mr. Al-Hammadi, affirmed February 11, 2021, and the Affidavits of the principal of the Respondent, Izzut “Izzy” Abdo, affirmed February 3, 2021 and February 24, 2021. The Court also received the Affidavit of realtor Heidi Rhyno sworn January 28, 2021.

Each Affiant was cross-examined on their affidavit during the hearing of the application. Background [ 5 ] The Applicant is a property development and construction company. Between 2002 and 2005 the Applicant developed the “Cedarwood Subdivision Phase 5” (the “Subdivision”) in Hammonds Plains, NS. Lots 502 and 503 of the Subdivision were conveyed to the Respondent by warranty deeds in February 2006. The deeds contain endorsements by Ahmed Abdo, the Respondent’s principal, over the heading “as to Restrictive Covenants.” Attached to each deed is a

Schedule A stating, inter alia , that the conveyances were subject to “Restrictive Covenants as shown in conveyance to F.H. Construction Limited at Book 6987, Page 60 as recorded in the Halifax Registry of Deeds on March 8 th , 2002.” In fact, that conveyance contained no restrictive covenants. Attached to the deed for each of the two lots in question (Lots 502 and 503), however, is a

Schedule B, headed “Protective Covenants – Cedar Crest Subdivision Phase 5”, dated 25

March 2004. These “Protective Covenants” included the following: 3. No building shall be erected on the said lands other than a detached private dwelling house to and for the use of a single family with an appropriate garage attached hereto. Detached garage may be permitted at the discretion of the grantor. 4. No more than one dwelling house shall be erected or stand at one time upon the said lands. …. 12. The lands of any building erected, or to be erected thereon, shall not be used … for any other purpose than a private residence for the use of one family only to each dwelling unit… …. 24.

The Grantor may later waive or modify any of the forgoing building and other restrictions. [ 6 ] The Applicant’s principal, Faisal Al-Hammadi, stated in his Affidavit that the restrictive covenants originated with instructions to the Applicant’s counsel “to create and implement a building scheme applicable to all the Lots and a related set of restrictive covenants to be attached to and to form a part of each Lot’s deed.” The resulting covenants, he stated, were attached as

Schedule B “to all of F.H. Construction Limited’s Deeds into the various purchasers of the Lots of Cedarwood Subdivision – Phase 5.” [ 7 ] Contrary to the evidence of Mr. Al-Hammadi, it was undisputed at the hearing that the restrictive covenants were not consistent across the lots of the Subdivision.

The evidence indicated that five of 29 lots in the Subdivision did not have the same restrictive covenants as those attached to the deeds for Lots 502 and 503. [ 8 ] In June 2015, the Respondent obtained municipal approval from the Halifax Regional Municipality for subdivision of Lots 502 and 503, splitting each into two lots, designated as Lots 502A, 502B, 503A, and 503B. This was done without notice to the Applicant, which says he did not learn of the further subdivision until July 2020. Mr.

Al-Hammadi stated in his affidavit that this subdivision was “in violation of Applicant’s intentions…”. [ 9 ] One of the subdivided lots (503A) was subsequently sold to a third party, who built a house on it, but the other three lots remained the property of the Respondent. The Applicant still owns one lot in the Subdivision. Issues: 1. Was the Respondent’s subdivision of the two lots contrary to restrictive covenants that attached to the deeds to the Respondent, either because of the covenants, or because the Respondent was estopped from acting contrary to the covenants? 2.

Is the Respondent entitled to a remedy for interference with contractual relations? Issue 1: Was the Respondent’s subdivision of the two lots contrary to restrictive covenants that attached to the deeds to the Respondent, either because of the covenants, or because the Respondent was estopped from acting contrary to the covenants? Building Schemes [ 10 ] The Applicant argues in its pre-hearing written submissions that the restrictive covenants attached to the deeds for lots 502 and 503 were part of a “building scheme.” The evidence of the Applicant’s principal, Mr.

Al-Hammadi, both in his affidavits and on cross- examination, was to the effect that the Applicant intended to impose restrictive covenants in order to protect its own preferred layout for the Subdivision. On cross-examination he said expressly that he understood the covenants to have been intended to protect the developer’s own interests. The Applicant does not dispute that the covenants were not uniform across the properties in the Subdivision. [ 11 ] The leading case on building schemes and restrictive covenants in Nova Scotia is Moorhouse v Black , 2014 NSSC 13 .

The parties in Moorhouse were neighbours in a subdivision, each of whom had purchased from the developer. There were identical restrictive covenants in their deeds from the developer prohibiting construction of a secondary building without the developer’s approval. The issue was whether the covenants were enforceable by owners of other lots. Moir J described the restrictive covenants in

Schedule B of the deeds: 3 ... The

schedule is composed of an unnumbered opening provision followed by twenty-two numbered clauses. In the opening provision, "The Grantee covenants with the Grantor to observe and comply with the following restrictions made in pursuance of a building scheme established by the Grantor." 4 The opening provision goes on to provide, "The burden of these restrictions shall run with the land ... forever ...". Further, the "benefits of these restrictions shall run with each of lots 101 to 177 inclusive and 200 to 269 inclusive which lots are now owned by the Grantor." Despite the equivocal use of the word "run", and the inclusion of lot 164, I think the only sensible

interpretation of this part of the text is that the burden is intended to remain upon the owner and future owners of lot 164 for the benefit of the owners and future owners of the other lots. However, other parts of the text seem to contradict this part. 5 There is no representation that other lots already sold have similar restrictions for the benefit of the owners of lot 164 and no promise that the developer will extract similar burdens benefiting lot 164 and binding on the owners of lots to be sold in the future.

Indeed, the opening provision suggests that the scheme is not binding on others where it provides, "These restrictions shall be binding upon and [enure] to the benefit of the heirs, executors, administrators, representatives, successors and assigns of the Grantor and the Grantee."

Clause 22 of the

schedule defines "Grantor" as Fairmount Developments Inc. Further, clause 18 reads, "Notwithstanding anything hereincontained, the Grantor may assign all or any part of its rights which arise under these restrictions." [12] The covenants in Moorhouse included certain absolute prohibitions, and various permissions and approvals that were subject tothe developer’s discretion. Despite this distinction, between absolute and discretionary prohibitions, Moir J noted, “clause 21 gives thedeveloper power ‘to waive, alter or modify the above covenants and restrictions’.

It may do so ‘without notice to the owners of any otherlots’.” (para. 14) [13] Moir J reviewed the law in Nova Scotia on a purchaser’s ability to enforce restrictive covenants against other purchasers in asubdivision as set out in Cleary v. Pavlinovic (1987), (NS SC), 80 NSR (2d) 22 (SCTD), and Sawlor v. Naugle(1990), (NS SC), 101 NSR (2d) 160 (SCTD). A building scheme, he wrote, consisted of “covenants imposed by thedeveloper on the lots sold to the various purchasers for them to enjoy the benefits of the covenants and to be bound by them as well.”(paras. 16-17).

Moir J described four requirements for a building scheme: 1) The parties derive title under a common vendor, the developer. 2) The vendor laid out its lands, or a part of them, for sale in lots, including the lots now owned by the parties, subject to restrictionsimposed on all the lots, that may have varied in details but were consistent only with some general scheme of development.

That is tosay, the "scheme must be set out in a way that it can be known or ascertainable from the very beginning of the development": Sawlor,para. 18. 3) The developer intended the restrictions to be for the benefit of all the lots in the subdivision and they were, in fact, for the benefitof each of the lots. 4) The parties, or their predecessors in title, purchased their lots on the footing that the restrictions were to enure for the benefit ofother lots in the subdivision. (para. 18) [14] Moir J found that the parties both derived title under Fairmount Developments, and that Fairmount had laid out lots for salesubject to identical restrictions imposed on all the lots. (para. 34).

With respect the third requirement – that “the developer intended therestrictions to be for the benefit of all the lots in the subdivision and they were, in fact, for the benefit of each of the lots” – Moir J said: [19] The third requisite, the requirement for reciprocity, was elaborated in Sawlor in light of a provision allowing the developer to waivethe application of a restrictive covenant to any lot in the building scheme.

At para. 19, Justice Tidman said: It is also questionable whether the covenant in issue, which restricts building to one dwelling per lot, was intended by the commonvendor Federal to be and was for the benefit of all the lots intended to be sold. To so conclude, one must, as a matter of equity, find animplied mutual contract by which each purchaser is to have the benefit of the promise by all the other purchasers. In this case, there is noexpress term that the covenants are to enure to the benefit of or be binding upon each purchaser.

If a mutual covenant is to be found, thenit must be implied from the express covenant between the grantor Federal and the individual purchasers. Covenant 14, however, providesthat the grantor without notice and, thus, without the consent of the owner of any other lot, has the power to waive, alter or modify theso-called protective covenants in their application to any other lot. The protection of the covenant seems to me to be for only the vendorand not for the various purchasers.

A prospective purchaser upon reading that clause could hardly be said to believe, to the extent that itshould be implied in equity, that he would by virtue of purchasing a lot enter a mutually binding contract with every other lot owner thatonly one house will be placed on each lot. On that basis, Justice Tidman found that the third requisite had not been met... [15] Moir J rejected the applicants’ argument that the court should follow British Columbia authority holding restrictions effectiveas between purchasers without reciprocity.

British Columbia had “a statutory system for the creation of restrictive covenants mutuallybinding on the owners of lots in a subdivision”, he said, so that “[a] developer may impose restrictive covenants under the BritishColumbia statutory scheme without reciprocity, but equity will not, without statutory reform, enforce a restrictive covenant as betweencommon purchasers unless the four requisites are present in the beginning, including reciprocity.” (paras. 23-24). [16] The applicant in Moorhouse also suggested that registration under the Land Registration Act, SNS 2001, c 6, could give effectto a building scheme.

Section 61(1) of the LRA provides that a “successive owner of a parcel is affected with notice of a condition orcovenant included in an instrument registered or recorded with respect to that land and is bound thereby if it is of such nature as to runwith the land...” In dismissing this argument, Moir J said: [30] The stipulation for binding effect gives further force to the notice provision. Otherwise, it merely refers us back to common law andequity with the phrase "if it is of such nature as to run with the land".

The restrictive covenant runs with the land if it is part of a buildingscheme that meets the four requisites. [31] Further, there is no legislative provision in Nova Scotia that gives binding effect, as among lot owners, to a restrictive covenant evenif the developer retains a power to waive the covenant. [32] Therefore, the discussions in the various British Columbia authorities about what happens when a developer who has power towaive restrictive covenants sells the last lot or dissolves have no bearing on the question in Nova Scotia of whether a power to waive arestrictive covenant undermines the ability of others to enforce it.

[33] Is the requisite for reciprocity met by a scheme that includes a discretion of the developer to waive some or all of the restrictivecovenants for some or all of the lots in the subdivision? In Nova Scotia, we are thrown back to the common law and equity for ananswer, back to Sawlor and the authorities it cites. [17] Moir J concluded that “[d]espite some wording to the contrary, (3) the restrictive covenants were not, in fact, for the benefit ofeach of the lots, and (4) the parties, or their predecessors, did not purchase their lots on the footing that the restrictions enured for thebenefit of other lots in the subdivision.” (para. 35). He elaborated: [37] … [T]he opening provision of

Schedule "B" contains statements suggesting that the burden of the restrictions is intended to remainwith the lot being conveyed and the benefit is to remain for all of the lots in the subdivision. It needs to be emphasized that these arestatements, like a recital in a

preamble. They are not terms. At that, they are statements of intent. The reader awaits the terms to seehow the intention is carried forward. It is not. [38] The statements about the benefits running with the other lots includes "which lots are now owned by the Grantor". It was writtenfor the conveyance of the first lot, but the phrase remained unchanged in later conveyances. So, at the time the restrictive covenantswere drafted only the developer's interests were in mind.

It was probably an oversight that this phrase was not removed or modified inthe rest of the conveyances, but the fact that it was not removed or modified suggests no one's mind was much on the thought thatpurchasers of other lots may have an interest in enforcing the covenants. [39] Also, the lot numbers always include the lot being conveyed, the lot sought to be restricted, in the phrase that says that the benefits"run" with the lots in the subdivision. Nowhere do the recitals suggest that restrictions have been, or will be, placed on the other lots forthe benefit of the lot being burdened.

In this sense, the recitals support what we find when we turn to the actual terms: the restrictionsare in the exclusive control of the developer. [40] These terms fail to meet the requisite because there is no reciprocity in fact. They are not, in fact, for the benefit of each lot. [18] Moir J went on to point out that the “requirements for approvals, and the discretionary powers, are entirely between thedeveloper and the lot owner, to the exclusion of other lot owners.

There is no provision for present or future lot owners to have any sayover plans and specifications for a dwelling, the landscape design, or future alterations.” (para. 41). This approach, Justice Moir wrote,“culminates in clause 21 by which any of the covenants may be waived by the developer ‘without notice to the owners of any otherlots’.” (para. 42) This was “incompatible with the statement in the opening paragraph of the

Schedule "B" that the restrictions ‘run withthe land … forever’ and that the benefits ‘run’ with lots 101 to 177 and 200 to 269.” (para. 42) The developer’s exclusive power overapprovals and waiver of covenants, however, was, “consistent with the terms in the opening paragraph of

Schedule "B" that make therestrictions binding upon, and for the benefit of, the developer and the grantee, and empower the developer to assign part or all of itsrights arising under

Schedule "B".” (para. 42). [19] In holding that the applicants had no right to enforce any of the covenants, Moir J concluded: [43] The restrictions were for the exclusive benefit of the developer, who had absolute discretions to approve or disapproveimprovements or alterations without recourse to the other lot owners, who had power to waive anything in the

schedule without consentof the other lot owners, and who had a right to assign its interests under the

schedule to anyone. Therefore, the covenants were not, infact, for the benefit of each of the lots. [44] For the same reason, these restrictions fail the fourth requisite.

The parties cannot have purchased their lots on the footing that therestrictions enured for the benefit of other lots in the subdivision because the footing did not include a term by which similar restrictionshad been and would be imposed on the other lots, and it did include terms as follows: • Binding effect is upon the grantor and the grantee only. • The developer may assign rights in connection with the restrictions to anyone. • Numerous of the restrictions create discretions exclusive to the developer. • The developer can waive or modify any or all restrictions on any lot without notice to the other lot owners. [20] The Applicant in the within proceeding cites passages from the Canadian Encyclopedic Digest (Ontario) as well as the BritishColumbia Supreme Court decision in Gubbels v Anderson (1994), (BC SC), 91 BCLR (2d) 379, 1994 CarswellBC216.

The CED passage states, inter alia, that when land is sold in a building scheme, “that is, where part of a tract is set apart by thevendors for the benefit of the purchasers, either by way of a plan or otherwise, the vendors cannot depart from the plan or scheme whichwas the foundation of the sales.

It may be regarded as an implied covenant or an implied grant of an easement, or it may rest on theprinciples of estoppel.”[1] In Gubbels, the court held that: [u]nder a building scheme all landowners share similar burdens and enjoy benefits relating to these limitations on property use.Purchasers of property within areas covered by building schemes do so with knowledge of the restrictions and often because they seekthe specific benefits provided by the building scheme.

The terms imposed are known to each owner and are entered into by thesuccessors in title. (para. 23) [21] The Applicant submits that these passages support the view that the Respondent should not be able to “derogate from thebargain it has made.” In fact, these passages have little or nothing to say about whether a building scheme has been established underNova Scotia law – the Applicant’s stated position, upon which it has the burden. The law respecting the existence of a building scheme

in Nova Scotia is summarized in Moorhouse . Applying the Moorhouse elements

(1) The parties derive title under a common vendor, the developer. [ 22 ] There is no dispute on the “common vendor” element.

(2) The vendor laid out its lands, or a part of them, for sale in lots, including the lots now owned by the parties, subject to restrictions imposed on all the lots, that may have varied in details but were consistent only with some general scheme of development. That is to say, the "scheme must be set out in a way that it can be known or ascertainable from the very beginning of the development"… [ 23 ] The Applicant laid out the Subdivision in lots. The Applicant says the lots were sold subject to a “known or ascertainable” building scheme. Mr.

Al-Hammadi’s affidavit evidence was to the effect that the lawyer who prepared the deeds was instructed to “create and implement a building scheme applicable to all the Lots and a related set of restrictive covenants to be attached to and to form a part of each Lot’s Deed” in order to “better regulate and enforce its intentions … and to better support purchaser value in the Lots…” (The developer’s intentions referred to are that the subdivision would consist of “larger-than-normal ‘county-style’ Lots, generally ranging in size from over an acre to almost two acres, Lots which would permit purchasers ample space for residential dwelling houses, related systems such as well and septic, and ample set-backs, side-yards, and back-yards.”) [ 24 ] Mr.

Al-Hammadi’s evidence was that the restrictive covenants were included as

Schedule B to the 2006 warranty deeds to the Respondent for Lots 502 and 503, as they (allegedly) were for all warranty deeds to purchasers. Mr.

Al-Hammadi also notes that both deeds “appear to have been endorsed with respect to those restrictive covenants by Ahmed Abdo in his capacity as the Respondent’s sole Director, President and Secretary.” As such, the Applicant submits, its intentions “could not have been clearer.” [ 25 ] As asserted in the Respondent’s written submissions and evidence, and as ultimately confirmed in the hearing by Applicant’s counsel, the deeds to five of the lots in the subdivision in fact do not contain the restrictive covenants attached to Lots 502 and 503.

Several deeds do not include covenants restricting construction to one dwelling per lot. The Respondent submits that this inconsistency means that the second prerequisite for a building scheme has not been met. [ 26 ] Attempting to refute this point, the Applicant says it is sufficient that the protective covenants were created “in pursuance of an overarching goal for the subdivision…”.

Specifically, the Applicant points to Moir J’s statement that the second criterion contemplates restrictions “that may have varied in details but were consistent only with some general scheme of development.” ( Moorhouse , para. 17 ). Since the deeds to Lots 502 and 503 include covenants prohibiting construction of buildings in addition to a single detached private house, and prohibiting use of the land for other purposes, these covenants “form part of the Applicant’s vision for the sub-division and are imbued with the same intent to help ensure consistent quality throughout the community.

Whether some Lots have slightly different details in their covenants is immaterial.” (Applicant’s reply brief). [ 27 ] Given the lack of uniformity as to the covenants attaching to the various lots in the Subdivision, it is difficult to see how the alleged building scheme could be said to impose “restrictions on all the lots” as part of a “general scheme of development.” Certainly the developer did lay out the Subdivision in lots, and in most cases purported to attach restrictive covenants of some description to the deeds to the purchasers.

However, the evidence for a general scheme of development consists essentially of the evidence of the developer’s subjective intentions. The mere existence of restrictive (or “protective”) covenants does not, by itself, create a general scheme of development. [ 28 ] A fundamental objection to finding that a building scheme exists arises from the Applicant’s unilateral discretion to waive or modify the covenants in favour of the Applicant. Clause 24 of

Schedule B to the deeds for Lots 502 and 503 provides that the “Grantor may later, [ sic ] waive or modify any of the foregoing building and other restrictions.” In its written submissions, the Respondent says the covenants are consequently “entirely susceptible to the whim or personal assessment of the developer”, and that such provisions have gone to a finding of lack of reciprocity in Sawlor , Moorhouse , and Gandhi v Liao , 2021 NSSC 208 . [ 29 ] The Respondent also relies on Lone Oak Properties Ltd v Baillie , 2019 ONSC 4667 , where the court said, “[g]iven the right in the Covenant for the Developer to exercise its discretion with respect to all of the identified restrictions without any obligatory reference to a defined threshold or description concerning the exercise of that discretion, there is no verifiable or demonstrated intention from the Developer to impose the restrictions in connection with a "general scheme of development".” (para. 38).

(3) The developer intended the restrictions to be for the benefit of all the lots in the subdivision and they were, in fact, for the benefit of each of the lots. [ 30 ] As noted earlier, Mr.

Al-Hammadi’s evidence was that the Applicant intended the Subdivision to consist of “larger-than- normal ‘country style’ Lots, generally ranging in size from over an acre to almost two- acres, Lots which would permit purchasers ample space for residential dwelling houses, related systems such as well and septic, and ample set-backs, side-yards, and back-yards.” This intention, the Applicant submits, was reflected in the “intended imposition” of the restrictive covenants on the lots in the subdivision.

The Applicant submits that this subjective intention is sufficient to establish that the restrictions were intended to be, and in fact were, for the benefit of each lot. [ 31 ] The Respondent says the restrictions were not in fact for the benefit of all the lots in the Subdivision. This Court agrees.

Schedule B contains no statement of the developer’s object or purpose. As the Respondent argues, the only express evidence of the Applicant’s intentions consists of after-the-fact statements – and even that evidence was to the effect that Mr. Al-Hammadi’s intention was to benefit the developer alone. His evidence was entirely focused on the Applicant’s subjective intentions, and with the instructions given to the lawyer who prepared the deeds. Notably, the Applicant makes little attempt to argue that the covenants in fact reflect those intentions. Mr.

Al-Hammadi was frank in cross-examination in saying that he understood that the purpose of the covenants was to protect various interests and concerns of the developer, not the purchasers. As the Respondent argues, nothing in the covenants suggests that they were for the benefit of the other lots in the Subdivision. Instead, the covenants indicate that they are only for the benefit of the

Applicant. [32] The Applicant further submits that the “comprehensiveness of the restrictions such as that of recycling, signage, building waste,and landscaping quality, are such that any reasonable buyer purchasing the Lot would know the extent of the restrictions on futuredevelopment” as well as “the extent of their benefit in value.” The Applicant cites Berrigan v Higgins (1984), (NSSC), 64 NSR (2d) 20, [1984] NSJ No 276, where the court concluded that “[a]nyone purchasing a lot from this second stage of thedevelopment was in a position to know both the extent of his burden and the extent of his benefit.

The areas to which the restrictionsapplied are clearly defined and the obligations imposed within that area are also clearly defined.” (para. 11). [33] However, unlike the present case, the relevant covenants in Berrigan included an express prohibition from subdividing theland. (para. 9). Further, while the court accepted that evidence of the subjective intention of the developer was admissible, thoseintentions would normally be ascertained from the documents. (para. 6). Citing MacGregor et al. v.

Boyd Builders Ltd. et al., (ON SC), [1966] 1 OR 424 (Ont H Ct J), the court stated that “there must be a definite plan defining the area of land subjectto the scheme and this area must be brought to the knowledge of the purchasers. In my opinion, if reciprocal rights are going to becreated, then the land which is to enjoy those reciprocal rights must be made clear.” (para. 7). [34] In this Court’s view it is a reach to argue that a purchaser in the present subdivision would be “in a position to know both theextent of his burden and the extent of his benefit.” As noted earlier, nothing in the deed generally, or in

Schedule B specifically, indicatesthat the covenants are for the benefit of other lots in the Subdivision, or that that they are burdened accordingly.

(4) The parties, or their predecessors in title, purchased their lots on the footing that the restrictions were to enure for the benefit ofother lots in the subdivision. [35] The Applicant says the covenants “enure for the benefit of other Lot owners … simply because each and every Warranty Deedincludes

Schedule “B”, which contains the Restrictive Covenants”, and that by purchasing with the covenants annexed to the deed, “eachpurchaser must be taken to know that there are restrictions applicable to their Lot and to other Lots...”. As discussed earlier, in fact thereis no uniformity in the covenants throughout the Subdivision, and nothing in the deed or in the surrounding circumstances indicates thatthe restrictions are for the benefit of other lots. Other than Mr.

Al-Hammadi’s evidence of his subjective intentions, as conveyed to hislawyer, there is no basis to conclude that purchasers bought their lots “on the footing that the restrictions were to enure for the benefit ofother lots…”. Unilateral waiver by the developer [36] As noted earlier, the

Schedule B covenants are subject to unilateral waiver or amendment, a factor which undermines claims ofreciprocity and, as the Respondent argues, leaves the covenants at the whim of the Applicant. In its reply submissions the Applicantattempts to answer that the developer’s “personal assessment and whims … actually reveal reciprocity in the nature of the protectivecovenants…”, based on the evidence of Mr.

Al-Hammadi’s intentions for the Subdivision. [37] As with other branches of the building scheme analysis, this Court is not satisfied that this after-the-fact explanation canestablish the existence of a building scheme merely on the basis that the developer imposed, or purported to impose, various restrictivecovenants on most of the purchasers in the Subdivision.

If the mere existence of restrictive covenants as between the developer and theinitial purchasers were sufficient to establish a building scheme, there would be no need for the analysis established in the caselaw. [38] Regarding the unilateral power to waive or alter the covenants in

Schedule B, the Applicant submits that “once a developmentis complete, the developer ceases to own land of any kind [and] thereby is not able to obtain relief from the power to waive theprotective covenant.” The Applicant relies on British Columbia authority in support of this position. The court in High Point EnterprisesLtd v.

Subdivision Plan 47460, 1993 CarswellBC 2688 (BCSC) remarked that it was undisputed that the grantor, having “disposed of allof the lots in the subdivision … does not retain any property interest in the subdivision” and “does not have any authority to waive orrelax the restrictions contained in the Building Scheme.” (para. 7). [39] High Point does not refer to a covenant equivalent to the one in question here. In Moorhouse, Moir J specifically rejected thesuggestion that High Point and Tri-X Timber Corp v.

Rutherford, 2012 BCCA 71, were of assistance (in that case on the issue ofreciprocity), given the existence of a statutory scheme in that province with no equivalent in Nova Scotia. (paras. 22-27). Further, it isundisputed that the Applicant still owns a lot in the Subdivision. As such, this entire line of argument does not assist the Applicant.

Land Registration Act [40] In the further alternative, the Applicant suggests that s 61(1) of the Land Registration Act, SNS 2001, c. 6, permits the court to“modify or discharge a restrictive covenant in limited circumstances”, and asks the court to remove the covenant respecting thedeveloper’s unfettered power to modify the covenants, on the basis that a “particular covenant that is anathema to the general scheme ofdevelopment by providing unfettered discretion is problematic.” [41] However, this is no more than a request for this Court to re-write “defective” restrictive covenants to the developer’s benefit.Nor does the Applicant explain why this request would be justified under one of the categories identified in s 61(1).

Conclusion on the building scheme claim [42] In this Court’s view, the Applicant has not come close to establishing the prerequisites for a building scheme as set out inMoorhouse. In essence, the Applicant’s position is that the scattershot covenants that were attached to the deeds, combined with Mr. Al-Hammadi’s evidence of what he intended and of the instructions he gave his lawyer, can cure the lack of any reference to reciprocalobligations of the kind that are at the heart of a building scheme.

Even if the lack of uniformity in the covenants were treated as a meredetail, nothing in the deeds or the attached schedules suggests an intention to create a building scheme, as described in the caselaw. Noris there any indication of reciprocal burdens and benefits as between lots in the Subdivision. At most, the deeds point to individualobligations as between the Applicant and the purchaser. Finally, the developer retains a unilateral power to waive or alter the covenants –

a provision that, in itself, is fatal to the claim of a building scheme. [43] The weakness of the argument that a building scheme exists is further apparent from the Applicant’s oral submissions, wherecounsel reiterated that Mr. Al-Hammadi’s subjective intentions, described after the fact, should carry significant weight. Counsel alsomade arguments on good faith, commercial reality, and the Applicant’s reasonable expectations. However, none of these arguments go tothe straightforward absence of the prerequisites of a building scheme. As Respondent’s counsel pointed out in oral argument, Mr.

Al-Hammadi was frank in acknowledging that he understood the covenants as being imposed in pursuit of the developer’s preferences forhow the development should be set up. [44] For these reasons, combined with various deficiencies in the covenants on their face, I find that the Applicant has notestablished that a building scheme exists. Lack of a dominant tenement [45] The Respondent further submits that the covenants do not identify a dominant tenement. In Sawlor v.

Naugle (1990), (NS SC), 101 NSR (2d) 160, 1990 CarswellNS 510 (SCTD), Tidman J stated that, in addition to the four criteria for abuilding scheme, for a restrictive covenant to run with the land, a “dominant tenement to be benefited by the covenant must beascertainable by reference to the conveyance.” (para. 26) This requires “either a metes and bounds description of the lands, a reference toa plan identifying the lands or some other specific reference by which the lands to be benefited may be readily identified or ascertained.”(para. 30). [46] The common law – which governs restrictive covenants in Nova Scotia – requires that “the dominant land for the benefit ofwhich a restrictive covenant is imposed in a deed from the covenantee to a purchaser of other lands of the covenantee must beascertainable from the deed itself; otherwise, it is personal and collateral to the conveyance as being for the benefit of the covenanteealone and not enforceable against a successor in title to the purchaser.”[2] [47] The Respondent points out the that the heading of the restrictive covenants states that “[t]he lands to which these covenantsshall apply … include the lot described in

Schedule “A” hereto annexed and conveyed by this deed.” The Respondent argues that theconveyance does not, however, describe a dominant tenement, “either specifically or by reference.” As such, the Respondent says, thecovenants do not run with the land and do not bind subsequent purchasers. [48] In Sawlor the restrictive covenants were invalid because there was no reference to the lands to be benefited. The

Schedule Areferenced in the covenants identified only “Lot 6 of the Federal Division.” The Applicant submits that in Sawlor, the covenants refer toSchedule A of each deed, which provides a legal description of the areas circumscribing the parcel and the various easements that burdenthe property…”. The relevant language includes the following: ALL that parcel of land situate on the westerly side of Cedarcrest Drive within Cedarwood Subdivision Phase 5 … being designated asLot 502, on a Plan of Survey of Lots 501 to 530 inclusive and parcels CD-2, SC-1, KC-1, WW-1, and P-1, being a Subdivision of Landsof F.H.

Construction Limited… … Subject to Restrictive Covenants as shown in conveyance to F.H. Construction Limited at Book 6987, Page 60 as recorded in the Halifax Registry of Deeds on March 8th, 2002. [49] As noted earlier, in the case before this Court,

Schedule B – headed “Protective Covenants – Cedar Crest Subdivision Phase 5”,and dated 25 March 2004 – opens with the statement that the “lands to which these covenants shall apply (hereinafter called the “saidlands”) include the lot described in

Schedule “A” hereto annexed and conveyed by this deed.” [50] This Court finds that the only property described in each

Schedule A is the individual lot being conveyed. While it isreferenced to a plan of survey, this does nothing more than identify the individual lot.

Section 1 of

Schedule B also uses the word“include”, implying that the restrictive covenants may attach to properties other than the one described in

Schedule A. However, nothingin

Schedule A or

Schedule B links the restrictive covenants to the other properties on the survey plan. Further, the evidence shows thatthese specific covenants do not attach to every parcel shown in the survey plan referenced at

Schedule A. No Breach of a Covenant [51] The Respondent says that even if the covenants are enforceable, there has been no breach, as the covenants do not expresslyforbid subdivision of the lots. The authorities relied upon involve ambiguous restrictions. In Goodwin v. Ridley, 2006 BCCA 581, [2006]BCJ No. 3268, there was no express prohibition on subdivision of the original four lots.

The restrictive covenants prohibited erecting“any building or structure on each lot other than a dwelling house which may be single family, duplex or multiple residence building,with or without garage and usual outbuildings”, as well as providing that no building was “to be used as a dwelling, whether singlefamily, duplex or multiple residence building, shall have a floor space of less than 1,000 square feet, and no such building shall be usedfor any purpose other than residential purposes.” (para. 2) The trial judge had held a building scheme existed, and that the covenantsprohibited building more than one house per subdivided lot.

Allowing the appeal, the British Columbia Court of Appeal held that thecovenant was ambiguous: 8 I do not, however, share the judge's view that the wording of the restriction imposed by the scheme is without ambiguity. Therestriction is to be interpreted as a contractual term in the context of its factual matrix with guidance being taken from what can be said tohave been its object or purpose at the time the scheme was created: Gubbels v. Anderson (1995), (BC CA), 8B.C.L.R. (3d) 193 [paragraph] 15 (C.A.).

9 It is, in my view, significant that the building scheme does not preclude subdivision which for all practical purposes would haverestricted the number of houses on each of the original four lots to one. That is not, however, determinative and it may be … that theobject of the restriction was to limit the density of the homes on those lots such that "a dwelling house" means only one dwelling houseper lot.

But if that is so, it is difficult to see why provision was specifically made for duplex or multi-residence buildings and, perhapsmore importantly, why the wording did not specify one dwelling house, as would be expected if that was the actual intention. 10 It seems to me that the object may alternatively have been, as Ms. Goodwin contends, to preclude any of the original four lots frombeing used for commercial purposes such that "a dwelling house" is descriptive of the kind of building that can be erected.

The firstclause would then mean the erection on each lot of any building or structure that is not a dwelling house is precluded. [52] The British Columbia Court of Appeal noted that a “restriction on the use of land must be clearly expressed. If ambiguityexists, it is to be resolved in favour of the free use of the land.” (para. 12).

The Court concluded that the scheme did not “restrict theerection of more than one dwelling house on each of the original four lots with the clarity that has always been required respecting theuse of land”, and the ambiguity was “to be resolved in favour of there being no restriction under the building scheme on Ms. Goodwin'sconstruction of a house on her lot.” (para. 14). [53] However, Goodwin is distinguishable. There was a building scheme in place. Further, the covenants in this case specify (atclause 4) that “[n]o more than one dwelling house” (emphasis added) shall be erected or stand on the lands.

This was exactly the point ofambiguity in Goodwin. [54] The Respondent also cites Re New Casa Holdings Ltd, 2019 ABQB 309, [2019] AJ No. 554, where the covenant stated, in part,that “not more than one dwelling house shall be erected on each of the lots above described…”(para. 2). A subsequent developersubdivided the “parent” lots. This case is distinguishable, in that there was a building scheme in place, and the very identities of the“lots” referred to were unclear.

Allowing an application to discharge the restrictive covenant, the court held that the “cases cited onuncertainty and ambiguity are binding on me, and even if they were not, I agree that if I cannot articulate a clear description as to whatconstitutes a "lot" in the affected area for the purposes of the application and enforcement of the restrictive covenant it has now becomespent or unworkable.” (paras. 11-24). [55] In Gubbels v.

Anderson, (BC SC), [1994] 7 WWR 61, [1994] BCJ No. 230 (BCSC), the covenant stated,“[t]here shall not be erected on the said land, save as hereinafter mentioned, anything other than one private dwelling house and thenecessary outbuildings incidental thereto.” (para. 6). The court held that there was no ambiguity in this language: “The purpose of therestrictions is to create a residential area which promotes privacy and seclusion by limiting the density of homes.

To hold that therestrictions permit construction of a single-family dwelling on each subdivided portion of a lot would effectively defeat the purpose ofthe restrictive covenant and building schemes.” (para. 23). [56] The Applicant in the within case says the argument that the lack of an express prohibition of subdivision means that there is nobreach of

Schedule B is one that “willfully ignores the plain meaning of the protective covenants…”. In the Applicant’s view, clause 3of the covenants limits “the type of building that may be constructed in the sub-division”;

section 4 limits “the number of dwellinghouses that can be created”; and clause 12 imposes limits on use (“not for any other purpose other than a private residence for the use ofone family only to each dwelling unit”). The Applicant submits that the plain and ordinary meaning of these restrictions is a “Preciserestriction of type and density that

an act of sub-division clearly violates” as well as imposing a “precise restriction on the use of theproperty” that would be breached by selling the subdivided lots.

As in Gubbels, the Applicant submits, there is no ambiguity as to “thetype and density of buildings that can be erected and how it must be used.” If the developer had intended to permit structures and usesbeyond a single family dwelling on each lot, the Applicant submits, the covenants would have set out the allowable characteristics andconditions. [57] In this Court’s view the covenants are clear: the “said lands” are the lot being conveyed, and “no more than one dwellinghouse” may be built or stand on the “said lands” at one time – at least while the parcel is owned by the Respondent, in the absence of abuilding scheme that runs with the lands.

However, the covenants do not expressly prohibit the Respondent from subdividing the land,or from selling the subdivided parcels. [58] In Gubbels, where a building scheme existed, the situation was similar: the original lot, which was subject to the covenantlimiting the structures on the lot, had been subdivided, and one of the subsequent owners had already built on their portion of the lot. Thepetitioners, who were the purchasers of the other subdivided portion of the original lot, sought to be relieved of the burden of thecovenant.

The court held that the covenant remained in place in respect of the entire original lot, thereby preventing the petitioners frombuilding on their lot. However, there was no suggestion that the subdivision of the original lot was improper.

In other words, the lotcould be subdivided, but the building scheme meant that the original limit of a single structure on the original lot was binding. [59] In this Court’s view, the covenants are at best ambiguous with respect to subdivision; while a possible implication of therestriction on structures on the lot is that in the event of subdivision, only a single home may exist on the entire original lot. However,that is not the issue: the issue is whether subdivision in itself is a breach of the covenants. This Court’s finds that it is not.

Estoppel [60] As an alternative (or supplement) to the arguments on the restrictive covenants, the Applicant argues that the Respondent is“estopped from unilaterally waiving” the restrictive covenants. In DeLong v.

Lewis Estate, 2012 NSSC 369, the court cited BruceMacDougall, Estoppel (Markham, LexisNexis, 2012), for the principle that the “essence of any estoppel is that there has been astatement of some sort that the recipient wants to have the maker held to.”[3] The statement relied on must be heard, “in the sense ofhearing an oral statement, reading a written one, or observing conduct that amounts to a communication.” The court described severalvarieties of estoppel:

18 And so, estoppel by deed and estoppel by convention require parties who make an agreement. (And, the later requires detrimentalreliance.) Estoppel by representation, promissory estoppel, and proprietary estoppel all require a speaker and a recipient. Also, each ofthese kinds of estoppel require detrimental reliance on the part of the recipient. Election, which is a related branch of law, involves thecommunication of a choice. Abandonment is still difficult to characterize, but it appears to involve communication and it has noapplication on the present facts. [61] In Ryan v.

Moore, 2005 SCC 38 , [2005] 2 SCR 53, Bastarache J, for the court, set out the following requirements forestoppel by convention: 59 …

(1) The parties' dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation bystatement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).

(2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legalposition.

(3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking toestablish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption sincethere has been a change from the presumed position. …. 61 The crucial requirement for estoppel by convention, which distinguishes it from the other types of estoppel, is that at the materialtime both parties must be of "a like mind"...

The court must determine what state of affairs the parties have accepted, and decide whetherthere is sufficient certainty and clarity in the terms of the convention to give rise to any enforceable equity... 62 While it may not be necessary that the assumption by the party raising estoppel be created or encouraged by the estopped party, itmust be shared in the sense that each is aware of the assumption of the other... Mutual assent is what distinguishes the estoppel byconvention from other types of estoppel...

The courts have described communications complying with this requirement as "crossing theline"… [62] Bastarache J quoted The "August Leonhardt", [1985] 2 Lloyd's LR 28, where the court said the communication “may be anexpress statement or it may be implied from conduct, e.g. a failure by the alleged representor to react to something said or done by thealleged representee so as to imply a manifestation of assent which leads to an estoppel by silence or acquiescence.” (The AugustLeonhardt at 34-35).

Bastarache J added that “it is not enough that each of the two parties acts on an assumption not communicated tothe other... Further, the estopped party must have, at the very least, communicated to the other that he or she is indeed sharing the otherparty's (ex hypothesi) mistaken assumption.” (para.62). [63] The Applicant cites Wagman v. Obrigewitsch, 2010 SKQB 84, [2010] SJ No. 118, varied on other grounds, 2011 SKCA 68,for the proposition that estoppel by convention prevents a party from resiling on a “conventional understanding” of a bargain.

InWagman, common owners of a single lot agreed to have it surveyed and divided into three parcels, each with separate title. On anapplication for

summary judgment by the plaintiffs, the court held that an existing lease did not provide a basis for subdivision. Thelease was ambiguous as to boundaries. The boundaries would be determined by the survey. The court considered estoppel in thealternative: 64 … If I am wrong and there is no ambiguity in the diagram attached to the lease, the non-interpretative doctrine of estoppel byconvention applies. This is so whether or not there was originally a common mistake respecting the fence.

This doctrine looks tosubsequent conduct to define the contractual meaning that will be enforced by the court and it is not subject to the same strictures as isthe use of subsequent conduct as a general aid to contractual

interpretation. ... 66 In Canada the doctrine is not normally conceptualized as replacing the original contract by a new contract based on the party'sconvention but rather is conceptualized as preventing a party from going back on the conventional understanding of the parties to assert adifferent

interpretation… … 68 There must be clear evidence of the common assumption between the parties. There must also be detrimental reliance... Detrimentalreliance is described as lying at the heart of true estoppel. In this case even if we are to assume that the fence line constructed by AlexWagman was intended to but mistakenly did not, delineate 25% usage of the surface area then this was clearly a common assumption byboth John Obrigewitsch and Belle Wagman. On Wagmans evidence alone this is so.

Over the years Obrigewitsches made improvementsto the land on the west side of that fence line, building additions to their cottage on that basis and eventually installing landscaping andsprinklers in place of the fence line. They relied on the boundary which had been created and expended effort and expense in recognitionof that. There is therefore an estoppel in their favour.

[64] The Applicant says it fears the “negative ramifications” to public perception of its “bona fides in the implementation andenforcement of building schemes” resulting from its restrictive covenants being ignored. As such, the Applicant says, estoppel byconvention is established. [65] The Respondent says estoppel fails because estoppel can only be used as a shield in defence of a proceeding, not a sword toadvance a claim. In any event, the Respondent says, the Ryan v. Moore requirements are not met, because there was no sharedassumption of fact that the covenants barred subdivision of the lots.

There is no evidence that such a belief was ever communicated bythe Applicant, or that the Applicant has suffered a detriment by relying on the alleged assumption.

Given the lack of evidence of damageto the Applicant, the Respondent says, it would not be unjust to allow it to resile from such a common assumption, if indeed it did exist.DeLong and Wagman are not helpful because in this case the parties were never of a “like mind” as to the effect of the covenants.Finally, the Respondent points out that the Applicant did not plead estoppel. [66] The Applicant agrees with the general proposition that estoppel is a shield, not a sword, but says this ignores the fact that theApplicant “has always had a pre-existing right to enforce and enjoy the benefits of the Restrictive Covenants” and is relying on estoppelto continue exercising these rights, not to revive an unenforceable building scheme.

Therefore, according to the Applicant, it is not beingused as a sword. The Applicant cites Voyager Petroleums Ltd. v. Vanguard Petroleums Ltd. (1983), 1983 ABCA 197 , 149 DLR(3d) 417 (Alta CA), where the court held that estoppel by representation was established in a lease dispute where the elements ofestoppel were in place before the term of the lease expired. Estoppel was being used to continue, rather than revive, a lease. The partyraising estoppel in Voyager was the plaintiff, which was asserting that the lease remained valid. [67] The Applicant also cites Sorensen v.

Investors Group Financial Services Inc., 2014 NSSC 398, a

summary judgment decisioninvolving entitlement under a long-term disability policy. Muise J granted the defendant insurer’s motion in part on the issue of breach ofcontract, and held that it followed that estoppel was not available to the plaintiff to require the insurer to continue paying erroneouslyhigh benefits. In respect of an estoppel argument, Muise J accepted that the “sword not a shield” principle: means simply that-- because the promise must have regard to the non-enforcement of an existing right-- promissory estoppel cannotoperate independently as a cause of action.

That cause of action must be based on some pre-existing right held against the defendant, anda promissory estoppel may either complete the plaintiff's case (say, by negating one of the defendant's contractual defences), or it may beinvoked by a defendant to defend against the assertion of the plaintiff's strict legal rights…[4] [68] Muise J held that there was “no evidence of any right held by Ms. Sorensen to receive disability benefits in the erroneouslyhigh amount which she held against either Investors Group or Great-West and which pre-existed the representation.

Therefore, in myview, this passage does not support the result suggested by Ms. Sorensen.” (para.96). [69] The Applicant in the within case says estoppel is not raised as a separate cause of action. As in Sorensen, the Applicant submitsthat it “is merely seeking to continue the rights enjoyed under the protective covenants and estop the Respondent from pretending thecovenants do not exist.” [70] The Applicant says the “state of affairs” was that “[w]ithout limitation, the Applicant was driven to develop the Sub-Divisionsuch that its Lots were commodious.

Terms like size and “ample” punctuated the Applicant’s statements as to its intentions.” Thecovenants were set out in

Schedule B, and Mr. Abdo endorsed them. The Applicant says there was a “shared assumption of facts” thatthe Applicant intended each lot to contain only one house, and the Respondent accepted the conveyances of Lots 502 and 503 on thatbasis. There is no evidence that the Respondent did not understand the restrictive covenants, or that it sought to be relieved of thecovenants. The Applicant says it conducted itself in reliance on the restrictive covenants being respected by the Respondent.

Regardlessof whether there was a building scheme, the Applicant says, the Respondent purchased on the basis that it was accepting the covenants. [71] The Applicant says the Respondent’s denial of a shared assumption of fact because the covenants did not expressly prohibitsubdivision is “purposefully evades engaging with the issue”, given that sub-division would be “an express contravention” of covenants3,4,5,6,7,8,9, and 10.

Further, the express endorsement of the covenants by the Respondent’s director indicates that there was “a sharedassumption … of what is permissible and not permissible.” Respondent’s counsel pointed out in oral argument that Mr. Abdo was notcross-examined on the Respondent’s understanding of the covenants at the time of the conveyance. [72] This Court finds that the Applicant’s assertions about shared assumptions giving rise to estoppel are not made out. Firstly, asnoted earlier, the deeds are unclear as to what constitutes the applicable covenants;

Schedule A does not in fact refer to the 2004“Protective Covenants” in

Schedule B, but to “Restrictive Covenants” registered in 2002, which are not attached to the deeds and do notappear to exist. Secondly, the shared assumption that would be necessary to establish estoppel is not a vague awareness that restrictivecovenants of some kind exist, or even an awareness that the restrictive covenants restrict the number of structures on the lands. Rather,the Applicant says the shared assumption is that the lots could not be subdivided. That, however is not a prohibition found in theSchedule B covenants.

Issue 2: Is the Respondent entitled to a remedy for interference with contractual relations? The Respondent’s claim [73] The Respondent advances its own claim for intentional interference with contractual relations, arising from the withdrawal ofthe Respondent’s realtor from the listing agreement after the Applicant commenced proceedings. [74] In Industrial Union of Marine and Shipbuilding Workers of Canada, Local 1 v.

International Brotherhood of ElectricalWorkers, Local 625, 2001 NSSC 148, the court set out the elements of “direct interference with contractual relations” in the context ofthe “serious triable issue” element on an injunction application: “(1) the defendant's knowledge of the contract and its terms; (2) theintention to interfere with contractual relations; (3) conduct by which the defendant directly prevents or hinders one party fromperforming a contract, whether or not a breach ensues; (4) the plaintiff must suffer damage.” [75] The Respondent submits that the evidence establishes that (1) it had contracts with the realtor for the sale of the property;

(2) the Applicant knew of the contracts; (3) the realtor terminated the contracts after receiving correspondence from the Applicant’s counsel,in breach of the listing agreements; (4) the Applicant intended to cause the realtor to breach the contract, and in fact caused it to do so;and (5) the Applicant has suffered damages as a result, in the form of the obligation to pay property taxes on the properties since thetermination of the listing agreements. The Respondent says that since July 2020, when the realtor terminated the listing agreement, it haspaid property taxes on the properties of $2472.92.

The premise of the claim is that the properties would have sold, absent theApplicant’s interference. The principal point in dispute is whether damages are established. The Respondent only seeks reimbursementfor the property taxes. [76] The Respondent’s realtor, Heidi Rhyno, stated in her affidavit that her firm, Royal LePage Atlantic, agreed to list the threeproperties for sale, at prices of for $90,000, for each of Lots 502A and 502B, and $80,000 for Lot 503A.

While she believed these prices,set in cooperation with Izzy Abdo and (when remote signatures were required) his father Ahmed Abdo, were “a little bit high” in 2019,in her affidavit in January 2021 she opined that the properties “would sell in a heartbeat in current conditions at those prices.” Theproperties were on the market for about 397 days, attracting a single “informal” offer of $40,000 for the three lots, which was rejected.In July 2020 Ms. Rhyno was informed by counsel for the Applicant that this proceeding had been commenced, with a request towithdraw the listings. Ms.

Rhyno stated that upon receiving this letter, she decided “very quickly” to terminate the listing, and actuallydid so, in order to avoid becoming “embroiled” in the legal proceeding. She concluded that “[i]f it were not for the letter, the propertieswould have continued to be listed” and stated that she was “certain they would have been sold by now.” [77] The Applicant points to various alleged deficiencies in Ms. Rhyno’s affidavit and argues that her evidence should be excludedor accorded no weight. In particular, the Applicant submits that there is no basis provided for Ms.

Rhyno’s opinion that the properties“would have sold by now” had the listings not been terminated. [78] The Applicant submits that Ms. Rhyno’s evidence as to the potential for sale of the lots has no probative value. The Applicantargues, inter alia, that her evidence is conclusory and without foundation, providing no evidence of anyone seeking property in therelevant area, no evidence about prices of any surrounding or similar lots, and no evidence about how long it takes such lots to sell. TheRespondent maintains that Ms. Rhyno “does provide a basis for how the listing prices were set.

They were set working together with theclient.” She also allegedly provides a basis for her opinion that the lots would have sold, “in that she is in fact a realtor” and can be cross-examined on the foundation of her opinion. [79] In the alternative to Ms. Rhyno’s opinion, the Respondent submits that the court can take judicial notice that the propertieswould have sold had the listings not been terminated.

The Applicant says this is not suitable subject matter for judicial notice relying onthe general parameters of the doctrine, which it says confines it to “facts which are known to people generally or to facts whicheverybody knows.” [80] In R v. Spence, 2005 SCC 71, Binnie J, for the Court, considered the alternative theories of judicial notice of Professors Thayerand Morgan and held that the stricter Morgan criteria should be applied to proposed judicial notice of adjudicative facts.

The Morgantheory was that judicial notice was available of facts that are “so notoriously correct as ‘not to be the subject of debate among reasonablepersons’” or “capable of immediate demonstration by resort to ‘readily accessible sources of indisputable accuracy’.”[5] Binnie J saidthat the closer a fact relates to the decisive issue, the narrower the availability of judicial notice: 61 To put it another way, the closer the fact approaches the dispositive issue, the more the court ought to insist on compliance with thestricter Morgan criteria.

Thus in [R v Find, 2001 SCC 32 , [2001] 1 SCR 863] the Court's consideration of alleged juror biasarising out of the repellant nature of the offences against the accused did not relate to the issue of guilt or innocence, and was not"adjudicative" fact in that sense, but nevertheless the Court insisted on compliance with the Morgan criteria because of the centrality ofthe issue, which was hotly disputed, to the disposition of the appeal. While some learned commentators seek to limit the Morgan criteriato adjudicative fact …, I believe the Court's decision in Find takes a firmer line.

I believe a review of our jurisprudence suggests that theCourt will start with the Morgan criteria, whatever may be the type of "fact" that is sought to be judicially noticed.

The Morgan criteriarepresent the gold standard and, if satisfied, the "fact" will be judicially noticed, and that is the end of the matter. 62 If the Morgan criteria are not satisfied, and the fact is "adjudicative" in nature, the fact will not be judicially recognized, and that toois the end of the matter. [81] Given that the theoretical sale of the lots in the time period after the listing agreements were terminated is the foundation of theRespondent’s claim, the Applicant says facts relating to this point can only be “adjudicative” and are therefore not amenable to judicialnotice. [82] The Respondent points out that courts have taken judicial notice of “general trends in economic activity” in the province;[6]that interest rates are at historically low levels;[7] and that during a recession, “actual and feared lay-offs have … affected real estatemarkets adversely.”[8] [83] However, as the Applicant submits, these cases are distinguishable.

They deal with macroeconomic trends, not narrow anddecisive facts such as the expected saleability of specific pieces of property at specific prices at specific times. [84] None of the authorities advanced by the Respondent support the suggested application of the doctrine to make a finding as tothe likely salability and price of a specific piece of property, during a specific time period, where this is a decisive fact in decidingwhether the claim is made out. In this Court’s view Ms. Rhyno’s evidence should be received in evidence, but given no weight.

Conclusions [85] The Applicant’s motion is dismissed with costs to the Respondents. The Respondent’s claim for costs relating to its payment ofproperty taxes on the properties is also dismissed with costs payable to the Applicant.

[ 86 ] If the parties cannot agree on costs, the Court will receive written submissions within thirty (30) calendar days of this decision. Smith, J.