Holmes v Jastek Master Builder, 2019 SKCA 132

Court of Appeal for Saskatchewan Citation: Holmes v Jastek Master Builder 2004 Inc. , 2019 SKCA 132 Date: 2019-12-09 Docket: CACV3026 Between: Michael Holmes and Joseph Bichel Appellants/Respondents by Cross-Appeal (Plaintiffs/Defendants by Counterclaim) And Jastek Master Builder 2004 Inc. and Jastek Valencia Project Inc. Respondents/Appellants by Cross-Appeal (Defendants) And 585323 Saskatchewan Ltd., Randall Pichler, 626040 Saskatchewan Ltd., and Glenn Pichler Respondents (Defendants) And GDP Construction Corp.

Respondent/Appellants by Cross-Appeal (Defendant/Plaintiff by Counterclaim) Docket: CACV3091 Between: Michael Holmes and Joseph Bichel Appellants (Plaintiffs) And 626040 Saskatchewan Ltd., Glenn Pichler, and GDP Construction Corp. Respondents (Defendants) And 585323 Saskatchewan Ltd., Randall Pichler, Jastek Master Builder 2004 Inc., and Jastek Valencia Project Inc. Non-Parties (Defendants) Before: Ottenbreit, Ryan-Froslie and Schwann JJ.A. Disposition: Appeal allowed in part (CACV3026) Cross-appeals dismissed (CACV3026) Appeal dismissed (CACV3091) Written reasons by: The Honourable Mr.

Justice Ottenbreit In concurrence: The Honourable Madam Justice Ryan-Froslie The Honourable Madam Justice Schwann On Appeal From: QBG 477 of 2007, Saskatoon (CACV3026); and 2017 SKQB 78 , Saskatoon (CACV3091) Appeal Heard: September 11, 2018 Counsel: Curtis Onishenko, George Green, and Allan Stonhouse for Michael Holmes and Joseph Bichel Faith Baron for 585323 Saskatchewan Ltd., Randall Pichler, Jastek Master Builder 2004 Ltd., and Jastek Valencia Project Inc. Gary Zabos, Q.C., for 626040 Saskatchewan Ltd., Glenn Pichler, and GDP Construction Corp. Ottenbreit J.A. I.

Introduction [ 1 ] Michael Holmes and Joseph Bichel [collectively the purchasers] act as representative purchasers for a class of persons who

entered into agreements with Jastek Valencia Project Inc. [Jastek Valencia] between November 2006 and March 2007 to purchase condominium units to be built at 103 Wellman Crescent in Saskatoon , Saskatchewan [Valencia Project]. [ 2 ] The purchasers sued Jastek Master Builder 2004 Inc. [Jastek MB], Jastek Valencia, 585323 Saskatchewan Ltd. [585 SK Ltd.], Randall Pichler [Randy] [cumulatively the Jastek parties], GDP Construction Corp. [GDP], 626040 Saskatchewan Ltd. [626 SK Ltd.], and Glenn Pichler [Glenn] [cumulatively the GDP parties], in a class action alleging breach of contract and other causes of action arising out of the cancellation of the Valencia Project.

GDP counterclaimed against the purchasers for damages claiming the purchasers had improperly registered a Certificate of Pending Litigation [CPL] with respect to 103 Wellman Crescent.

It should be noted that, prior to the applications giving rise to this appeal, the CPL was removed from the title to 103 Wellman Crescent by court order. [ 3 ] This appeal arises from an unreported decision in Court of Queen’s Bench Chambers concerning four applications respecting the Valencia Project ( Holmes v Jastek Master Builder 2004 Inc. , (13 January 2017) Saskatoon, QBG 477/2007 (Sask QB) [ Chambers Decision ]): 1) an application by the purchasers for

summary judgment against Jastek MB and Jastek Valencia for breach of contract; 2) an application by the Jastek parties for

summary judgment dismissing some of the claims of the purchasers against those parties and dismissing the entire action against Jastek MB, 585 SK Ltd., and Randy; 3) an application by the GDP parties for

summary judgment dismissing the purchasers’ claims against them; and 4) an application granting judgment to GDP on its counterclaim and directing an accounting to determine damages. [ 4 ] The Chambers judge granted

summary judgment in favour of the purchasers against Jastek Valencia and Jastek MB for breach of contract only and ordered the issue of damages be set for trial on an individual basis. He granted the application of the Jastek parties and the GDP parties to dismiss the purchasers’ claims of conspiracy, inducing breach of contract, and breach of contract (except breach of contract as against Jastek Valencia and Jastek MB as previously noted).

He dismissed the counterclaim of GDP in its entirety. [ 5 ] The Chambers judge issued a separate decision regarding costs ( Holmes v Jastek Master Builder 2004 Inc. , 2017 SKQB 78 , 8 CPC (8th) 297 [ Costs Decision ] ). He further ordered that costs as between the purchasers and Jastek Valencia and Jastek MB, as well as costs as between the purchasers and 585 SK Ltd. and Randy, were to be determined by the trial judge.

He ordered costs in favour of the GDP parties. [ 6 ] The purchasers appeal the Chambers judge’s decisions insofar as their claims were dismissed against the Jastek parties and GDP parties, as well as the award of costs made in favour of the GDP parties. [ 7 ] Jastek MB and Jastek Valencia cross-appeal, seeking to have the decision varied in part regarding the following findings: (

a) That Jastek Valencia breached the terms of the condominium purchase agreements by failing to use its best efforts to obtain a building permit; and (

b) That Jastek MB was an agent for Jastek Valencia and is therefore responsible for Jastek Valencia’s breach of contract. [ 8 ] GDP cross-appeals the dismissal of its counterclaim. II. FaCTS ANd background [ 9 ] I begin with some background of the Jastek parties, the GDP parties, and the marketing and sale of the Valencia Project. [ 10 ] At all material times, the natural person behind the Jastek parties was Randy. He was the sole shareholder, director, president, and secretary of 585 SK Ltd. In turn, 585 SK Ltd. was the sole shareholder of Jastek MB and of Jastek Valencia.

Randy was also the sole director, president, and secretary of Jastek MB, as well as the sole director and officer of Jastek Valencia. [ 11 ] Jastek Valencia was incorporated for the purpose of selling the Valencia Project. Neither Jastek MB nor Jastek Valencia had any employees. Jastek Management Inc. [Jastek Management], which is a non-party in this litigation but to which reference is made in these proceedings, had employees and provided services to the Jastek parties. Randy was also the sole director of Jastek Management .

No direct evidence was presented as to the shareholders of Jastek Management, but it was common ground that Randy was the director and controlling mind of that company. [ 12 ] The natural person behind the GDP parties was Randy’s brother, Glenn. He was the sole shareholder, director, and president of 626 SK Ltd. which, in turn, was the sole shareholder of GDP. Glenn was the sole director and president of GDP. [ 13 ] The brothers and their respective companies shared an office and had worked together on a formal and informal basis on various construction projects.

Although the brothers assisted one another and shared resources, their businesses and corporations were separate. [ 14 ] In May 2006, 585 SK Ltd. acquired an option to purchase the land that would ultimately become 103 Wellman Crescent from Dundee Realty Corporation [Dundee]. Randy intended to construct two condominium buildings on that property: Building A with 47 units and Building B with 41 units. In furtherance of that intention, in late August 2006, Jastek MB requested its architect to produce drawings for the Valencia Project.

The architect had produced drawings for another Jastek MB project called “Ashcreek” [Ashcreek Project] and they were simply to repeat that design for the Valencia Project. On December 8, 2006, Jastek Valencia was incorporated. [ 15 ] In early December 2006, the purchasers attended an open house at a condominium development associated with Jastek MB. They spoke to a sales agent who informed them that “Jastek” was building another project referred to as “Jastek Valencia”. [ 16 ] The sales agent advised the purchasers that the Ashcreek Project had show suites for the Valencia Project available for view.

He gave them a brochure showing a floor plan and other information for the Valencia Project. The brochure had the name Valencia on the top and six pages of floor plans. On the last page, the name Valencia was in the bottom left-hand corner along with a website

(www.jastek.com), and a logo for Jastek MB with the words “marketed by” adjacent to it. There was nothing in the brochure to indicate Jastek Valencia existed or was the proposed owner, developer, or seller of the property. [ 17 ] The purchasers viewed the Jastek website which showed three current projects – including the Valencia Project – and 22 previously completed projects.

There was nothing on the website to indicate the Valencia Project was being developed by anyone other than Jastek MB and no indication of the existence of Jastek Valencia. [ 18 ] On December 12, 2006, the purchasers went to the Ashcreek Project to view the Valencia Project show suite. After they examined the floor plans and drawings for the Valencia Project, the sales agent provided them with a form of purchase agreement and explained that the agreement was subject to the purchasers obtaining mortgage financing before December 26, 2006, and to Jastek MB obtaining a building permit.

The sales agent indicated to them that, although there was no building permit at that time, it was only a formality to obtain one. The purchasers signed the purchase agreement dated December 12, 2006 for a unit [Agreement] and made the deposit. The possession date was to be October 5, 2007. The “vendor builder” or “seller” identified on the Agreement was Jastek Valencia. [ 19 ] At the time of signing of the Agreement, the sales agent provided the purchasers with a document called “Jastek Master Builder Home Owner’s Manual” [Manual].

While the Manual was about the Valencia Project, the marketing information in the Manual was that of Jastek MB and consistently suggested that Jastek MB would be building the Valencia Project. The Manual described the Agreement as “a written contract that you enter with Jastek Master Builder in which you agree to purchase a new home built by our company”. [ 20 ] The Manual contained the imprinted logo of Jastek MB as well as the logo of the Valencia Project. It contained phone numbers for Jastek MB, described the credentials of Jastek MB, and explained who Jastek MB was.

All of the associated documents the purchasers received contained both the logos and names of Valencia and Jastek MB. These documents included a blank change order/price quote request form stating that Jastek MB was “contractually bound to complete the work”. [ 21 ] The Manual stated that Jastek MB was a registered builder under the New Home Warranty Program of Saskatchewan. There was nothing to suggest that anyone other than Jastek MB was involved in the construction, sale, and/or warranty of the building. There was no mention whatsoever of Jastek Valencia.

The only reference to Jastek Valencia that could be found in the Manual related to its logo (that was simply the word “Valencia”), which also appeared on the Agreement. [ 22 ] On February 12, 2007, a letter was faxed to the purchasers on the letterhead of Jastek Valencia signed by Randy, stating that the Valencia Project was behind schedule, reminding the purchasers that the Agreement was subject to obtaining a building permit, and advising them that it was impossible to get the permit in time to allow the project to be completed on schedule.

The letter also stated that development could not proceed until the purchasers consented to a new possession date of November 15, 2007, and to a further delay of three months beyond the new possession date if necessary. In the absence of unanimous consent from all the buyers of the Valencia Project units by February 15, 2007, the Agreement would be cancelled and the deposits refunded. All buyers provided consent. At this point, 42 of 47 units of Building A had been sold.

No units in Building B had been sold. [ 23 ] On February 27, 2007, after contacting the City of Saskatoon [City], the purchasers learned that Jastek MB had not yet applied for a building permit.

On March 1, 2007, the purchasers sent a letter to Randy seeking information about when the building permit would be sought, why it was taking so long, and expressing concern that Jastek was not doing its part to remove the condition regarding the building permit. [ 24 ] By way of background, when the February 12, 2007 letter was sent to the purchasers, Jastek Valencia had not yet received the architectural drawings for the Valencia Project and was not in a position to apply for a permit.

On March 7, 2007, the completed architectural plans – which were initially requested in August 2006 – were provided to Randy by the architect. There was little evidence dealing with the nature of any inquiries made by Randy (or anyone on behalf of Jastek Valencia) to the architect about the plans between August 2006 and March 2007, the content of those communications, or the reasons for the delay in getting the plans. [ 25 ] On March 9, 2007, Jastek Valencia submitted an application to the City for a building permit signed by Glenn, who was also shown as the contact person.

On March 14, the purchasers received a letter ostensibly from Jastek MB, addressed to “Valencia Condominium Purchasers” and signed by Glenn, explaining that the plans for the Valencia Project had been submitted to the City. [ 26 ] On March 15, 2007, the City raised concerns about the plans, citing problems with the provision of a landscaping strip and the number of parking stalls. These concerns were conveyed to the architect on March 19.

On March 27, revised plans addressing the issues were sent to the City. [ 27 ] On March 29, the City sent a letter to Randy at Jastek MB indicating that the permit application had been taken “out of circulation” because of issues surrounding water and sewer connections. There was no evidence Randy followed up with the City as to when the permit application could be finally processed. [ 28 ] Randy testified that he concluded that with no permit at the end of March, there was no realistic prospect of the construction being completed on time and he decided to cancel the Valencia Project.

He acknowledged that his decision was also influenced by the rising costs of construction. [ 29 ] The purchasers received a letter dated April 9, 2007, from the lawyers for Jastek Valencia stating: “Due to factors beyond the control of the builder, the building permit has not been obtained”, and that “[t]he Builder is no longer in a position to complete the project as originally planned due to the rising and uncontrollable construction and development costs or to deliver possession within the time line set out in the Agreement.” The letter declared that the Agreement was thereby terminated. [ 30 ] Unknown to any of the parties at the time, but later explained in the affidavit of an employee with the City, on March 29, 2007, the City had provided zoning approval for the Valencia Project.

The permit had initially been put on hold because information was requested by the City’s Infrastructure Services regarding sewer and water hook-up. This information was provided on April 11, 2007, and Infrastructure Services subsequently gave its approval to the building permit application. However, on April 16, 2007, Jastek MB sent a letter to the City cancelling the permit application. The City employee indicated the permit would have been approved by the City but for

that letter. [ 31 ] Glenn had been assisting Randy for free with various tasks on the Valencia Project, including preparing the building permit application. Sometime between March 30, 2007 and April 9, 2007, Randy told Glenn that he could not get a permit for the Valencia Project and was not going to proceed with it. Glenn contemplated building his own condominium project on the land and had discussions about that prospect with Randy. [ 32 ] On April 12, 2007, GDP was incorporated by Glenn for the purpose of developing Villagio Court on 103 Wellman Crescent.

On April 20, GDP applied for a building permit for a project consisting of a 47-unit building and a 41-unit building. That permit application was approved on May 17, 2007, but the application was withdrawn by GDP and resubmitted, seeking instead construction of two 41-unit buildings. That permit was approved on June 4, 2007. 585 SK Ltd. eventually exercised the option for 103 Wellman Crescent and transferred it to GDP. The purchase price for the land was paid by GDP. [ 33 ] Building A of Villagio Court was completed in December 2008 and Building B was completed in June 2009.

The units were sold between January 2009 and January 2012. It is not disputed that Glenn hired the same architect used by the Jastek parties and an additional engineering firm to assist with developing Villagio Court, and that he also used an altered version of the Valencia Project’s designs. [ 34 ] At some point after the cancellation of the Valencia Project, a payment of approximately $500,000 was made by the GDP parties to the Jastek parties (or Jastek Management) for services provided by the employees of Jastek Management for the development of Villagio Court.

There is little evidence regarding the nature of this payment and other financial dealings between GDP and the Jastek parties and Jastek Management.

No records of the labour or services provided by Jastek Management employees were kept. [ 35 ] It should be noted the values of the condo units to be built for the purchasers and all potential condos of the Valencia Project had risen significantly between December 2006 and March 2007 due to market forces. [ 36 ] The purchasers, as representative plaintiffs, brought a class action claim against the Jastek parties and the GDP parties as a result of the failure of the Valencia Project to proceed. In that claim, they raised various causes of action.

These included: breach of contract against Jastek Valencia and Jastek MB; breach of fiduciary duty against the Jastek parties; inducing Jastek Valencia to breach the contract against Jastek MB, 585 SK Ltd., Randy, and the GDP parties; and conspiracy to breach the contract with intent to injure and or cause loss against the Jastek parties and the GDP parties.

The purchasers also claimed that Jastek Valencia and Jastek MB were the agent for 585 SK Ltd. and requested that the corporate veil be lifted with regard to Jastek MB, 585 SK Ltd, 626 SK Ltd., and Randy and Glenn personally. [ 37 ] GDP counterclaimed for damages under s. 68 of the The Land Titles Act, 2000 , SS 2000, c L-5.1 [ LTA ], against the purchasers for improper registration by them of a CPL on the title for 103 Wellman Crescent. [ 38 ] All of the purchasers’ claims were certified under The Class Actions Act , SS 2001, c C-12.01 [ CAA ] ( Holmes v Jastek Master Builder 2004 Inc. , 2010 SKQB 156 , 357 Sask R 23 ).

The common issues certified were the breach of contract, agency, inducement of breach of contract and conspiracy claims. Breach of fiduciary duty was not certified as a common issue. [ 39 ] In due course, the parties made the applications for

summary judgment in respect of the common issues and the counterclaim detailed at the outset of this decision. III. Decision of the chambers judge [ 40 ] The Chambers judge, in dealing with the parties’ applications, first reviewed The Queen’s Bench Rules germane to

summary judgment applications as well as the appropriate approach to them. He noted that the first step under Rule 7-5(1)(

a) and (2)(

a) was for the court to determine if there was a genuine issue requiring a trial. [ 41 ] The Chambers judge noted that some allegations of wrongdoing in the statement of claim had not been certified and were not issues to be determined pursuant to the certification order. In particular, he noted the claim of breach of fiduciary duty against all the Jastek parties was not included in the common issues. He indicated that the factual underpinnings of that claim were similar to those of the breach of contract claim, but he was not in a position to make any determination about that claim when none was sought by the purchasers on their

summary judgment application. He stated he would, however, be able to make such a determination if need be on the applications for

summary judgment made by the Jastek parties and GDP parties, who were seeking a complete dismissal of all claims put forward by the purchasers. [ 42 ] The Chambers judge then reviewed in detail the facts and background leading up to the signing of the Agreement, the actions of the parties thereafter, and the dealings of the Jastek parties with the architects and the City. He determined that a genuine issue for trial existed in all the matters except for the counterclaim of GDP. [ 43 ] The Chambers judge then turned to the question of whether Jastek Valencia breached the Agreement.

He noted that it was common ground that whether there was a breach of contract revolved around the condition that the Agreement was “subject to the builder obtaining a building permit”. [ 44 ] The Chambers judge found that paragraph 4 of the Agreement required Jastek Valencia to use its “best efforts to ensure completion of construction of the said condominium unit has been effected by the date of closing” ( Chambers Decision at para 56).

He determined this phrase must, in its ordinary meaning, include all activity required of the contractor to make the condominium available for occupation and that the issuance of the building permit was inextricably linked to completion of that construction. He found that Jastek Valencia was under an obligation to use its best efforts to obtain a building permit as part of the construction process. As well, he found that obtaining the architect’s drawings was part of the construction process because, without them, construction could not be commenced regardless of any issues related to the building permit.

[45] The Chambers judge determined that all dealings between the purchasers, the Jastek parties, and the GDP parties could beconsidered in coming to a conclusion of whether best efforts were undertaken by Jastek Valencia to obtain the permit.

He decided whatoccurred after the decision to withdraw the application for a building permit should have no bearing on the analysis of Jastek Valencia’sdecision to cancel its application for a building permit but could be used for the limited purpose of determining whether best efforts had, infact, been taken. [46] The Chambers judge then reviewed the timeline of events between August 2006 and April 16, 2007, as provided by the Jastekparties.

The Chambers judge reviewed the letter from Jastek Valencia to the purchasers dated April 9, 2007, which indicated that abuilding permit had not been obtained due to factors beyond its control, and that it was no longer in a position to complete the project asoriginally planned due to rising and uncontrollable construction development costs or to deliver possession within the timelines set out inthe Agreement. [47] The Chambers judge noted that rising construction and development costs were not a basis on which to refuse to obtain, or totake no further steps to obtain, a building permit.

With respect to timelines, he observed the Agreement allowed Jastek Valencia to extendthe possession date to February 15, 2008, without the consent of the purchasers, but Jastek Valencia was not prepared to do so. [48] The Chambers judge directly addressed the argument of Jastek Valencia that matters caused by third parties and beyond itscontrol resulted in delays in obtaining the building permit: [75] Best efforts must include an obligation on Jastek to contact the third parties referred to to ensure that the building permit would beissued in a timely fashion.

They were in a position to exercise some control over the actions of the architects and Dundee yet evidence ofwhat efforts were being made to speed up that process were not submitted. [76] The City was not under any control of Jastek Valencia Project Inc. but that did not absolve Jastek Valencia Project Inc. frominquiring of the City as to the issues I have previously identified. It cannot be said when coming to a determination to cancel the contractthat Jastek Valencia Project Inc. had taken its best efforts in attempting to have the building permit issued in a timely fashion.

JastekValencia Project Inc. was not entitled to sit back and suffer delay without it making some effort to understand and deal with that delay. [77] The letter of February 12, 2007 to the purchasers asking for an extension of time is described by Jastek Valencia Project Inc. asalready being concerned about delay as a result of the failure to obtain the architects’ plans yet Jastek did nothing about that.

Jastek alsoargues that by the end of March when approval had not been achieved it knew that the project had been delayed to an unacceptable degree.If such was the case, why did Jastek resubmit the plans to the City on March 27, 2007? By March 30, the response regarding sewer andwater seemed to result in Jastek determining that the contract was hopelessly delayed. Would it not have been prudent for it to contact theCity on March 30 to discuss with them what further delay would occur?

We now know what the length of the delay would be by otherevidence received and we now know from evidence from the City of Saskatoon a reasonable expectation of when the building permitwould be granted. But as Jastek has previously argued, that information is not germane to the question of whether Jastek took theappropriate efforts to obtain a building permit.

We are left with a what-if scenario in the decision-making process of Jastek on March 30.Jastek had no idea as to when a building permit would be issued, the fault of which lies on them since no effort was made to contact theCity or Dundee regarding the particular issue they faced. [78] I think at this stage it is important again to refer to the Bhasin case. The application of the implied duty of good faith contained inthat case adds an extra dimension to the inquiry as to whether best efforts were being used by Jastek Valencia Project Inc. to obtain thebuilding permit.

The duty of good faith suggests that Jastek Valencia Project Inc. in pursuing the building permit would not utilize factorsthat were not in the contemplation of the parties at the time of signing the agreement.

That means that Jastek Valencia Project Inc. wouldnot use notions of cost of construction, profit margins, competition for workers and other factors as considerations in determining when toabandon the application for the building permit. [49] The Chambers judge concluded: [79] Jastek Project Valencia Inc. [sic] had committed to construct the condominiums and sell them to the purchasers at a fixed pricewithin a certain time frame.

The duty of good faith should not allow Jastek Project Valencia Inc. [sic] to utilize the building permitapplication issue as an escape hatch. [80] Clearly by February 12, Jastek was reluctant to proceed with the project but did not cancel outright because it had not yet evensubmitted the building permit application and would be hard-pressed to justify that the appropriate efforts had been taken to obtain one tosatisfy the condition imposed upon themselves. [81] I find that Jastek Valencia Project Inc. did not make its best efforts to obtain a building permit as required under the terms of thecontract and therefore is in breach of it. [82] In determining whether the standard as argued to by the Jastek Valencia Project Inc., was reasonable efforts, I would have foundwere not taken either.

Jastek Valencia Project Inc. essentially sat on its hands instead of dealing with the third parties whose obligationshad to be met before the building permit could be applied for and granted. [50] The Chambers judge then turned to the issue of whether the corporate veil of Jastek Valencia should be lifted to find JastekMB, 585 SK Ltd., and/or Randy liable for Jastek Valencia’s breach of contract.

The Chambers judge reviewed the six criteria set out inTridont Leasing (Canada) Ltd. v Saskatoon Market Mall (1995), (SK CA), 131 Sask R 169 (Sask CA) [Tridont], todetermine whether an agency relationship exists between a shareholder and a corporation and/or a dominant corporation and a subsidiarythat could justify lifting of the corporate veil. Those six factors are at paragraph 22 of Tridont, quoting B.L. Welling, Corporate Law inCanada, The Governing Principles, 2d ed (Toronto: Butterworths, 1991) at 130–31: (

a) whether the profits were “treated” as profits of the parent or of the subsidiary …; (

b) whether the individuals involved in the day-to-day operations were appointed by the parent;

(

c) whether the parent corporation was the “brains” behind the day-to-day operation; (

d) whether the parent corporation made policy and financial decisions that were merely carried out by the subsidiary; (

e) whether the profits were directly traceable to the skill and direction of the parent; and, (

f) whether control by the parent was constant, as would be the case in a typical principal-agent situation, or merely periodic and longrange, as might occur in a typical corporation-shareholder situation. [51] The Chambers judge analyzed the corporate structure of the Jastek parties, their dealings with the purchasers, and the part eachentity played in the Valencia Project.

Relevant to that analysis, at the outset of his decision the Chambers judge had concluded that JastekMB was an operating company with active employees and offices and had incorporated another company for the specific purpose ofcompleting the development and sale of various condominium projects. After applying the criteria in Tridont in his analysis, he concludedthat Jastek Valencia was the agent of Jastek MB. Accordingly, he found Jastek MB liable for Jastek Valencia’s breach of contract.

TheChambers judge alternatively found Jastek MB liable to the purchasers on the basis that Jastek Valencia had failed as a legal entity toproperly identify and make known to the purchasers that it was a separate entity from its parent for all practical and legal purposes from itsparent. [52] The Chambers judge then turned to whether the corporate veil should be pierced with regard to 585 SK Ltd. and Randy. Hedetermined that neither was liable for breach of contract on the basis of agency.

He concluded none of the six criteria set out in Tridontapplied to 585 SK Ltd., noting: [100] … The uncontradicted evidence is that 585323 Saskatchewan Ltd. was used on occasion as a conduit for the purchase of propertyfor development by Jastek Master Builder. 585323 Saskatchewan Ltd. was not involved in the actual planning, development sale orconstruction of this development or any other one identified as being conducted by Jastek Master Builder 2004 Inc. 585323 SaskatchewanLtd. is part of the Jastek companies effectively under the control of Randall Pichler but that does not make it responsible to parties whocontract with Jastek Master Builder 2004 Inc. or Jastek Valencia Project Inc.

It had a legitimate business purpose outside the activities ofeither of those corporations. [53] He also found that the corporate veil of 585 SK Ltd. could not be pierced based on any representations made by either 585 SKLtd. or Randy as it related to the operation of Jastek Valencia and whether 585 SK Ltd. was the entity which was, in fact, contracting withthe purchasers. He determined that Randy was not responsible on any basis for the breach of contract. The Chambers judge concluded thatthe responsibility for breach of contract rested with Jastek Valencia and Jastek MB.

He accordingly dismissed the claim for breach ofcontract against 585 SK Ltd. and Randy. [54] The Chambers judge turned next to the allegation that the GDP parties and the Jastek parties conspired to have Jastek Valenciabreach the Agreement. He noted that the germane law set out in Canada Cement LaFarge Ltd. v B.C. Lightweight Aggregate, (SCC), [1983] 1 SCR 452 [Canada Cement], was not in dispute.

The Chambers judge accepted the purchasers’ submission that,on the pleadings and the history of the case, they relied on both branches of the tort (conspiracy to injure and conspiracy by unlawfulmeans) and he was not restricted by the certification to utilizing only the first branch of the tort. [55] He noted that the theory of the purchasers was that Randy and Glenn realized that there was a rising market for the sale ofcondominium properties between the time the Valencia Project began selling units and the time when the application for a building permitwas withdrawn.

The purchasers theorized that this motivated Randy and Glenn to agree to breach the Agreement to enhance the profit tobe received by their respective corporations jointly, or to allow Glenn and his companies to make greater profit than what Randy couldhave achieved. [56] After reviewing the evidence, the Chambers judge concluded there was simply no evidence or inferences to be drawn from theevidence to suggest the predominant purpose of the Jastek parties and the GDP parties was to injure the purchasers.

He found there was nogenuine issue for trial on the first branch of the tort. [57] The Chambers judge then addressed the second branch of the tort – conspiracy by unlawful means – noting that the unlawfulconduct was alleged to be the breach of the “best efforts” term of the Agreement.

The Chambers judge stated the crucial issue waswhether an agreement existed between the Jastek parties and the GDP parties to breach the Agreement. [58] He referred to Kaymar Rehabilitation Inc. v Champlain Community Care Access Centre, 2010 ONSC 2248 [Kaymar], as to theapproach to be followed with respect to the inferences that there was such an agreement and whether a conspiracy to breach the terms ofthe Agreement existed.

He also noted the argument of the Jastek parties and the GDP parties that any inferences that may be drawn mustrationally conclude that a conspiracy existed and that there was no other rational explanation that also fits the evidence. [59] The Chambers judge reviewed the evidence related to unlawful means conspiracy in detail, including the course of dealingsbetween the Jastek parties and the GDP parties. He determined the evidence supported the conclusion that the decision to cancel thepermit application was Randy’s alone.

He found there was also a separate decision to allow GDP to continue with the development if itchose to do so. [60] The Chambers judge also addressed the payments totalling approximately $500,000 made by GDP to the Jastek companies ontaking over the development. He found that the fact the payments were made, coupled with the absence of documentation or explanationabout their financial dealings, was not determinative of a conspiracy.

He noted that there was no evidence the companies always properlyaccounted for the minutiae of their dealings. [61] The Chambers judge concluded there was no agreement between the Jastek parties and the GDP parties to engage in unlawfulconduct (i.e., to breach the Agreement). [62] The Chambers judge then moved on to consider whether Randy, Jastek MB, or 585 SK Ltd. induced Jastek Valencia to breachthe Agreement. The Chambers judge noted that, although he found Randy, acting as a director of the two Jastek companies, had made the

decision that resulted in the breach of the contract, Randy did not engage in any separate or distinct decision-making process or activity that induced or resulted in the breach apart from acting on behalf of his companies. [ 63 ] The Chambers judge determined 585 SK Ltd. had nothing to do with the decision resulting in the breach of the Agreement and that the inducement claim was merely another attempt to pierce the corporate veil.

He found there was no genuine issue for trial on the inducement of breach of contract claim against the Jastek parties. [ 64 ] The Chambers judge also determined that, because the decision to breach the Agreement was made by Randy alone on behalf of Jastek Valencia, none of the GDP parties were liable for inducing breach of contract. [ 65 ] The Chambers judge concluded: [146] To summarize:

(1) Regarding the purchasers’ claim against Jastek Valencia Project Inc. and Jastek Master Builder 2004 Inc., I find there is no genuine issue for trial regarding breach of contract, and I find that those two corporations are responsible for breaching a contract with the purchasers. By virtue of the class action certification that results in a finding on behalf of all class participants against those two corporations. What has yet to be determined is the question of what damages if any have been sustained and the matter should proceed to trial on that basis as to the individual damage sustained by each of the purchasers as contemplated in the certification order.

(2) I have determined that there is no genuine issue for trial respecting the claim against 585323 Saskatchewan Ltd. and Randall Pichler respecting breach of contract and that claim against those two defendants is dismissed.

(3) I have determined that there is no genuine issue for trial in respect of the tort of civil conspiracy and that this claim as against all of the defendants is dismissed.

(4) I have determined that there is no genuine issue for trial respecting the claim of the plaintiffs that all or any of the defendants induced Jastek Valencia Project Inc. to breach the condominium purchase agreement; this claim is dismissed. [ 66 ] The Chambers judge then outlined three peripheral issues: [147] To my mind there are three periphery [ sic ] issues that need to be determined. The first, is whether the breach of fiduciary duty claim made on behalf of the plaintiffs against the Jastek defendants can be determined on a

summary basis. Secondly, should the counterclaim of GDP Construction Corp. against the plaintiffs for improper registration of the certification of pending litigation be determined by

summary judgment. Lastly, what cost order should be made, if any. [ 67 ] With respect to breach of fiduciary duty he found that, based on his finding of a breach of contract, such a claim was not eliminated. However, he did not make any final determination on that matter. [ 68 ] The Chambers judge determined that GDP had, on its application for

summary judgment against the purchasers, failed to prove it had incurred loss as a result of the improper registration of the CPL on 103 Wellman Crescent or to quantify its alleged loss. Accordingly, he found there was no genuine issue for trial respecting GDP’s counterclaim and dismissed it. [ 69 ] He set the remaining issues for pre-trial conference and set a hearing for the issue of costs. After the hearing on costs, the Chambers judge issued the Costs Decision.

He began by noting that this Court in Ammazzini v Anglo American PLC , 2016 SKCA 164 , 405 DLR (4th) 119 , stated that s. 40 of the CAA , did not mandate that costs would reflexively follow the cause and signalled that other issues apart from who won and lost would also be relevant. [ 70 ] The Chambers judge determined that it would not be appropriate to decide costs regarding the purchasers’ claim against Jastek Valencia and Jastek MB because the class action had not been concluded.

With respect to the dismissal of the purchasers’ claim against 585 SK Ltd. and Randy, the Chambers judge determined that the practical effect of any breach of contract would ultimately flow back to Randy and that this could be a factor contemplated under s. 40(2) (

c) of the CAA . Accordingly, he left costs on the application before him as it related to the Jastek parties to be determined by the trial judge. [ 71 ] The Chambers judge stated that because the purchasers’ claim against the GDP parties and the counterclaim of the GDP parties were both dismissed, he could make a final determination of costs with respect to those claims. He reviewed the position of the parties, the underlying principles of class action litigation, and the values inherent in s. 40(2) (

e) of the CAA . The Chambers judge noted that Glenn operated a small business either out of his home or his brother’s offices and declared that these personal attributes were a factor to be considered under s. 40(2) (e). With respect to the factors he considered important, he wrote: [20] I conclude the factors of most importance in this particular case are: (1) the public interest, (2) access to justice for members of the public, (3) the following “other factors”: (

a) the personal circumstances of [Glenn]; (

b) the lack of merit to the plaintiffs’ claim of conspiracy; and (

c) the GDP defendants’ counterclaim appears to be put forward on a tactical basis. [ 72 ] After analyzing these factors, he concluded:

[27] The above leads me to determine that the GDP defendants are entitled to their taxed costs of the action under Column 3 for those steps taken before August 1, 2015 (the date of the new tariff), and under Column 2 for steps taken after August 1, 2015, to be reduced by 45 percent being: (1) the offset for the defendants’ costs on its counterclaim of 20 percent; and (2) 25 percent being an exercise of my discretion in assessing costs under s. 40 of the Act . No costs are awarded to either party on the certification application. IV.

ISSUES [ 73 ] The purchasers appeal the Chambers judge’s failure to lift the corporate veil regarding 585 SK Ltd., the dismissal of their claims of conspiracy by unlawful means, inducing breach of contract, and, in a separate appeal, the order of costs made against them. [ 74 ] Jastek Valencia and Jastek MB cross-appeal the Chambers judge’s finding that there was a breach of contract and his decision to lift the corporate veil in regard to Jastek MB. [ 75 ] GDP cross-appeals the dismissal of its counterclaim in its entirety. [ 76 ] The issues raised by the parties in the appeals and cross-appeals can be broadly restated as follows: (

a) Did the Chambers judge err in finding that Jastek Valencia failed to use its best efforts to obtain a building permit and thereby breached the Agreement? (

b) Did the Chambers judge err in dealing with the issue of lifting the corporate veil for 585 SK Ltd. and/or Jastek MB? (

c) Did the Chambers judge err by declining to draw an adverse inference against the Jastek parties and the GDP parties for failing to preserve documentation on the Villagio Court project? (

d) Did the Chambers judge err in dismissing the purchasers’ claim for conspiracy by unlawful means? (

e) Did the Chambers judge err by failing to find inducement to breach on the same grounds as the conspiracy? (

f) Did the Chambers judge err by dismissing the claim of GDP in its entirety? (

g) Did the Chambers judge err in making the costs orders? V. Analysis [ 77 ] The Queen’s Bench rule dealing with the disposition of

summary judgment applications is as follows: Disposition of application 7-5

(1) The Court may grant

summary judgment if: (

a) the Court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (

b) the parties agree to have all or part of the claim determined by

summary judgment and the Court is satisfied that it is appropriate to grant

summary judgment.

(2) In determining pursuant to clause (1)(

a) whether there is a genuine issue requiring a trial, the Court: (

a) shall consider the evidence submitted by the parties; and (

b) may exercise any of the following powers for the purpose, unless it is in the interests of justice for those powers to be exercised only at trial: (

i) weighing the evidence; (ii) evaluating the credibility of a deponent; (iii) drawing any reasonable inference from the evidence.

(3) For the purposes of exercising any of the powers set out in subrule (2), a judge may order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

(4) If the Court is satisfied that the only genuine issue is a question of law, the Court may determine the question and grant judgment accordingly.

(5) If the Court is satisfied that the only genuine issue is the amount to which the applicant is entitled, the Court may order a trial of that issue or grant judgment with a reference or an accounting to determine the amount.

(6) If the Court is satisfied there are one or more genuine issues requiring a trial, the Court may nevertheless grant

summary judgment with respect to any matters or issues the Court decides can and should be decided without further evidence.

(7) If an application for

summary judgment is dismissed, either in whole or in part, a judge may order the action, or the issues in the action not disposed of by

summary judgment, to proceed to trial in the ordinary way.

(8) If an application for

summary judgment is dismissed, the applicant may not make a further application pursuant to rule 7-2 without leave of the Court. [ 78 ] I turn first to the standard of review applicable to decisions made about whether to proceed under Rule 7-5. This has recently been reiterated in Thomas Estate v Hess , 2019 SKCA 26 , [2019] 5 WWR 270 [ Thomas Estate ]: [29] Absent an error of law, the exercise of powers under the

summary judgment rules attracts deference: Hryniak v Mauldin , 2014 SCC 7 at para 80 , [2014] 1 SCR 87 [ Hryniak ]. A decision as to whether there is a genuine issue for trial on a

summary judgment application is a mixed question of fact and law. Where there is no extricable error in principle, it should not be overturned absent a palpable and overriding error: Deren v SaskPower , 2017 SKCA 104 at para 41 ; Hryniak at para 81 . It is an error in principle to misapprehend or overlook material evidence: Housen v Nikolaisen , 2002 SCC 33 , [2002] 2 SCR 235 [ Housen ]. Questions of fact are assessed on the palpable and overriding error standard and questions of law on the correctness standard: Housen . [ 79 ] Questions of fact include the drawing of inferences.

The deference accorded to the drawing of inferences relevant to the application of the above rules was underlined in Blue Hill Excavating Inc. v Canadian Western Back Leasing Inc. , 2019 SKCA 22 , [2019] 4 WWR 393 [ Blue Hill ] : [36] The Chambers judge found that there were no issues of credibility arising from the affidavits (at paras 47 and 50). He did, however, determine to exercise the power given by Rule 7-5(2) to draw inferences and weigh evidence.

In accordance with Hryniak , his decision to do so attracts deference (at para 81). … [ 80 ] It is also necessary to step back and reiterate the present legal landscape of

summary judgment applications. In Hryniak v Mauldin , 2014 SCC 7 at para 23 , [2014] 1 SCR 87 [ Hryniak ], the Supreme Court of Canada, dealing with rules similar to Rule 7-5, breathed new life into the

summary judgment process. It described the new

summary judgment rules as embodying the “evolution … from highly restricted tools to weed out clearly unmeritorious claims or defences to their current status as legitimate alternative means for adjudicating and resolving legal disputes” (at para 36). Hryniak represents a cultural shift regarding the use of

summary judgment as a means to improve access to justice (at para 28). [ 81 ] In Viczko v Choquette , 2016 SKCA 52 at para 37 , 396 DLR (4th) 449 [ Viczko ], this Court applied the adjudicative framework and principles set out in Hryniak to Rule 7-5. The Court noted that on a

summary judgment motion, a judge should first decide whether there appears to be a genuine issue requiring a trial without using the enhanced fact-finding powers in Rule 7-5(2). If there appears to be a genuine issue requiring a trial, the judge should then determine (

a) if a trial can be avoided by using Rule 7-5(2)(

b) powers to weigh the evidence, evaluate credibility, and draw inferences, and (

b) whether it is in the interests of justice to exercise those powers only at trial. [ 82 ] The process to be followed in applying the

summary rules is substantially that set out in Tchozewski v Lamontagne , 2014 SKQB 71 , [2014] 7 WWR 397, as approved by this Court in Viczko . It is well-known and is not disputed by any of the parties. I will not repeat it here. [ 83 ] On cross-appeal in relation to the breach of contract, Jastek Valencia and Jastek MB substantially challenge the Chambers judge’s findings of fact and the inferences he drew from the facts. Relying on Canada (Attorney General) v Lameman , 2008 SCC 14 at para 11 , [2008] 1 SCR 372 [ Lameman ] , they submit that the Chambers judge, under the

summary judgment rules, could only make inferences strongly supported by the facts and that, on the whole, the evidence of breach of contract was not strong enough. [ 84 ] With respect, this discrete proposition as to the drawing of inferences has been superseded by Hryniak and is simply no longer the law .

In Peter Ballantyne Cree Nation v Canada (Attorney General ), 2016 SKCA 124 at para 29 , [2017] 1 WWR 685 [ Peter Ballantyne ], Herauf J.A. noted that Lameman speaks to “an earlier generation of rules of court which have been superseded by rules that emphasize accessible justice that is proportionate, timely and affordable”. [ 85 ] Unlike Lameman , Hryniak does not limit the Chambers judge to only drawing inferences strongly supported by the facts: [57] On a

summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute. A documentary record, particularly when supplemented by the new factfinding tools, including ordering oral testimony, is often sufficient to resolve material issues fairly and justly. … [ 86 ] Since Hryniak , this Court has not insisted the inferences drawn by the Chambers judge be strongly supported by the facts. [ 87 ] This Court has also echoed the comments in Hryniak that in order for the

summary judgment procedure to be properly employed, the evidence must give the judge confidence that he or she can reach a fair and just determination ( see: Thomas Estate at para 36 ; Viczko at para 37 ; Blue Hill at para 33 ; Deren v SaskPower , 2017 SKCA 104 at para 58 [ Deren ] ; and Ter Keurs Bros. Inc. v Last Mountain Valley (Rural Municipality) , 2019 SKCA 10 at para 34 , [2019] 4 WWR 586 [ Ter Keurs Bros. ] ).

This Court has not applied the “strongly supported by the facts” standard since the Hryniak decision. [ 88 ] That said, the strength of the evidence is still relevant to the bottom line determination: “What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure” ( Hryniak at para 59 ).

In the end, the evidence must be sufficient to allow the judge to “draw the inferences necessary to make dispositive findings” ( Hryniak at para 94 ). [ 89 ] This Court does, however, continue to cite Lameman for the proposition that the court expects each party to put its “best foot forward” when leading evidence in relation to a

summary judgment application ( see: Blue Hill at para 31 ; Ter Keurs Bros. at para 30 ; Haztech Fire and Safety Services Inc. v M. Thompson Holdings Ltd. , 2017 SKCA 56 at para 33 [ Haztech ] ; and Peter Ballantyne at para 30 ). [ 90 ] I turn now to the specific issues raised in this appeal. A. Did the Chambers judge err in finding that Jastek Valencia failed to use its

best efforts to obtain a building permit and thereby breached the Agreement? [91] Jastek Valencia and Jastek MB make several submissions. They argue the Chambers judge (

i) reversed the onus of proof,(ii) disregarded significant evidence speaking directly to the circumstances of the parties, (iii) drew erroneous inferences, (iv) consideredirrelevant evidence, and (

v) made arguments for the purchasers that they did not make themselves. [92] The legal underpinning of most of these submissions on this issue is that the Chambers judge’s inferences regarding “bestefforts” should have been “strongly supported” by the facts.

As set out above, this is not the law and to the extent that those submissionsrely on that approach, they are fatally weakened. [93] As a preliminary point, Jastek MB and Jastek Valencia do not dispute before this Court that the Agreement imposed on JastekValencia an obligation to use its best efforts to obtain a building permit. [94] The law germane to the issue of good faith and best efforts was set forth in Dynamic Transport Ltd. v O.K. Detailing Ltd., (SCC), [1978] 2 SCR 1072 at 1084: … The vendor is under a duty to act in good faith and to take all reasonable steps to complete the sale.

I cannot accept the proposition thatfailure to fix responsibility for obtaining planning approval renders a contract unenforceable. The common intention to transfer a parcel ofland in the knowledge that a subdivision is required in order to effect such transfer must be taken to include agreement that the vendor willmake a proper application for subdivision and use his best efforts to obtain such subdivision. This is the only way in which businessefficacy can be given to their agreement. … [95] What will constitute best efforts is contextual.

In 6157734 Canada Inc. v Bluelime Enterprises Inc., 2016 ONSC 1794 (Div Ct),the Court said: [36] In OEB International Inc. v. Leyden, (ON SC), [1995] 59 A.C.W.S. (3d) 234 (S.C.J.), the court held that “bestefforts” means more than reasonable efforts. It means taking, in good faith, all reasonable steps to achieve the objective. The meaning of “best efforts” is however, not boundless.

Itmust be approached in the light of the particular contract the parties to it and the contract’s overall purpose as reflected in its language. [96] In CSRS Ltd. v Embley, 2008 BCCA 533, 87 BCLR (4th) 251 [CSRS Ltd.], Levine J.A. wrote: [84] Both parties agree that the trial judge correctly cited the principles for determining best efforts summarized in Atmospheric DivingSystems Inc. v. International Hard Suits Inc. (1994), 89 B.C.L.R. (2d) 356 (S.C.) at paras. 71–72: In

summary, the principles extracted from the cases on the issue of “best efforts” are: 1. “Best efforts” imposes a higher obligation than a “reasonable effort”. 2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusionand leaving no stone unturned. 3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour. 4. The meaning of “best efforts” is, however, not boundless.

It must be approached in the light of the particular contract, the parties to itand the contract’s overall purpose as reflected in its language. 5. While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary forthe plaintiff to prove that the defendant acted in bad faith. … 7. Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test is relevant evidence that the defendantdid not use its best efforts.

The “no stone unturned” test has been applied to contracts relating to a wide variety of subject matter. Further, courts routinely imply aterm in contracts that the parties will make reasonable efforts to fulfil their respective contractual obligations.

Where the parties include a“best efforts” clause in a contract, as they did in the case at bar, they must surely intend that something more than “reasonable efforts” beused. [97] Having reviewed the cases summarized in Atmospheric Diving Systems Inc. v International Hard Suits Inc., (BC SC), [1994] 5 WWR 719 (BCSC), cited in CSRS Ltd. above, I agree with the foregoing formulation of the definition of bestefforts.

This was the obligation Jastek Valencia undertook by the terms of the Agreement. [98] Jastek Valencia and Jastek MB argue the Chambers judge incorrectly concluded on all the evidence that Jastek Valencia failedto use its best efforts to obtain a building permit. That discrete issue is a factual one to be determined by looking at the evidence as awhole.

It is subject to the palpable and overriding error standard of review (Housen v Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235). [99] Jastek Valencia and Jastek MB also argue that the Chambers judge made numerous legal errors in determining that best effortswere not made. They submit he independently brought up the issue of a lack of due diligence respecting the architectural plans, and hereversed the onus of proof in finding Jastek Valencia “did nothing” (Chambers Decision at para 77) about the architect’s delay indelivering the plans.

They argue he applied an incorrect legal standard to his finding that on March 30, Jastek Valencia had “no idea” (at

para 77) when the building permit would be obtained, the fault of which lies on Jastek Valencia because no inquiries were made to the City or to Dundee. [ 100 ] The last two issues have been dressed up as legal errors by Jastek Valencia and Jastek MB, but factual findings and inferences are at their crux. In respect of those issues, Jastek Valencia and Jastek MB also argue the Chambers judge’s ability to draw inferences on

summary judgment applications is limited, unlike at trial where testimonial evidence allows greater freedom to do so. As indicated above, they are clearly wrong on this point. [ 101 ] I return to the first issue raised (i.e., that the purchasers had not raised lack of diligence with the architect as an issue and that it was raised by the Chambers judge independently). Jastek Valencia and Jastek MB submit that as a result they were prevented from properly responding to the issue.

However, these submissions are simply not correct. [ 102 ] The evidence of the Jastek parties was that the actions of third parties prevented the permit from being obtained in a timely manner and factored into Randy’s decision to cancel the project. Also, at paragraph 161 of its Chambers brief, Jastek Valencia made the assertion that it was diligent in its dealings with the architect. In their Chambers brief, the purchasers noted that, in his affidavit sworn March 10, 2016, Randy referenced tardiness in getting plans from the architect as a reason for the delay which he considered in cancelling the project.

In short, the lack of due diligence with the architect was put in play by both the Jastek parties and the purchasers, and this entitled the Chambers judge to address that issue. There is no indication that Jastek Valencia was prevented from responding to this issue. It was given ample opportunity to lead evidence to deal with this matter. [ 103 ] Jastek Valencia also argues that the Chambers judge’s finding that it “did nothing” about the architect’s delay in delivering the plans was based on sparse evidence of contact with the architect.

It argues the Chambers judge wrongly placed on it a burden to provide further evidence of its dealing with the architect, thereby reversing the onus of proof borne by the purchasers. There is no merit to this argument. [ 104 ] Jastek Valencia was faced with an allegation in the purchasers’ claim that it failed to use its best efforts to obtain a building permit and complete the project. It responded that the actions of third parties hindered it from doing so. While the overall onus of proof on the application for

summary judgment against Jastek Valencia was on the purchasers, there was an evidentiary burden on Jastek Valencia, in light of its response, to explain why there was a delay with the third-party architect and to put its evidentiary “best foot” forward as required by Hryniak .

It chose not to provide any evidence of diligence with the architect that would substantiate that it had used its best efforts but was thwarted in obtaining the plans through no fault of its own. [ 105 ] The Chambers judge was entitled to infer from the absence of evidence that Jastek Valencia “did nothing” to hasten – or, at least, supervise – the process of obtaining the drawings. The Chambers judge was referring to the absence of any meaningful evidence to support the position that Jastek Valencia was advancing in its response.

Accordingly, there was no reversal of the onus of proof. [ 106 ] Jastek Valencia also argues that the Chambers judge failed to apply an objective standard to the evidence of what Randy knew about the timing of the permits. It submits the Chambers judge erroneously inferred that Randy and Jastek had “no idea” about the anticipated timeline to obtain a permit. Randy had testified that, in his experience, it took four weeks to approve a permit if everything went right.

However, the comment of “no idea” is an observation by the Chambers judge that Jastek Valencia did not contact the City to determine the duration of delay in light of the sewer and water issue while the City was reviewing the building permit application. In that sense, the Chambers judge appropriately noted that Jastek Valencia had “no idea” about timelines and that, as part of its duty to use best efforts, it would have been prudent to have contacted the City and not simply to have blamed the City for delay.

I see no indication that the Chambers judge did not approach Randy’s “knowledge” of timelines objectively. [ 107 ] Jastek Valencia also submits the Chambers judge should either not have considered events after the cancellation of the Valencia Project in determining the timeline for the issuance of the permit, because those events formed no part of Randy’s knowledge when he cancelled the project, or, alternatively, he should have considered all the evidence regarding when the sewers were installed and the completion of the first building of Villagio Court. [ 108 ] The Chambers judge noted that a reasonable expectation of the delay in obtaining the permit was known as a result of “other evidence” (at para 77), including evidence from the City.

However, the Chambers judge made it clear that this evidence was not germane to the question of whether Jastek Valencia made the appropriate efforts to obtain a permit. He also specifically says the length of time it took GDP to get a permit was not evidence of Jastek Valencia’s best efforts. The Chambers judge appropriately focused on Randy’s knowledge and actions up to the point where the application for the permit was withdrawn. [ 109 ] Jastek Valencia argues as well that certain evidence was completely ignored by the Chambers judge and did not form part of his decision.

It submits that when assessing best efforts, the Chambers judge failed to consider: (

a) The communication dated March 30, 2007, from the City indicating the building permit could not be approved until the sewer and water mains were installed; (

b) Prior to March 30, 2007, Jastek Valencia was not aware that the water and sewer lines had not yet been installed; (

c) The installation of water and sewer mains was the responsibility of Dundee and was completely out of Randy’s control; (

d) GDP’s permit was conditionally issued on the installation of water and sewer lines; (

e) Water and sewer lines were not actually installed until the fall of 2007, which was roughly around the time the purchasers would have expected to have possession of their new condominiums; and (

f) The first building constructed by GDP was not completed until December 2008, more than a year after the purchasers’ expected possession date. [ 110 ] Jastek Valencia is again clearly wrong. The first five items listed above deal with the issue of the water and sewer lines. The

Chambers judge was aware of the problem created by the requirement to have those lines in place, including that the installation of thoselines was out of the control of Jastek Valencia, noting that the permit had been taken out of circulation as a result of this problem and that athird party was to install the lines. [111] The fact that GDP’s permit was conditionally issued is neither here nor there, nor is the fact that sewer lines were not installeduntil the fall of 2007. None of these factors speak to the reasons why Jastek Valencia cancelled the project in April.

Jastek Valencia andJastek MB miss the Chambers judge’s point that the relevant issue was what “efforts” had been made to deal with the problem of the delaycreated by the sewer issue. Admittedly, the problem involved a third party, but his focus was not the problem but rather the lack of“effort” of Jastek Valencia to resolve that problem. [112] It is clear there were no efforts made by Jastek Valencia when it came to investigating the sewer issue. It made no inquiries aboutthe timing of sewer installation.

There was no discussion with the City regarding whether the permit might be issued conditionally (as waseventually done for GDP). For someone who was an experienced builder and who believed that the normal permit process took fourweeks if there were no problems, the lack of effort by Randy and Jastek Valencia to make the necessary inquiries with the City to managethe problems that had arisen was astounding. The Chambers judge understood this and acknowledged this at paragraphs 71–73 of hisdecision. [113] In

summary, I am satisfied the Chambers judge committed no errors of law in his handling of the evidence. I am also satisfiedthat the Chambers judge did not reverse the onus of proof in determining the facts grounding the issue of whether best efforts were made.Further, I am satisfied he did not disregard significant evidence or consider irrelevant evidence. [114] As alluded to above, the complaints of Jastek Valencia and Jastek MB are really, in substance, a disagreement about theChambers judge’s findings of fact with respect to best efforts. With respect to those findings, I cannot say he erred.

The inferences theChambers judge drew were reasonably supported by the evidence he had before him, in the sense that they were within the range ofreasonable inferences available. [115] I can find no palpable and overriding error in the Chambers judge’s finding that best efforts were not used. I am also satisfied thatthis finding comports with the jurisprudence set out above with respect to “best efforts”. B.

Did the Chambers judge err in dealing with the issue of lifting thecorporate veil for 585 SK Ltd. and/or Jastek MB? [116] It is common ground in this appeal that the Chambers judge erred in finding that Jastek MB was the parent company of JastekValencia and caused to be incorporated other companies for the various real estate developments of Randy, and that Jastek MB was theoperating company with employees. The purchasers submit that these errors are not fatal. They argue that 585 SK Ltd. solely controlledJastek Valencia, Jastek MB, and Jastek Management, and together they operated as one economic unit.

They submit that the evidenceshows Jastek Valencia was the agent of both Jastek MB and 585 SK Ltd., and lifting the corporate veil is justified with respect to bothcorporations. [117] For their part, the Jastek parties argue that the Chambers judge relied heavily, if not entirely, on the misapprehension of JastekMB being the parent company of Jastek Valencia, and that this was the lynchpin of, and was essential to, the Chambers judge’s findingthat Jastek Valencia was the agent of Jastek MB. They argue, therefore, that the corporate veil of Jastek MB cannot be lifted.

They alsosubmit the Chambers judge did not otherwise misstate the corporate structure of the Jastek group of companies and did not fail toappreciate the limited role that 585 SK Ltd. played in the Valencia Project. The Jastek parties argue that the Chambers judge, in applyingthe Tridont factors set out above, definitively concluded the corporate veil should not be lifted in respect of 585 SK Ltd.

Accordingly, theyargue that the Chambers judge was right to decline to find liability against 585 SK Ltd. [118] In assessing the arguments of the purchasers and the Jastek parties, it is important to note that they do not dispute that theChambers judge used the appropriate starting point for the agency analysis, namely the six factors set out in Tridont. [119] Tridont builds on long-standing and well-known law. In Kosmopoulos v Constitution Insurance Co., (SCC),[1987] 1 SCR 2 at 10, the Supreme Court said: As a general rule a corporation is a legal entity distinct from its shareholders: Salomon v.

Salomon & Co., [1897] A.C. 22 (H.L.). The lawon when a court may disregard this principle by “lifting the corporate veil” and regarding the company as a mere “agent” or “puppet” ofits controlling shareholder or parent corporation follows no consistent principle. The best that can be said is that the “separate entities”principle is not enforced when it would yield a result “too flagrantly opposed to justice, convenience or the interests of the Revenue”:L.C.B.

Gower, Modern Company Law (4th ed. 1979), at p. 112. … [120] Although some jurisdictions espouse an approach that comes very close to restricting the lifting of a corporate veil to situations offraudulent or improper conduct or agency (see for example, Yaiguaje v Chevron Corporation, 2018 ONCA 472, 423 DLR (4th) 68, (leaveto appeal refused, (SCC))), our Court has historically taken a more fact-based approach.

In Nedco v Clark, (SK CA), [1973] 6 WWR 425 at 433 (Sask CA), Culliton C.J.S. stated: After reviewing the foregoing, and many other cases, the only conclusion I can reach is this: while the principle laid down in Salomon v.A. Salomon & Co. Ltd., supra, is and continues to be a fundamental feature of Canadian law, there are instances in which the Court can andshould lift the corporate veil, but whether it does so depends upon the facts in each particular case.

Moreover, the fact that the Court doeslift the corporate veil for a specific purpose in no way destroys the recognition of the corporation as an independent and autonomous entityfor all other purposes.

[ 121 ] That each case is dependent on its own facts was accepted in Tridont by the both the majority decision (at para 17) and the dissenting decision (at para 101). However, the corporate veil must only be pierced sparingly (at para 20) and not every case of mere corporate agency will result in the lifting of a corporate veil. [ 122 ] Although a determination to lift a corporate veil is fact-driven, our Court has not gone so far as to allow the lifting of a corporate veil on the sole ground that it would be inequitable not to do so ( see Tridont at para 23 ).

In Tridont , the Court said: [19] When one examines the cases where the courts have pierced the corporate veil, there must at least be complete domination by the parent over the subsidiary or some note of illegality or improper motive for the creation of the subsidiary company before the courts will treat the companies as one economic entity. In Merchandise Transport Ltd. v British Transport Commission; Arnold Transport (Rochester) Ltd. v.

British Transport Commission , [1962] 2 Q.B. 173 ; [1961] 3 All E.R. 495 (C.A.) , the corporate veil was pierced because the two companies were so under the control of one of them that they in fact constituted one economic enterprise. Even in the strongest case relied on by Culliton C.J.S. in Nedco , Littlewoods Mail Order Stores Ltd. v.

Inland Revenue Commissioners , [1969] 1 W.L.R. 1241 ; [1969] 3 All E.R. 855 at 860 (C.A.) , Lord Denning M.R. noted that the subsidiary must be “the creature, the puppet of” the controlling shareholders. … [ 123 ] I will return to the application of these principles . [ 124 ] The crux of both of the arguments of the Jastek parties and the purchasers is that the Chambers judge’s Tridont analysis suffers from factual errors.

After reviewing his analysis, I am satisfied that he made a number of factual errors that impacted his analysis of whether to lift the corporate veil in these circumstances. [ 125 ] He wrongly determined that Jastek MB was an operating company with employees and offices when, in fact, it was Jastek Management that had the employees. He wrongly determined that Jastek MB was responsible for incorporating other companies for the specific purpose of completing the development and sale of various projects including the Valencia Project when it was, in fact, 585 SK Ltd. that was the parent company of Jastek Valencia.

He also wrongly found that Jastek MB was the only company with physical resources to move the company forward and, on that basis, internally it was responsible for the Valencia Project. In fact, any employees who were to be involved in the project belonged to Jastek Management, which was also used to provide all support services to Randy and Glenn’s respective projects. [ 126 ] How these obvious errors occurred is not clear. In their Chambers brief, the purchasers explicitly set out the corporate structure of the various Jastek companies, showing 585 SK Ltd. as being at the apex.

This corporation was the shareholder of both Jastek MB and Jastek Valencia. Randy was an officer and director of all three. The Chambers judge’s failure to appreciate the true corporate structure and the interrelationship of the companies and the function of each tainted his agency analysis and warrants this Court’s intervention.

That said, I conclude his errors affected his ruling with respect to 585 SK Ltd., but in the end do not change his determination with respect to Jastek MB. [ 127 ] Given the Chambers judge’s errors, it falls to this Court to make the determination afresh of whether the corporate veil should be pierced with respect to 585 SK Ltd. and Jastek MB by applying the Tridont factors and the jurisprudence set forth above. [ 128 ] The Jastek parties do not dispute that this is not a genuine issue that requires a trial. Accordingly, I will proceed to determine the matter on the merits.

Moreover, I am confident that I can make a fair and just determination on the evidence. 1. 585 SK Ltd. [ 129 ] Multiple corporate personalities were used to develop the Valencia Project. Clearly, all of those corporate personalities lead back to 585 SK Ltd. This company was the parent of all the Jastek corporate actors involved in the Valencia Project. Although the details of the shareholder(

s) of Jastek Management were not clearly defined in the evidence, there is no dispute that Randy was the officer and director of this company (as with the other Jastek companies), and it may be inferred he controlled it as he did his other corporations. [ 130 ] 585 SK Ltd. was an integral part of the Valencia Project. It was the parent company and held the option to the land on which the development was to proceed. 585 Sask Ltd. eventually exercised the option before transferring it to GDP. Each of the other Jastek companies had their part to play in the development.

Jastek MB was the public face of the Jastek parties and, it appears, contributed to the goodwill of the Jastek brand, providing marketing efforts and acting as a liaison with the City. Jastek Valencia was a latecomer to the Jastek companies. Nevertheless, it was an important legal conduit through which the sale of the Valencia Project could be realized using the marketing profile and name of Jastek MB. Jastek Management provided the employees and services.

These corporate players all contributed in their own harmonious way to the Valencia Project, with Randy, and sometimes Glenn, as the conductors of the whole piece. [ 131 ] Applying the Tridont factors set forth earlier, and given the corporate structure of the Jastek parties, I conclude that any profits (after charges by Jastek Management for services provided) would have eventually flowed back in some way to 585 SK Ltd. as the shareholder of Jastek Valencia, or to Jastek MB.

The individuals involved in the day-to-day operations of Jastek Valencia were the employees of Jastek Management and Randy, the officer and director of both 585 SK Ltd. and Jastek MB. Randy was the principle shareholder of 585 SK Ltd. and, through 585 SK Ltd., was also the brains behind the day-to-day operations of the Jastek companies. [ 132 ] It was Randy who made financial and policy decisions respecting the development of the property, the terms upon which it was to be sold, and the supervision of the development and contracts through one or more of his corporate avatars.

The profits of all this effort, whether initially generated by Jastek Valencia or funnelled through Jastek MB, may be inferred to have eventually accrued to 585 SK Ltd. The organizational, structural, and operational matrix of the Jastek corporations was constant insofar as the Valencia Project was concerned: 585 SK Ltd. was at the apex. [ 133 ] On the basis of all of the foregoing, I conclude that Jastek Valencia was an agent of 585 SK Ltd. and that the corporate veil of 585 SK Ltd. must be lifted.

Therefore, it is responsible for the breach of the Agreement in the same way as Jastek Valencia. [ 134 ] Tridont also allows the piercing of the corporate veil where one company is so dominated and controlled by another that both corporations are a common unit. The overriding consideration is whether the two entities are so intimately connected that the court will

treat them as one enterprise and treat the acts of one closely related company as the acts of the other. The case of Parkland Plumbing &Heating Ltd. v Minaki Lodge Resort 2002 Inc., 2009 ONCA 256, 305 DLR (4th) 577 [Minaki], is instructive. It involved a dispute betweena mortgagee and lien claimants. In that case, the respondent, Mr. Archer, had incorporated Minaki Lodge Resort 2002 Inc. [Minaki Inc.]for the purpose of acquiring and redeveloping Minaki Lodge. Mr.

Archer was also the sole shareholder and director of the respondentcompany, Celestine Mortgage, which had put a mortgage on the property immediately after purchase with money received from him. Hecontrolled both corporations and made decisions on their behalf. [135] The Ontario Court of Appeal upheld the trial judge’s finding that Celestine Mortgage and Minaki Inc. were indistinguishable,thereby making Celestine Mortgage an owner of Minaki Lodge.

As an owner, Celestine Mortgage had no priority over the lien claimants.The court found the trial judge did not err in holding that Celestine Mortgage’s corporate veil could be pierced so as to find CelestineMortgage an owner (at para 55). There was sufficient evidence to support the trial judge’s findings: [59] In this case, the evidence demonstrated and the trial judge found that [Mr. Archer] exercised clear domination and control over theredevelopment project through a stable of companies that included Celestine and Minaki Inc., such that, in effect, these companies acted asa mere corporate facade for [Mr.

Archer’s] own activities. On this record, the trial judge’s holding that Celestine and Minaki Inc. wereindistinguishable – so that the acts of one were the acts of the other as [Mr. Archer’s] agents throughout – is unimpeachable. [136] Similarly, Randy and 585 SK Ltd. exercised clear domination and control over the Valencia Project through a stable ofcompanies that included Jastek Valencia, Jastek MB, and Jastek Management. All could be said to be a common economic unit operatingunder the aegis of 585 SK Ltd. This also justifies piercing the corporate veil of 585 SK Ltd. regarding the breach of the Agreement. 2.

Jastek MB [137] The Chambers judge, referring to undisclosed cases, found that Jastek MB could also be liable for the breach of contract becauseit failed to properly identify itself as a separate legal entity to the parties with whom it was dealing. It may be safely assumed that

[…]