REAL PROPERTY REPORTS Fifth Series/Cinqui`Eme S´Erie Recueil De Jurisprudence En Droit Immobilier VOLUME 52 (Cited 52 R.P.R

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REAL PROPERTY REPORTS Fifth Series/Cinqui`eme s´erie Recueil de jurisprudence en droit immobilier VOLUME 52 (Cited 52 R.P.R. (5th))

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[Indexed as: Soboczynski v. Beauchamp] Adam Soboczynski and Olga Soboczynski, Respondents and Don Beauchamp and Louise Beauchamp, Appellants Ontario Court of Appeal Docket: CA C58106 2015 ONCA 282 Alexandra Hoy A.C.J.O., Gloria Epstein, C.W. Hourigan JJ.A. Heard: November 4, 2014 Judgment: April 23, 2015 Real property –––– Sale of land — Agreement of purchase and sale — Inter- pretation of contract — Miscellaneous –––– Parties entered into agreement of purchase and sale (APS), which contained entire agreement clause — Vendors signed seller property information statement (SPIS), in which they stated that property was not subject to flooding and that they would inform purchasers of any “important changes” prior to closing — Vendors did not disclose subsequent flood in basement — After transaction closed, basement flooded again — Purchasers brought successful action against vendors for damages based on negligent misrepresentation — Vendors appealed — Appeal allowed — Given that entire agreement clause operated retrospectively, not prospectively, representations made in SPIS were actionable because SPIS was completed after APS had been signed — However, evidence did not support finding that purchasers relied on representations that formed basis of their claim. Torts –––– Fraud and misrepresentation — Negligent misrepresentation (Hedley Byrne principle) — Particular relationships — Sale of land –––– Parties entered into agreement of purchase and sale (APS), which contained entire agreement clause — Vendors signed seller property information statement (SPIS), in which they stated that property was not subject to flooding and that they would inform purchasers of any “important changes” prior to closing — Vendors did not disclose subsequent flood in basement — After transaction closed, basement flooded again — Purchasers brought successful action against vendors for damages based on negligent misrepresentation — Vendors appealed — Appeal allowed — Evidence did not support finding that purchasers relied on representations that formed basis of their claim. Cases considered by Gloria Epstein J.A.: BG Checo International Ltd. v. British Columbia Hydro & Power Authority (1993), 1993 CarswellBC 1254, [1993] 2 W.W.R. 321, [1993] 1 S.C.R. 12, 147 N.R. 81, 75 B.C.L.R. (2d) 145, 99 D.L.R. (4th) 577, 20 B.C.A.C. 241, 176 REAL PROPERTY REPORTS 52 R.P.R. (5th)

35 W.A.C. 241, 14 C.C.L.T. (2d) 233, 5 C.L.R. (2d) 173, 1993 CarswellBC 10, EYB 1993-67096, [1993] S.C.J. No. 1 (S.C.C.) — considered Dzourelov v. T.B. Bryk Management & Development Ltd. (2004), 31 R.P.R. (4th) 238, 2004 CarswellOnt 4052, 190 O.A.C. 321, 40 C.L.R. (3d) 301, [2004] O.J. No. 4109 (Ont. Div. Ct.) — considered Farmer v. H.H. Chambers Ltd. (1972), 31 D.L.R. (3d) 147, [1973] 1 O.R. 355, 1972 CarswellOnt 931 (Ont. C.A.) — considered Hedley Byrne & Co. v. Heller & Partners Ltd. (1963), 107 Sol. Jo. 454, [1963] 3 W.L.R. 101, [1964] A.C. 465, [1963] 1 Lloyd’s Rep. 485, [1963] 2 All E.R. 575 (U.K. H.L.) — referred to Inntrepreneur Pub. Co. v. East Crown Ltd. (2000), [2000] N.P.C. 93, [2000] 3 E.G.L.R. 31, [2000] 2 Lloyd’s Rep. 611, [2000] 41 E.G. 209 (Eng. Ch. Div.) — considered Kaufmann v. Gibson (2007), 2007 CarswellOnt 4560, 59 R.P.R. (4th) 293, [2007] O.J. No. 2711 (Ont. S.C.J.) — referred to Krawchuk v. Scherbak (2011), 82 C.C.L.T. (3d) 179, 5 R.P.R. (5th) 173, 332 D.L.R. (4th) 310, 4 C.L.R. (4th) 1, 106 O.R. (3d) 598, 2011 CarswellOnt 3015, 2011 ONCA 352, 279 O.A.C. 109, [2011] O.J. No. 2064 (Ont. C.A.) — followed Krawchuk v. Scherbak (2011), 2011 CarswellOnt 13567, 2011 CarswellOnt 13568, 430 N.R. 396 (note), 297 O.A.C. 395 (note), [2011] S.C.C.A. No. 319 (S.C.C.) — referred to Queen v. Cognos Inc. (1993), 1993 CarswellOnt 801, 1993 CarswellOnt 972, D.T.E. 93T-198, 45 C.C.E.L. 153, 93 C.L.L.C. 14,019, 99 D.L.R. (4th) 626, 60 O.A.C. 1, 14 C.C.L.T. (2d) 113, [1993] 1 S.C.R. 87, 147 N.R. 169, EYB 1993-67486, [1993] S.C.J. No. 3 (S.C.C.) — referred to Rainbow Industrial Caterers Ltd. v. Canadian National Railway (1991), 8 C.C.L.T. (2d) 225, 59 B.C.L.R. (2d) 129, [1991] 6 W.W.R. 385, 84 D.L.R. (4th) 291, 126 N.R. 354, 3 B.C.A.C. 1, 7 W.A.C. 1, [1991] 3 S.C.R. 3, 1991 CarswellBC 921, 1991 CarswellBC 214, [1991] R.R.A. 850, 1991 SCC 27, EYB 1991-67052, [1991] S.C.J. No. 67 (S.C.C.) — considered Shelanu Inc. v. Print Three Franchising Corp. (2003), 64 O.R. (3d) 533, 172 O.A.C. 78, 226 D.L.R. (4th) 577, 38 B.L.R. (3d) 42, 2003 CarswellOnt 2038, [2003] O.J. No. 1919 (Ont. C.A.) — followed Shelanu Inc. v. Print Three Franchising Corp. (2006), 19 B.L.R. (4th) 19, 2006 CarswellOnt 2627, 269 D.L.R. (4th) 152, [2006] O.J. No. 1729 (Ont. C.A.) — referred to Strand v. Emerging Equities Inc. (2008), 2008 ABCA 23, 2008 CarswellAlta 54, 37 B.L.R. (4th) 44, 54 C.C.L.T. (3d) 8, 425 A.R. 314, 418 W.A.C. 314, [2008] A.J. No. 50 (Alta. C.A.) — referred to Soboczynski v. Beauchamp Gloria Epstein J.A. 177

Usenik v. Sidorowicz (2008), 2008 CarswellOnt 1462, [2008] O.J. No. 1049 (Ont. S.C.J.) — referred to

APPEAL by vendors from decision allowing purchasers’ action for damages based on negligent misrepresentation.

Benjamin G. Blay, for Appellants W. Scott Gallagher, for Respondents

Gloria Epstein J.A.: I. Overview 1 The appellants, Don and Louise Beauchamp, sold their home to the respondents, Adam and Olga Soboczynski. 2 The issue at the centre of this appeal is the legal effect of an entire agreement clause in an agreement of purchase and sale. Specifically, does the clause preclude a purchaser’s action in negligent misrepresentation against a vendor for non-contractual representations made subsequent to entering into the agreement but before closing? 3 The appellants and respondents entered into the agreement of purchase and sale (the “APS”) on November 21, 2007. The purchase price was $290,000. Following the execution of the agreement, but before the transaction closed, the appellants, at the respondents’ request, completed and signed a Seller Property Information Statement (the “SPIS”). In the SPIS, the appellants stated that the property was not subject to flooding. They also undertook to inform the respondents of any “important changes” to the information contained in the SPIS based on events, if any, that took place prior to closing. 4 On January 9, 2008, the basement of the house flooded, causing relatively minor damage. The appellants fixed the damage but did not disclose the incident to the respondents. The transaction closed as scheduled on January 18, 2008. 5 On February 6, 2008, the basement flooded again. After learning of the pre-closing flood, the respondents sued the appellants for damages based on negligent misrepresentation, arguing that the SPIS required the appellants to disclose the January 9 flood to them. 6 The trial judge concluded that the entire agreement clause in the APS acted as a bar to the respondents’ action. Notwithstanding this conclusion, the trial judge proceeded to assess damages. He found that if the 178 REAL PROPERTY REPORTS 52 R.P.R. (5th)

respondents had been successful, they would have been entitled to $25,000 in damages for negligent misrepresentation. 7 The Divisional Court disagreed with the trial judge’s conclusion that the entire agreement clause precluded the respondents’ tort action. The SPIS required the appellants to tell the respondents about the pre-closing flood. They failed to do so. And the other elements of the tort of negligent misrepresentation had been made out. Therefore, the Court awarded damages to the respondents in the amount assessed by the trial judge. 8 The appellants appeal on two main grounds. First, the Divisional Court erred in finding that the entire agreement clause in the APS does not preclude a claim based on representations made in the SPIS. Second, the court erred in holding that the tort of negligent misrepresentation had been made out. 9 I would allow the appeal. I agree with the Divisional Court that the representations the appellants made in the SPIS are actionable notwithstanding the entire agreement clause in the APS. However, in my view, the evidence does not support a finding that the respondents relied on the representations that form the basis of their claim for negligent misrepresentation. In the absence of reliance, the respondents’ claim must fail.

II. Factual Background (i) The APS and the SPIS 10 The APS was subject to two conditions — satisfactory financing, and a satisfactory home inspection. The APS also contained an entire agreement clause. It read: [The APS] including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects [the APS] other than as expressed herein. 11 On November 22, 2007, the day after the APS was signed, Mr. Soboczynski gave the appellants the SPIS to fill out. After consulting their lawyer, the appellants completed and signed the SPIS. In the document, the appellants indicated that: (i) the property was not subject to flooding, (ii) they were not aware of any moisture or water problems, and (iii) they were not aware of any damage due to wind, fire, water, insects, Soboczynski v. Beauchamp Gloria Epstein J.A. 179

termites, rodents, pets or wood rot. The SPIS concluded with the following statement: Any important changes to this information known to the sellers will be disclosed by the sellers prior to closing. 12 As previously noted, the APS was conditional on the “[r]esults of an inspection from an inspector of [the respondents’] choice”. On Novem- ber 28, 2007, the respondents obtained a satisfactory home inspection from their chosen inspector. As Mr. Soboczynski testified, “We received the inspection report. There was nothing significant there to be concerned about that we thought. My wife saw the inspection report as well and I took it home to her.” Having obtained a satisfactory home inspection, the respondents waived the home inspection condition. They also secured financing and waived the financing condition. As of November 28, 2008, the APS was no longer conditional. 13 The SPIS was not incorporated into the terms of, or otherwise referenced in, the APS.

(ii) The Two Floods 14 On January 9, 2008, the basement of the house flooded after a period of heavy rainfall and melting snow. Water entered the basement through the window wells. The carpet was saturated with water. The appellants repaired the damage by drying out the rug and replacing the under pad. The repairs cost $1,648.59. 15 The appellants consulted their lawyer about the flood but did not inform the respondents of the incident. The appellants’ evidence was that they believed the flood was an isolated occurrence and was not an “important change” requiring them to give notice to the respondents under the terms of the SPIS. 16 The sale closed on January 18, 2008. The respondents were unaware of the January 9 flood. On February 6, 2008, after another period of heavy rainfall, the basement flooded again. The respondents repaired the damage and took steps to prevent further flooding. The respondents hired an expert and discovered that the backyard was ponding and the window wells were lower than the surrounding land. The remedial steps the respondents took cost $22,598.17. 17 The respondents eventually found out about the January 9 flood. By statement of claim dated November 17, 2009, they commenced this action against the appellants. The respondents sued only in tort. They 180 REAL PROPERTY REPORTS 52 R.P.R. (5th)

claimed damages based on alleged fraudulent or negligent misrepresenta- tions made in the SPIS.

III. Decisions Below (i) Superior Court of Justice 18 The trial judge dismissed the respondents’ claim. 19 He was not satisfied that the respondents had demonstrated that the property had been subjected to any flooding prior to the January 9 flood. He found that the cause of the flood was not clearly established but reasoned that after a period of heavy rainfall and melting snow, water had entered through the window wells. He further found that the appellants made a conscious decision not to disclose the January 9 flood to the respondents because they thought it was a “one off occurrence”. 20 Citing Krawchuk v. Scherbak, 2011 ONCA 352, 106 O.R. (3d) 598 (Ont. C.A.), leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 319 (S.C.C.), the trial judge reasoned that statements in an SPIS can amount to non-contractual representations and can give rise to the tort of negligent misrepresentation. However, here, the SPIS was not part of or otherwise connected with the APS. The trial judge concluded that, as a result, the entire agreement clause in the APS “prevails to exclude” the representations in the SPIS. The respondents could therefore not rely on them. 21 The trial judge expressed some reluctance about whether the tort would be made out if he had reached a different conclusion about the effect of the entire agreement clause. At para. 62, he wrote: [I]t is doubtful that the incident, which I find the Beauchamps believed to have been a one off incident, was an “important change to the information” requiring disclosure to the purchasers as per the wording of the S.P.I.S. 22 Notwithstanding this reluctance, the trial judge dealt with the respondents’ damages. He assessed them at $25,000 — an amount that included $22,598.17 for the costs of fixing the damage and preventing further flooding. The balance was intended to compensate the respondents for mental distress and loss of enjoyment. The amount of damages was not in issue before the Divisional Court and is not in issue before this court. 23 The trial judge died shortly after releasing his decision in this matter but before deciding the issue of costs. The appellants suggested that costs be referred to another judge of the Superior Court or be determined by Soboczynski v. Beauchamp Gloria Epstein J.A. 181

the Divisional Court. The respondents suggested that costs be determined by the Divisional Court.

(ii) Divisional Court 24 The Divisional Court allowed the respondents’ appeal. 25 First, I note that at the conclusion of the hearing before the Divisional Court, counsel were asked the following question. If the Court determined that the trial judge had erred by reviewing the appellants’ conduct on a subjective rather than an objective standard, were the parties content that the Court make findings of fact on the correct standard rather than send the matter back to trial? Both counsel agreed with the Divisional Court’s proposal.

The Entire Agreement Clause and an Action in Tort 26 The Divisional Court held, at para. 40, that “the trial judge erred in law when he concluded that the [respondents] could not rely on the representation in the SPIS because of the entire agreement clause in the [APS]”. The Court reasoned that the entire agreement clause in the APS did not interfere with the respondents’ claim based on a negligent misrepresentation made in the SPIS, even though it was signed after the APS was entered into but before closing. 27 In coming to this conclusion, Herman J., writing for the Court, noted that in Dzourelov v. T.B. Bryk Management & Development Ltd. (2004), 190 O.A.C. 321 (Ont. Div. Ct.), Dawson J. interpreted the first sentence of a comparable entire agreement clause as “deal[ing] with the situation at the time the agreement was signed. It has the effect of excluding the possibility of any representation, warranty or collateral agreement at that time, that was not included in the written agreement”: para. 13.1 Justice Dawson concluded that the entire agreement clause did not preclude a claim arising out of the formation of a subsequent oral agreement. 28 The Court also pointed to several decisions in which courts have held that representations in an SPIS can give rise to an action in tort for negli-

1The entire agreement clause at issue in Dzourelov stated: “The parties acknowledge that there is no representation, warranty, collateral agreement or condition, affecting the Agreement except as contained in this agreement. This agreement may not be amended other than in writing.” 182 REAL PROPERTY REPORTS 52 R.P.R. (5th)

gent misrepresentation.2 The Court noted, however, that in each case the completed SPIS was provided to the purchaser before the agreement of purchase and sale was entered into.

Was the Tort Made Out? 29 The Divisional Court then proceeded to determine whether the respondents had established a claim for negligent misrepresentation on the basis of the appellants’ failure to advise them of the pre-closing flood. 30 After concluding that the appellants owed the respondents a duty of care, the Court found that the January 9 flood constituted an “important change” and, under the terms of the SPIS, the appellants were required to notify the respondents of the occurrence. Their failure to do so constituted an untruth. 31 The Court then held that the trial judge erred in law by applying a subjective test to the appellants’ obligations under the SPIS by focusing on their honest belief that the incident did not amount to an “important change”. In keeping with the approach set out in Krawchuk, an objective standard must be applied. The question is whether a reasonable person in the circumstances would have disclosed the flood. 32 The Court found that it was not reasonable for the appellants to not advise the respondents of the change. Therefore, the appellants “acted negligently in not disclosing the change in the situation”: para. 59. 33 In considering the issue of reliance, the Court started with the proposition that purchasers are entitled to rely on representations in an SPIS. The Court then wrote, at para. 61: Had the [respondents] known about the flood, they might well have retained their own expert to investigate the situation to determine the cause of the problem. If it was determined that the problem was significant and was more than a one-time event, the contractual options of rescission or abatement might have been available to them. 34 In concluding its analysis of the tort of negligent misrepresentation, the Divisional Court found that the respondents sustained damage as a result of the misrepresentation and gave judgment to the respondents in the unchallenged amount of $25,000.

2The Divisional Court cited the following three cases for this proposition: Krawchuk; Kaufmann v. Gibson (2007), 59 R.P.R. (4th) 293 (Ont. S.C.J.); and Usenik v. Sidorowicz, [2008] O.J. No. 1049 (Ont. S.C.J.). Soboczynski v. Beauchamp Gloria Epstein J.A. 183

Costs Award 35 After considering written costs submissions, the Divisional Court rejected the appellants’ argument that costs should be reduced because the respondents had pleaded but did not establish fraud. The Court found that the fraud allegations had not been actively pursued at trial. The central issue at trial was negligent misrepresentation. 36 The Court awarded the respondents their trial costs fixed in the amount of $15,000, plus $10,171.69 in disbursements. The Court also awarded the respondents costs of the appeal in the amount of $7,500.

IV. Issues on Appeal 37 The appellants advance three main grounds of appeal. They submit that the Divisional Court erred: 1. by finding that the entire agreement clause in the APS did not preclude a claim in tort based on an alleged negligent misrepresentation made in the SPIS; 2. by concluding that the respondents had made out a claim for damages based on negligent misrepresentation; and 3. in its trial costs award to the respondents.

V. Analysis (i) Did the Divisional Court err by finding that the entire agreement clause in the APS did not preclude a claim in tort based on an alleged negligent misrepresentation made in the SPIS? 38 The appellants submit that the entire agreement clause, which expressly stated that there are no representations affecting their agreement other than as expressed in the APS, precludes the respondents from advancing a claim in tort based on representations in the SPIS. The appellants point out that the respondents could have avoided the consequences of the entire agreement clause by incorporating the SPIS into the APS, but did not do so. 39 It is well-settled that contract and tort duties may arise concurrently. In BG Checo International Ltd. v. British Columbia Hydro & Power Au- thority, [1993] 1 S.C.R. 12 (S.C.C.), the Supreme Court wrote, at p. 26, “where a given wrong prima facie supports an action in contract and in tort, the party may sue in either or both, except where the contract indicates that the parties intended to limit or negative the right to sue in tort.” 184 REAL PROPERTY REPORTS 52 R.P.R. (5th)

The Court continued, at p. 27, “In so far as the tort duty is not contradicted by the contract, it remains intact and may be sued upon.” 40 Accordingly, the key question is whether the entire agreement clause in the APS negatives the respondents’ right to sue in tort based on mis- representations made in the SPIS — a document completed after the APS was entered into. 41 In my view, the answer to the question is that, in the circumstances of this case, any consequences flowing from representations made in the SPIS were outside the reach of the entire agreement clause. The entire agreement clause in the APS operates retrospectively, not prospectively. In other words, the application of the clause is restricted to limit representations, warranties, collateral agreements, and conditions made prior to or during the negotiations leading up to the signing of the APS. When the appellants made representations in the SPIS, a document completed after the APS had been signed by all parties, the entire agreement clause was spent. 42 This conclusion is supported by the general purpose of entire agreement clauses, jurisprudence from this court, the plain meaning of the entire agreement clause at issue in this case, and the post-contractual conduct of the parties.

General Purpose of Entire Agreement Clauses 43 An entire agreement clause is generally intended to lift and distill the parties’ bargain from the muck of the negotiations. In limiting the expression of the parties’ intentions to the written form, the clause attempts to provide certainty and clarity. 44 In Inntrepreneur Pub. Co. v. East Crown Ltd., [2000] 41 E.G. 209 (Eng. Ch. Div.), Lightman J. colourfully described the purpose of an entire agreement clause as follows: The purpose of an entire agreement clause is to preclude a party to a written agreement threshing the undergrowth and finding in the course of negotiations some (chance) remark or statement (often long forgotten or difficult to recall or explain) on which to found a claim such as the present to the existence of a collateral warranty... For such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere. [Emphasis added.] Soboczynski v. Beauchamp Gloria Epstein J.A. 185

45 Legal commentators appear to be united in their view that entire agreement clauses are, generally speaking, retrospective in nature. Ac- cording to Angela Swan, “An “entire agreement” clause deals only with what was done or said before the agreement was made and seeks to exclude those statements and acts from muddying the interpretation of the agreement; it is a contractual invocation of the parol evidence rule”: Ca- nadian Contract Law, 3d ed. (Markham: LexisNexis Canada, 2012), at p. 600 (emphasis in original); see also John D. McCamus, The Law of Con- tracts, 2d ed. (Toronto: Irwin Law Inc., 2012), at p. 733. 46 Justice P.M. Perell agrees. He says that “[t]he parol evidence rule then directs that the written contract may not be contradicted by evidence of the oral and written statements made by the parties before the signing of the contract. The entire agreement clause is essentially a codification of the parol evidence rule”: “A Riddle Inside an Enigma: The Entire Agreement Clause” (1998) The Advocates’ Q. 287 at 290-91 (emphasis added). 47 And according to Professor M.H. Ogilvie, entire agreement clauses are “patently not applicable... where the representation postdates the contract”: “Entire Agreement Clauses: Neither Riddle Nor Enigma” (2009) 87 The Canadian Bar Review at 642 (emphasis added).

Jurisprudence From This Court 48 While there appears to be little jurisprudence on the effect of an entire agreement clause on representations made after the contract containing the clause is entered into, some assistance can be found in this court’s decision in Shelanu Inc. v. Print Three Franchising Corp. (2003), 64 O.R. (3d) 533 (Ont. C.A.), subsequent proceedings, (2006), 19 B.L.R. (4th) 19 (Ont. C.A.). 49 Shelanu involved a contractual dispute in which the question was whether an entire agreement clause in a written agreement rendered unenforceable a subsequent oral agreement between the parties. Justice Weiler, writing for the court, concluded it did not. 50 Shelanu clarified certain points about entire agreement clauses. 51 First, an entire agreement clause does not prevent the parties from amending the terms of their agreement. In other words, post-contract events can affect both the enforceability of the obligations in the agreement and add new obligations to those imposed by its terms. 186 REAL PROPERTY REPORTS 52 R.P.R. (5th)

52 Second, and relatedly, entire agreement clauses do not apply prospectively unless the wording expressly so provides. In the words of Weiler J.A., at paras. 49-50: [A]n exception to the parol evidence rule is the existence of any subsequent oral agreement to rescind or modify a written contract provided that the agreement is not invalid under the Statute of Frauds: Ellis v. Abell (1884), 10 O.A.R. 226 (Ont. C.A.) at para. 85. Clauses such as the entire agreement clause in issue here are normally used to try to exclude representations made prior to the signing of the written agreement. See P.M. Perell, “A Riddle Inside an Enigma: The Entire Agree- ment Clause” (1998) The Advocates’ Q. 287. Nothing in [the entire agreement clause] suggests that an oral agreement to surrender the franchise several years later would be of no effect. It cannot be said the entire agreement clause was clearly intended to cover any and all future contractual relations between Shelanu and Print Three. [Emphasis added.] 53 Both the general purpose of entire agreement clauses set out above and the approach to their application evident in this court’s decision in Shelanu support the conclusion that, subject to express wording to the contrary, these clauses do not apply to agreements or representations that post-date the contract in which the clause is found. 54 I now turn to the specific circumstances in this case.

Specific Words Used in the Entire Agreement Clause in the APS 55 A consideration of the precise words the parties used to record their bargain is central to the interpretation of the entire agreement clause in the APS. For convenience, I again set out the text of the entire agreement clause in issue: This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein. 56 The clause is worded in the present tense — “[t]here is no representation” affecting the APS (emphasis added). On their face, the words of the clause do not preclude an action for negligent misrepresentation based on a representation made post-contract. The words that reflect the parties’ bargain are therefore consistent with the general legal principles animating entire agreement clauses. Soboczynski v. Beauchamp Gloria Epstein J.A. 187

57 This interpretation of the clause is also consistent with the Divisional Court’s analysis in Dzourelov — a case relied upon by the Divisional Court in this case. In Dzourelov, the entire agreement clause was very similar to the one in this case. It read: “The parties acknowledge that there is no representation, warranty, collateral agreement or condition, affecting the Agreement except as contained in this agreement. This agreement may not be amended other than in writing” (emphasis added). In interpreting this clause, Dawson J. wrote: The exclusive agreement clause in question consists of two sentences. I agree with the appellant’s submission that the first sentence deals with the situation at the time the agreement was signed. It has the effect of excluding the possibility of any representation, warranty or collateral agreement at that time, that was not included in the written agreement. [Emphasis added.] 58 Thus, Dzourelov confirms that entire agreement clauses drafted in the present tense look backwards, not forwards. 59 The entire agreement clause in this case is saying, “These are the terms of our agreement and nothing that was said beforehand is relevant. You have no basis for relying on anything other than the terms of the agreement. The agreement stands on its own”.

Post-Contractual Conduct of the Parties 60 Finally, Canadian courts often look to the post-contractual conduct of the parties to shed light on what they intended the words enshrined in their written agreement to mean. The trend in Canada toward analyzing the subsequent actions of the parties is captured by G.H.L. Fridman in The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at pp. 450-51: Canadian courts have adopted the view that subsequent conduct can be a useful guide to the interpretation of a written contract... In one case, concerned with whether a restrictive covenant in a contract was personal to the parties or went with the land, Thomson J. of the Su- preme Court of Saskatchewan, said that in cases involving an ambi- guity in an agreement, “there is no better way of determining what the parties intended than to look to what they did under it [Bank of Montreal v. Univ. of Saskatchewan (1953), 9 W.W.R. (N.S.) 193 (Sask. Q.B.), at 199]. There is much to be said for this approach, as many Canadian judges since 1970, have declared. In Canada it seems clear that the subsequent actions of the parties may be admissible to 188 REAL PROPERTY REPORTS 52 R.P.R. (5th)

explain the true meaning and intent of their agreement. [Citations omitted.] 61 An examination of the conduct of the parties to the APS after they entered into their agreement supports the conclusion that they intended that the appellants’ obligations under the SPIS would be enforceable. 62 It was not necessary for the appellants to complete the SPIS. If one contracting party asks, post contract, for a representation or warranty, the other does not have to give it: he or she can say, “No, the contract ex- presses the limit of my obligations”. But that is not what transpired in this case. The fact that the appellants completed the SPIS, after consulting their lawyer, provides insight into their intentions in relation to the entire agreement clause. It reveals that the appellants considered the SPIS seriously. 63 Moreover, in the SPIS, the appellants undertook to inform the respondents of any “important changes” to the information they provided in the document. This ongoing obligation to which the appellants committed themselves indicates that all parties considered the SPIS as affecting their relationship. 64 For these reasons, I agree with the Divisional Court that the entire agreement clause, properly interpreted, does not preclude the respondents’ claim for damages based on negligent misrepresentation. In my view, the appellants should be held to any consequences that flow, in law, from the representations they made in the SPIS. To conclude otherwise would render the entire SPIS exchange meaningless.

The Doctrine of Caveat Emptor 65 Before proceeding, I pause to briefly address the doctrine of caveat emptor (“let the buyer beware”). 66 The appellants submit that circumventing the parties’ intentions as expressed by the entire agreement clause in the APS erodes the doctrine of caveat emptor. I disagree with the premise of this submission. Having concluded that the entire agreement clause in this case operates retrospectively, not prospectively, it cannot be said that the respondents’ claim for negligent misrepresentation has the effect of circumventing the parties’ intentions or the entire agreement clause. 67 At para. 38 of its reasons, the Divisional Court quoted from Killeen J.’s decision in Kaufmann, at para. 119, for the proposition that, “once a vendor “breaks his silence” by signing the SPIS, the doctrine of caveat emptor falls away as a defence mechanism and the vendor must speak Soboczynski v. Beauchamp Gloria Epstein J.A. 189

truthfully and completely about the matters raised in the unambiguous questions at issue”. Although the SPIS at issue in Kaufmann was expressly incorporated into the agreement of purchase and sale, I agree with the thrust of Killeen J.’s remarks. So long as a purchaser’s action is not precluded by the agreement of purchase and sale, the vendor cannot hide behind the doctrine of caveat emptor if he or she breaks the silence by signing a SPIS. 68 I would not give effect to this argument.

(ii) Did the Divisional Court err by concluding that the respondents had made out a claim for damages based on negligent misrepresentation? 69 Despite my conclusion that the entire agreement clause does not prevent the respondents from advancing a claim in negligent misrepresentation, in my view, their claim still fails because they have not established the fourth element of negligent misrepresentation — reasonable reliance. 70 The tort of negligent misrepresentation has five elements: Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465 (U.K. H.L.); Queen v. Cognos Inc., [1993] 1 S.C.R. 87 (S.C.C.), at p. 110. These elements are: (1) a duty of care based upon a special relationship between the plaintiff and defendant; (2) an untrue, inaccurate or misleading statement by the defendant; (3) negligence on the part of the defendant in making the statement; (4) reasonable reliance by the plaintiff on the statement; and (5) damage suffered by the plaintiff as a result. 71 On appeal, the parties made no written or oral submissions on the first element, the duty of care. My analysis proceeds on the assumption that the appellants owed the respondents a duty of care in these circumstances. I accept the Divisional Court’s finding that the appellants were negligent in failing to advise the respondents of the pre-closing flood. 72 Reasonable reliance is fundamental to the tort of negligent misrepresentation. The reasonable reliance element “states a factual test for cau- sation”: Allen Linden and Bruce Feldthusen, Canadian Tort Law, 9th ed. (Canada: LexisNexis Canada Inc., 2011), at p. 473. 73 In Farmer v. H.H. Chambers Ltd. (1972), [1973] 1 O.R. 355 (Ont. C.A.), McGillvary J.A. wrote, at p. 357: “To recover under the rationale of the Hedley Byrne case, representation must not only be made but it has to be such as to cause the plaintiff, as a result, to do some act to his detriment.” Although reliance can be inferred in certain circumstances, such an inference must be supported by the facts and evidence: Strand v. 190 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Emerging Equities Inc., 2008 ABCA 23, 37 B.L.R. (4th) 44 (Alta. C.A.), at para. 6 74 The problem here is that it is far from clear that the respondents would have had a remedy even if the January 9 water incident had been disclosed prior to closing. Put another way, the misrepresentation did not cause the respondents to “do some act to [their] detriment”: Farmer, at p. 357. 75 As noted above, the respondents sued in tort. They claim damages for negligent misrepresentation. However, there is no allegation of reliance in their statement of claim. 76 Notwithstanding the state of the respondents’ pleading, in their closing submissions at trial, the respondents advanced two arguments on the reliance issue. They argued that they relied on the misrepresentation in the SPIS because they waived the home inspection condition after receiving the SPIS. The respondents also argued that they relied on the misrepresentation in the SPIS because they were deprived of the opportunity to seek remedies available to them under the APS. 77 I address each submission in turn. 78 There are two difficulties with the respondents’ submission that they relied on the SPIS in waiving the home inspection condition in the APS. First, when the respondents waived the home inspection condition, there was nothing for the appellants to disclose. They waived the condition prior to the January 9 water incident. Second, and more significantly, there is no evidence that the inspector who performed the home inspection on behalf of the respondents relied on the SPIS in conducting his home inspection or even knew that it existed. Further, the trial judge rejected Mr. Soboczynski’s testimony that the SPIS was “part of the property inspection” process. He also expressly found, at para. 30, that the SPIS “was unrelated to the results of an inspection.” In the light of these findings, I would not give effect to this submission. 79 This takes me to the respondents’ argument that had the appellants advised them of the January 9 flood they would have taken advantage of remedies available to them under the APS. In terms of the available remedies, the respondents turn to s. 14 of the APS, which provided: INSURANCE: All buildings on the property and all other things being purchased shall be and remain until completion at the risk of Seller. Pending completion, Seller shall hold all insurance policies, if any, and the proceeds thereof in trust for the parties as their interests may appear and in the event of substantial damage, Buyer may either Soboczynski v. Beauchamp Gloria Epstein J.A. 191

terminate this Agreement and have all monies paid returned without interest or deduction or else take the proceeds of any insurance and complete the purchase. No insurance shall be transferred on completion. If Seller is taking back a Charge/Mortgage, or Buyer is assuming a Charge/Mortgage, Buyer shall supply Seller with reasonable evidence of adequate insurance to protect Seller’s or other mortgagee’s interest on completion. [Emphasis added.] 80 The APS does not define “substantial damage”. 81 The respondents’ argument is problematic as it is unclear what rights would have been available to them under this provision. And the Divi- sional Court’s somewhat conclusory statement, at para. 61, that “the contractual options of rescission and abatement might have been available to [the respondents]” does little to clarify the situation. 82 The respondents’ access to the remedies available under s. 14 de- pended on a finding of “substantial damage”. The difficulty the respondents face is that no finding was made as to whether the property sustained substantial damage as a result of the January 9 flood. In my view, on this record, the trial judge would likely have concluded that the Janu- ary 9 flood did not constitute “substantial damage” in the light of the observation he made, at para. 62 of his reasons reproduced above, that “it is doubtful” the January 9 flood was an “important change” as contemplated by the SPIS. The point is, however, that no finding was made. 83 In any event, at the time the property changed hands on January 18, 2008, the $1,648.59 worth of damage caused by the January 9 flood had been repaired. There was no damage to speak of, substantial or otherwise. 84 A consideration of the role damages play in tort cases illuminates why the respondents did not rely on the appellants’ negligent misrepre- sentations. In Rainbow Industrial Caterers Ltd. v. Canadian National Railway, [1991] 3 S.C.R. 3 (S.C.C.), at p. 14, the Supreme Court outlined how to assess damages in a negligent misrepresentation action: “The plaintiff seeking damages in an action for negligent misrepresentation is entitled to be put in the position he or she would have been in if the misrepresentation had not been made.” 85 Here, had the appellants told the respondents of the January 9 flood, the respondents’ position in relation to their obligations under the APS would not have changed. The respondents would have been obliged to complete the transaction under the terms of the APS. The fact that the 192 REAL PROPERTY REPORTS 52 R.P.R. (5th)

respondents did not suffer any damage compensable in tort solidifies their inability to prove reliance. 86 To prove reasonable reliance, it was incumbent on the respondents to adduce evidence sufficient for the court to conclude that the misrepresentation somehow caused them to act to their detriment. This they did not do. Although reasonable reliance can be inferred from the circumstances, there is not, in my view, sufficient evidence upon which to base such an inference. 87 I conclude the respondents have not established the fourth element of negligent misrepresentation. Their tort claim must therefore fail.

(iii) Did the Divisional Court err in its trial costs award? 88 The appellants argue that the Divisional Court erred in assessing the trial costs instead of referring them to the Superior Court. They say that proceeding in this fashion deprived them of a right of appeal. 89 They also contend that the Court erred in assessing costs on the basis that the respondents’ allegation against them in fraud was not actively pursued. They say the unsuccessful allegation of fraud was pursued through to the end of trial and that the costs award should reflect the extent to which these allegations increased trial costs. 90 The appellants seek costs payable by the respondents on a substantial indemnity basis. The appellants argue that even if they are unsuccessful in this appeal, they should still be entitled to substantial indemnity costs of the action because the respondents made completely unsubstantiated accusations of fraud against them. Unproven allegations of fraud attract this kind of costs award because they go to the root of a person’s integrity. 91 In my view, in the light of the trial judge’s death, and the parties’ submissions set out above, the Divisional Court was fully entitled to assess costs. The Divisional Court found as a fact that the plaintiffs did not actively pursue the fraud allegation at trial. The trial was about negligence, not fraud. The appellants were not entitled to substantial indemnity costs. 92 I see no reason to interfere with the Court’s decision regarding the costs of the trial. The Court’s assessment of the trial costs is entitled to deference. Soboczynski v. Beauchamp C.W. Hourigan J.A. 193

VI. Disposition 93 For these reasons, I would allow the appeal, set aside the decision of the Divisional Court, and restore the decision of the trial judge dismissing the action. 94 I would award the appellants their costs of this appeal in the agreed- upon amount of $5,000, including disbursements and applicable taxes.

Alexandra Hoy A.C.J.O.:

I agree

C.W. Hourigan J.A.:

I agree Appeal allowed. 194 REAL PROPERTY REPORTS 52 R.P.R. (5th)

[Indexed as: Schwartz v. Unique, assurances générales inc.] Herman Schwartz, Appellant v. L’Unique assurances générales inc., Respondent and 9250-1998 Québec inc., Le Grand Séminaire Rabbinique Tash de Montréal et L’officier de la publicité des droits de la circonscription foncière de Terrebonne, Impleaded Parties Court of Appeal of Quebec Docket: C.A. Montréal 500-09-024220-147 2015 QCCA 641 Bich, Kasirer, Vauclair JJ.A. Judgment: April 17, 2015 Municipal law –––– Tax collection and enforcement — Remedies available to municipality — Miscellaneous –––– Sale of immovable for unpaid taxes — Insurer brought motion seeking declaration that it be authorized to redeem immovable sold for unpaid taxes by municipality — Trial judge held that insurer, as person other than owner of immovable, could avail itself of right to redeem property pursuant to s. 533 of City and Towns Act — That decision was appealed from by S — Appeal dismissed — Trial judge was correct in deciding that, for purposes of s. 533 of Act, return of right of ownership of immovable to owners’ patrimony here was sufficient in circumstances to constitute redemption “for the benefit” of owners — Return of immovable to patrimony of original owners and its subsequent sale would ultimately serve to reduce owners’ debt to insurer — Return of property in itself did not result in harm to owner and met requirement of “only in the name and for the benefit” set forth in s. 533 of Act — Rights of insurer arose by statute, specifically s. 533 of Act, and not by judgment — Therefore, statutory conditions allowing insurer to exercise right of redemption were satisfied here. Droit municipal –––– Recouvrement des taxes et procédures d’exécution — Recours de la municipalité — Divers –––– Vente d’un immeuble pour cause de taxes impayées — Assureur a déposé une requête visant a` obtenir un jugement déclaratoire l’autorisant a` racheter un immeuble vendu par la municipalité pour cause de taxes impayées — Juge de première instance a estimé que l’assureur, en tant que personne autre que le propriétaire de l’immeuble, pouvait invoquer du droit de racheter la propriété en vertu de l’art. 533 de la Loi sur les cités et villes — Cette décision a fait l’objet d’un appel interjeté par S — Appel rejeté — Juge de première instance a eu raison de décider que, pour les fins de l’art. 533 de la Loi, le retour du droit de propriété sur l’immeuble dans le patrimoine des propriétaires etait´ suffisant dans les circonstances de l’espèce pour Schwartz v. Unique, assurances générales inc. Per curiam 195

constituer un rachat « pour le profit » des propriétaires — Retour de l’immeuble dans le patrimoine des propriétaires originaux et sa vente subséquente serviraient ultimement a` réduire la dette des propriétaires envers l’assureur — Retour de la propriété en soi ne causait aucun préjudice au propriétaire et cela satisfaisait l’exigence a` laquelle référait l’expression « au nom et pour le profit seulement » de l’art. 533 de la Loi — Droits de l’assureur découlaient de la loi, nommément l’art. 533 de la Loi, et non d’un jugement — Par conséquent, les conditions requises par la loi permettant a` l’assureur d’exercer le droit de rachat etaient´ satisfaites en l’espèce. Cases considered: Clough c. Shefford (Comté) (1943), [1944] B.R. 39, 1943 CarswellQue 87 (Que. K.B.) — referred to Clough c. Shefford (Comté) (1944), [1944] S.C.R. 280, 1944 CarswellQue 25 (S.C.C.) — referred to Laval (Ville) c. Marquis (1979), [1979] C.A. 408, 1979 CarswellQue 688 (C.A. Que.) — referred to Laval (Ville) c. Marquis (1982), [1982] C.S. 755, 1982 CarswellQue 759 (C.S. Que.) — referred to Statutes considered: Cités et villes, Loi sur les, RLRQ, c. C-19 art. 533 — considered Code civil du Québec, L.Q. 1991, c. 64 art. 1397 — considered

APPEAL from decision reported at L’Unique assurances g´en´erales c. Schwartz (2014), EYB 2014-231606, 2014 QCCS 39, 2014 CarswellQue 104 (C.S. Que.), allowing insurer to redeem immovable sold by municipality for unpaid taxes.

Mtre Johannie Mongeau, Mtre Denis Bouchard, for Appellant Mtre Claudia Vaillancourt, Mtre Michel St-Pierre, for Respondent Mtre Michael Hollander, for Impleaded Parties

Per curiam:

1 Herman Schwartz has appealed a judgment of the Superior Court, District of Terrebonne (the Honourable Stéphane Sansfa¸con), rendered January 13, 2014, which granted L’Unique Assurances Générales inc.’s motion seeking a declaration that it be authorized to redeem an immovable sold for unpaid taxes by the City of Boisbriand. 2 The trial judge held that the respondent, as a person other than the owner of the immovable, could avail itself of the right to redeem the 196 REAL PROPERTY REPORTS 52 R.P.R. (5th)

property pursuant to section 533 of the City and Towns Act.1 He rejected the appellant’s argument that the redemption was not truly “for the benefit / pour le profit” of the owner at the time of the adjudication of the property within the meaning of that expression in s. 533...... 3 The appellant advances three grounds of appeal. 4 It should immediately be said that the owners of the immovable – a Mr. David Hochhauser and Ms. Fiege Hochhauser – are not parties to the action and much of the appellant’s argument appears to take the form of pleadings made in their stead, i.e. prohibited plaidoyer pour autrui. How- ever irregular this might be, this situation need not be commented on further: even if one were to consider the pleadings by the appellant as procedurally valid, none of the three substantive arguments raised in support of the appeal has merit. 5 First, the appellant reiterates the argument dismissed by the judge at trial that the respondent could not exercise the right of redemption in the name and for the benefit of the owner pursuant to s. 533 CTA because the transaction was not “profitable”, in a financial sense, for the owners. The appellant is of the view that this profitability must be demonstrated by a person, like the respondent, who is not an owner as a pre-condition to his or her exercise of the statutory right of redemption. 6 The appellant is mistaken. 7 The judge was correct in deciding that, for the purposes of s. 533 CTA, the return of the right of ownership of the immovable to the owners’ patrimony here was sufficient in the circumstances to constitute

1CQLR, c C-19. Section 533 CTA provides: 533. Toute personne autorisée ou non peut, a` moins qu’un acte de vente n’ait et´´ e consenti en vertu du deuxième alinéa de l’article 525, retraire cet immeuble de la même manière, mais au nom et pour le profit seulement de celui qui en etait´ le propriétaire au temps de l’adjudication. 533. Any person, whether authorized or not, may, unless a deed of sale has been effected under the second paragraph of section 525, redeem such immovable in the same manner, but only in the name and for the benefit of the person who was the owner thereof at the time of the adjudication. Schwartz v. Unique, assurances générales inc. Per curiam 197

redemption “for the benefit / pour le profit” of Mr. and Ms. Hochhauser.2 Indeed, as Mayrand, J.A. observed in Laval (Ville) c. Marquis,3 both the person redeeming the immovable (the retrayant, or redeemer) and the owner can profit from the operation. 8 Where the redeemer is not the owner, the expression “only in the name and for the benefit of the person who was the owner at the time of the adjudication” in s. 533 does not preclude the redeemer from drawing an advantage from the exercise of the statutory right of redemption. 9 On the facts here, the return of the immovable to the patrimony of the original owners and its subsequent sale to 9250-1998 Qu´ebec inc. will ultimately serve to reduce the owners’ debt by $79,500 to the respondent. While that amount is less than the capital amount of $85,000 that the owners would have received as a result of the sale for taxes, it cannot be said that the redemption took place in a manner that was not in the owners’ name and for their benefit. This is not a circumstance where the return of the property in itself results in harm to the owner. The return of the right of ownership in the immovable to the patrimony of the owners meets the requirement of “only in the name and for the benefit / au nom et pour le profit seulement” set forth in s. 533 on the facts of this case.4 10 Secondly, the appellant argues that the respondent has no interest to exercise the right of redemption under s. 533 CTA on the basis of the judgments authorizing it to sell the property privately. 11 The argument is without merit. The rights of the respondent arise by statute, specifically s. 533 CTA, and not by judgment. The statutory conditions allowing the respondent to exercise a right of redemption were satisfied here.

2See Clough c. Shefford (Comt´e) (1943), [1944] B.R. 39 (Que. K.B.), p. 48, confirmed by [1944] S.C.R. 280 (S.C.C.); Laval (Ville) c. Marquis, [1982] C.S. 755 (C.S. Que.), AZ-82021363, p. 16 et 18. 3Laval (Ville) c. Marquis, [1979] C.A. 408 (C.A. Que.), AZ-79011176, p. 5. 4In this connection, the trial judge observed at para. [35] of his reasons that the English text of s. 533 CTA, is a clearer expression of legislative intent than the French, echoing similar remarks made by Mayrand, J.A. in Laval (Ville de), ibid., p. 5-6. We agree that the English text is particularly helpful in discerning the shared meaning of the French and English versions of s. 533 CTA. 198 REAL PROPERTY REPORTS 52 R.P.R. (5th)

12 Thirdly, the appellant invokes article 1397 C.C.Q. to suggest that the presence of a contract made in violation of a promise to contract renders the exercise of the right of redemption by the respondents invalid. 13 The argument is also without merit. 14 The respondent’s rights arise not under contract but by statute, based on the exercise of a right of redemption in s. 533 CTA. These statutory rights are in no way impugned by article 1397 C.C.Q. which provision, on its face, plainly has no application here. The sale for unpaid taxes, which served to prevent the realization of the promise here, is not a contract made in violation of a promise to contract within the meaning of article 1397.

FOR THE AFOREMENTIONED REASONS, the Court: 15 DISMISSES the appeal, with costs. Appeal dismissed. Skyline Agriculture Financial Corp. v. Saskatchewan 199

[Indexed as: Skyline Agriculture Financial Corp. v. Saskatchewan (Farm Land Security Board)] In the Matter of The Saskatchewan Farm Security Act, SS 1988-89 c S-17.1 Skyline Agriculture Financial Corp., Skyline Agriculture Lending Corp., Skyline Agriculture Stream Corp., Skyline Agriculture Capital Corp., Applicants and The Farm Land Security Board, Respondent Saskatchewan Court of Queen’s Bench Docket: Regina QBG 2089/14 2015 SKQB 82 Layh J. Judgment: March 26, 2015 Real property –––– Interests in real property — Miscellaneous –––– Two sets of corporations implemented series of transactions — One set of corporations were appellants, who were prospective international investors with investment plan — Respondent board found that investors did not satisfy residency requirements for persons entitled to have land holding under s. 76(e) of Saskatchewan Farm Security Act (“Act”) — Other set of corporations represented farm operators and land owners and they satisfied necessary residency requirements to have land holding under Pt. VI of Act — Qualifying corporation decided which Saskatchewan farm land it would purchase and investors lent it principal amount — Loan was secured by mortgage on purchased land and was supported by guarantee and general security agreement — Parties also entered into swap agreement and derivative agreement — Based on series of transactions, investors applied to board for order pursuant s. 94(2) of Act, which permitted board to order person with land holding contravening Act to comply with Act by reducing land holding — Board found that investors held “land holding” as defined by s. 76(e) of Act and issued order directing investors to dispose of interests in land — Investors successfully appealed — Board issued new order that again ordered investors to reduce its land holdings — Investors appealed — Appeal dismissed — Standard of review was reasonableness — Board’s interpretation of its governing statutory provision was reasonable and within range of possible acceptable outcomes that were defensible in respect of facts and law — Board offered several reasons for its contextual interpretation of land holding — Board gave detailed analysis of reasons for concluding that land holding could not be as restrictively defined as investors suggested — Board defined land holding in 200 REAL PROPERTY REPORTS 52 R.P.R. (5th) purposive way — Board gave primacy to substance of structure and not to form — Board’s decision was reasonable. Cases considered by Layh J.: A.T.A. v. Alberta (Information & Privacy Commissioner) (2011), 339 D.L.R. (4th) 428, 2011 CarswellAlta 2068, 2011 CarswellAlta 2069, 2011 SCC 61, (sub nom. Alberta Teachers’ Association v. Information & Privacy Commissioner (Alta.)) 424 N.R. 70, 52 Alta. L.R. (5th) 1, 28 Admin. L.R. (5th) 177, [2012] 2 W.W.R. 434, (sub nom. Alberta (Information & Privacy Commissioner) v. Alberta Teachers’ Association) [2011] 3 S.C.R. 654, [2011] S.C.J. No. 61, (sub nom. Alberta Teachers’ Association v. Information and Privacy Commissioner) 519 A.R. 1, (sub nom. Alberta Teachers’ Association v. Information and Privacy Commissioner) 539 W.A.C. 1 (S.C.C.) — considered Agraira v. Canada (Minister of Public Safety and Emergency Preparedness) (2013), 360 D.L.R. (4th) 411, 2013 CarswellNat 1983, 2013 CarswellNat 1984, 2013 SCC 36, 52 Admin. L.R. (5th) 183, 16 Imm. L.R. (4th) 173, [2013] 2 S.C.R. 559, 446 N.R. 65, [2013] S.C.J. No. 36 (S.C.C.) — followed British Columbia (Securities Commission) v. McLean (2013), (sub nom. McLean v. British Columbia Securities Commission) 347 B.C.A.C. 1, (sub nom. McLean v. British Columbia Securities Commission) 593 W.A.C. 1, 64 Ad- min. L.R. (5th) 237, 2013 CarswellBC 3618, 2013 CarswellBC 3619, 2013 SCC 67, [2014] 2 W.W.R. 415, 366 D.L.R. (4th) 30, (sub nom. McLean v. British Columbia Securities Commission) 452 N.R. 340, 53 B.C.L.R. (5th) 1, (sub nom. McLean v. British Columbia (Securities Commission)) [2013] 3 S.C.R. 895, [2013] S.C.J. No. 67 (S.C.C.) — considered Campbell v. Saskatchewan (Workers’ Compensation Board) (2012), 2012 Car- swellSask 348, 2012 SKCA 56, 35 Admin. L.R. (5th) 305, [2012] 8 W.W.R. 1, 393 Sask. R. 246, [2012] S.J. No. 318 (Sask. C.A.) — considered Commissioner of Competition v. CCS Corp. (2015), 380 D.L.R. (4th) 381, 2015 SCC 3, 2015 CSC 3, 2015 CarswellNat 32, 2015 CarswellNat 33, 79 Admin. L.R. (5th) 1 (S.C.C.) — considered Guinn v. Manitoba (2009), 466 W.A.C. 57, 245 Man. R. (2d) 57, 2009 Car- swellMan 373, 2009 MBCA 82, [2009] 9 W.W.R. 1, 98 Admin. L.R. (4th) 68, [2009] M.J. No. 279 (Man. C.A.) — considered Kivela v. C.U.P.E., Local 21 (2006), 55 C.H.R.R. D/403, 2006 SKCA 38, 2006 CarswellSask 162, 275 Sask. R. 271, 365 W.A.C. 271, 266 D.L.R. (4th) 319, [2006] S.J. No. 195 (Sask. C.A.) — followed N.L.N.U. v. Newfoundland & Labrador (Treasury Board) (2011), 2011 Car- swellNfld 414, 2011 CarswellNfld 415, 2011 SCC 62, 38 Admin. L.R. (5th) 255, (sub nom. Nfld. and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board)) 2011 C.L.L.C. 220-008, (sub nom. Newfoundland & Labrador Nurses’ Union v. Newfoundland & Labrador (Treasury Board)) 424 N.R. 220, 340 D.L.R. (4th) 17, D.T.E. 2012T-7, (sub Skyline Agriculture Financial Corp. v. Saskatchewan 201

nom. Newfoundland & Labrador Nurses’ Union v. Newfoundland & Labrador (Treasury Board)) [2011] 3 S.C.R. 708, 213 L.A.C. (4th) 95, 97 C.C.E.L. (3d) 199, (sub nom. Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board)) 986 A.P.R. 340, (sub nom. Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board)) 317 Nfld. & P.E.I.R. 340, [2011] S.C.J. No. 62 (S.C.C.) — considered New Brunswick (Board of Management) v. Dunsmuir (2008), 372 N.R. 1, 69 Admin. L.R. (4th) 1, 69 Imm. L.R. (3d) 1, (sub nom. Dunsmuir v. New Brunswick) [2008] 1 S.C.R. 190, 844 A.P.R. 1, 2008 CSC 9, (sub nom. Dunsmuir v. New Brunswick) 2008 C.L.L.C. 220-020, D.T.E. 2008T-223, 329 N.B.R. (2d) 1, (sub nom. Dunsmuir v. New Brunswick) 170 L.A.C. (4th) 1, (sub nom. Dunsmuir v. New Brunswick) 291 D.L.R. (4th) 577, 2008 Car- swellNB 124, 2008 CarswellNB 125, 2008 SCC 9, 64 C.C.E.L. (3d) 1, (sub nom. Dunsmuir v. New Brunswick) 95 L.C.R. 65, [2008] S.C.J. No. 9, [2008] A.C.S. No. 9 (S.C.C.) — followed Q. v. College of Physicians & Surgeons (British Columbia) (2003), 2003 SCC 19, 2003 CarswellBC 713, 2003 CarswellBC 743, 11 B.C.L.R. (4th) 1, 2003 CSC 19, 223 D.L.R. (4th) 599, 48 Admin. L.R. (3d) 1, (sub nom. Dr. Q., Re) 302 N.R. 34, [2003] 5 W.W.R. 1, (sub nom. Dr. Q. v. College of Physicians & Surgeons of British Columbia) [2003] 1 S.C.R. 226, (sub nom. Dr. Q., Re) 179 B.C.A.C. 170, (sub nom. Dr. Q., Re) 295 W.A.C. 170, [2003] S.C.J. No. 18, REJB 2003-39403 (S.C.C.) — considered Rizzo & Rizzo Shoes Ltd., Re (1998), 1998 CarswellOnt 1, 1998 CarswellOnt 2, 50 C.B.R. (3d) 163, [1998] 1 S.C.R. 27, 33 C.C.E.L. (2d) 173, 154 D.L.R. (4th) 193, 36 O.R. (3d) 418 (headnote only), (sub nom. Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re) 221 N.R. 241, (sub nom. Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re) 106 O.A.C. 1, (sub nom. Adrien v. Ontario Ministry of La- bour) 98 C.L.L.C. 210-006, 36 O.R. (3d) 418 (note), 36 O.R. (3d) 418, [1998] S.C.J. No. 2 (S.C.C.) — followed Shields v. Saskatchewan (Farm Land Security Board) (2010), 2010 Carswell- Sask 313, 2010 SKQB 170 (Sask. Q.B.) — considered UFCW, Local 1400 v. Affinity Credit Union (2015), 2015 SKCA 14, 2015 Car- swellSask 112, 381 D.L.R. (4th) 530 (Sask. C.A.) — considered Statutes considered: Auctioneers Act, R.S.S. 1978, c. A-34 Generally — referred to Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 Generally — referred to Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd Supp.), Pt. I Generally — referred to 202 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Farm Lands Ownership Act, R.S.M. 1987, c. F35 s. 1(1) “farm land” — considered Farm Land Security Act, S.S. 1984-85-86, c. F-8.01 Generally — referred to Farm Security Act, S.S. 1944, c. 30 (2nd Sess.) Generally — referred to Judgments Act, R.S.M. 1987, c. J10 Generally — referred to Land Titles Act, 2000, S.S. 2000, c. L-5.1 Generally — referred to Motor Dealers Act, R.S.S. 1978, c. M-22 Generally — referred to Public Inquiries Act, 2013, S.S. 2013, c. P-38.01 Generally — referred to Real Property Act, R.S.M. 1988, c. R30 Generally — referred to Registry Act, R.S.M. 1987, c. R50 Generally — referred to Saskatchewan Farm Ownership Act, 1974, S.S. 1973-74, c. 98 Generally — referred to Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1 Generally — referred to Pt. II — referred to Pt. III — referred to Pt. VI — referred to s. 76(e) “land holding” — considered s. 76(e) “land holding” (i)-(v) — referred to s. 76(e) “land holding” (iii) — considered s. 76(e) “land holding” (iii)(C) — considered s. 76(e) “land holding” (vi) — considered s. 88(4) — considered s. 89 — considered s. 90 — considered s. 91 — considered s. 92 — considered s. 94(2) — considered s. 94(3) — considered s. 94(4) — considered s. 95(1) — considered s. 95(2) — considered s. 95(3) — considered s. 97 — referred to Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 203

Securities Act, R.S.B.C. 1996, c. 418 Generally — referred to Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01 Generally — referred to s. 46 — considered

APPEAL by investors from decision of Board which issued new order that ordered investors to reduce land holdings.

M. Milani, Q.C., E. Kleisinger, for Applicants J. Ehmann, Q.C., K. Willet, for Respondent

Layh J.: Introduction 1 This appeal brings into sharp focus two competing forces: international investors seeking to gain some measure of access to Saskatche- wan’s agricultural scene versus legislation designed to protect ownership of Saskatchewan farm land primarily for Canadian residents and citizens. The appellants are prospective international investors with an investment plan they believe does not offend the land holding requirements of The Saskatchewan Farm Security Act, SS 1988-89, c S-17.1 (SFSA). The Farm Land Security Board (FLSB) has ruled otherwise. The appellants have appealed the FLSB’s decision.

The Facts 2 The transactions germane to this appeal are complicated, but not in issue. Essentially, two sets of corporations have implemented a series of transactions. The FLSB decided one set of corporations, the investors, do not satisfy the residency requirements for persons entitled to have a “land holding” under s. 76(e) of the SFSA. The other set of corporations represents farm operators and land owners who, no one disagrees, satisfy the necessary residency requirements to have a “land holding” under Part VI of the SFSA. 3 The first set of corporations appeals the FLSB’s decision. They are: Skyline Agriculture Financial Corp. [Skyline ParentCo] and its subsidiaries, Skyline Agriculture Lending Corp. [Skyline Lending], Skyline Agri- culture Stream Corp. [Skyline Stream] and Skyline Agriculture Capital Corp. [Skyline Capital] (collectively, the Skyline Entities or Skyline). Skyline ParentCo seeks investment from institutional investors. The funds raised by Skyline ParentCo through its private share offering will 204 REAL PROPERTY REPORTS 52 R.P.R. (5th)

capitalize Skyline ParentCo’s subsidiaries, and provide financing for Saskatchewan farm operations (owned and operated by Canadian or Ca- nadian-owned entities). Diagrammatically, this is how Skyline Entities are organized:

4 Counterparts to the Skyline Entities, representing the qualifying farm operators and owners, are three wholly owned Canadian corporations: FarmParentCo and its subsidiary, ManagementCo, and, in turn, its subsidiary, OpCo. To bring a specific example of the proposed structure before the FLSB, 675593 Manitoba Ltd. was incorporated as the FarmParentCo. Its shareholders are Canadian citizens. FarmParentCo, in turn, is the sole shareholder of its subsidiary, 6935118 Manitoba Inc., incorporated as the ManagementCo. Finally, 6925134 Manitoba Inc. was incorporated as the OpCo. Its shares are solely owned by Manage- mentCo. Collectively the three corporations are referred to as the Farm- land Entities. To complete the real scenario, OpCo purchased 15.86 acres of Saskatchewan farm land in the R. M. of Invermay on July 8, 2014 [the OpCo Land]. 5 Diagrammatically, the Farmland Entities are shown as follows:

6 The land purchase by OpCo set in motion a series of transactions ge- nerically described as follows.

The Loan 7 After an OpCo determines what Saskatchewan farm land it will purchase and the amount of the purchase price it wishes to finance, Sky- line Lending lends it the principal amount and, in some cases, improvements [the Loan]. The Loan is secured by a mortgage on the purchased land [the Mortgage]. The Loan is due and payable if the OpCo sells the Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 205

land. The OpCo may prepay the Loan at any time. If default occurs, the amount secured by the Mortgage becomes due and payable, permitting Skyline Lending to exercise the usual remedies of a mortgagee. 8 The Loan is supported by a Guarantee and General Security Agree- ment [GSA] from ManagementCo. The GSA grants Skyline Lending a security interest in all personal property of ManagementCo, other than the shares held by ManagementCo in any OpCo. Upon default by OpCo, Skyline Lending may sue ManagementCo under the Guarantee and enforce the GSA granted by ManagementCo. 9 Diagrammatically, the Loan and Mortgage transaction is represented as follows:

The Swap Agreement 10 The next transaction is a “swap” agreement [Swap]. Under the Swap, OpCo pays to Skyline Stream a monthly payment of a percentage of its gross farming revenues during the preceding month in exchange for a payment from Skyline Stream equal to the fixed interest payment that OpCo must pay to Skyline Lending under the Mortgage. 11 OpCo’s obligations to Skyline Stream under the Swap are secured by a GSA covering all personal property. ManagementCo and FarmParentCo guarantee the OpCo’s obligations under the Swap. How- ever, Skyline Stream does not receive an interest in OpCo’s land. If default occurs under the Swap, the non-defaulting party may terminate the Swap and a single close-out amount from the defaulting party becomes due. 12 The Swap agreement can be represented as follows: 206 REAL PROPERTY REPORTS 52 R.P.R. (5th)

The Derivative Agreement 13 The next layered transaction is a Derivative Agreement between ManagementCo and Skyline Capital. The Derivative refers to an index based on a basket of Saskatchewan farm land, including land owned by the subsidiary OpCos of ManagementCo. The index is pegged at the beginning of the derivative period under a separate agreement. The index rises in value if the aggregate value of the farm land in the basket rises, and decreases if the value decreases. If, at the end of the Derivative’s term (which can occur by effluxion of time or following default), the index decreases in value, ManagementCo receives a payment from Sky- line Capital. Conversely, if the index increases in value, Skyline Capital receives a payment. 14 ManagementCo’s obligations under the Derivative are secured by a guarantee by FarmParentCo, as well as a GSA from ManagementCo and FarmParentCo, creating a security interest in all personal property of ManagementCo and FarmParentCo, respectively, other than the shares held by ManagementCo in any OpCo. Again, this share carve-out prevents Skyline Capital from holding an indirect interest in any OpCo property. 15 The OpCo does not guarantee ManagementCo’s obligations under the Derivative Agreement. Nor does the OpCo Mortgage secure the Deriva- tive. No contractual nexus exists between the OpCo and Skyline Capital. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 207

The Derivative Agreement expressly states that no interest is created in land. In the event of default under the Derivative Agreement the non- defaulting party may elect to terminate the Derivative whereupon a single close out amount is payable to the non-defaulting party based on a valuation of the lands in the index at that time. 16 Diagrammatically, the Derivative Agreement is represented as follows:

Application to the FLSB 17 Based on this series of transactions Skyline applied to the FLSB for an order pursuant to s. 94(2) of the SFSA, a provision permitting the FLSB to order a person with a land holding contravening the SFSA to comply with the Act by reducing the land holding. After a hearing on August 7, 2014 the FLSB found that Skyline Entities held a “land holding” as defined by s. 76(e) of the SFSA and issued an order on August 29, 2014 directing Skyline ParentCo to dispose of its interests in the OpCo Land by December 31, 2014. 18 Skyline Entities appealed the order, filing a brief of law far exceeding in length and detail the Reasons for Decision provided by the FLSB. Af- ter hearing the appeals on October 23, 2014, I set aside the FLSB order and provided a fiat that read as follows: In light of my determination that the submissions by the Farm Land Security Board (the “Board”) in this appeal overreach the role that should be accorded to a tribunal as set out by the Saskatchewan Court of Appeal in Casavant v The Saskatchewan Teachers Federa- tion, 2005 SKCA 52, 262 Sask R 195, the incompleteness of the Board’s obligation to provide transparent and justifiable reasons in support of its order, and the apparent need to consider and apply more fully the interpretation of certain provisions of The Saskatche- 208 REAL PROPERTY REPORTS 52 R.P.R. (5th)

wan Farm Security Act, SS 1988-1989 c S-17.1 (the “Act”), the court has chosen to exercise its power under s. 97(1)(3) of the Act and refer the matter back to the Board for a further consideration to address those concerns and deficiencies described above and to issue a further order. Skyline Entities provided further documentation as requested by the FLSB and after a new hearing on November 17, 2014, the FLSB issued a new order and released reasons on December 11, 2014, again ordering Skyline to reduce its land holdings. The Skyline Entities now appeal that order to this court.

The Issues 1. What standard of review should this court apply in assessing the FLSB’s decision — reasonableness or correctness? 2. Does the decision of the FLSB withstand the application of the appropriate standard?

Relevant Legislation 19 Both parties agree that pivotal to this appeal is the FLSB’s interpretation of the term “land holding” which proscribes the nature of restricted interests in Saskatchewan farm land. Section 76 of the SFSA states, for the purpose of Part VI of the SFSA: (e) “land holding” includes: (i) farm land; (ii) any interest in farm land held under an agreement to purchase or lease; (iii) any interest in farm land held under any agreement that may directly or indirectly: (A) result in vesting of title to farm land; (B) confer the right to possession of farm land; or (C) confer any right or control ordinarily accruing to the owner of farm land; (iv) those kinds and types of shares, that may be designated by the Lieutenant Governor in Council, legally or beneficially owned in a corporation having a land holding; (v) for the purposes of sections 86, 94 and 95 and clause 100(b), any interest in a limited partnership where that limited partnership has a land holding; Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 209

(vi) any interest in farm land other than that described in subclauses (i) to (v); (vii) any conservation easement, or combination of contiguous conservation easements, within the meaning of The Conservation Easements Act respecting farm land of one quarter section or greater; but does not include farm land or any interest in farm land held by way of security for a debt or other obligation;

Legal Analysis Standard of Review The Positions of the Parties 20 Not surprisingly, Skyline argues that the standard of review is the stringent standard of correctness; the FLSB argues in favour of the more deferential standard of reasonableness. Each has marshalled and interpreted the case law in support of its position. Skyline states its position at para. 70 of its brief of law: ... [a]s a consequence of the language of section 97 of the SFSA, the issues [sic] the subject of this appeal, the lack of legal expertise of the Board, the errors made by the Board, and the limited deference due to the Board, the standard of review is correctness. 21 In contrast, the FLSB states its position at para. 40: The appropriate standard of review is reasonableness. This appeal concerns the interpretation of the term “land holding” within the context of the SFSA... As stated in Dunsmuir and Rogers Communica- tions, the interpretation and application of the Board’s home statute attracts review on the reasonableness standard. Thus, unless the Ap- plicants establish that the Order falls outside “the range of possible, acceptable outcomes which are defensible in respect of the facts and law”, the court must defer to the Board’s decision. 22 Although Skyline advocates for a correctness standard of review its grounds of appeal imply that even under a reasonableness test the FLSB has missed the expected mark. For example, Skyline states that the FLSB “erred in applying reasoning that ignores the principles of corporate law...,” and “erred by misdirecting itself in respect of the evidence.” These grounds of appeal suggest that Skyline has not abandoned its argument that even under the standard of reasonableness, the FLSB has erred. 210 REAL PROPERTY REPORTS 52 R.P.R. (5th)

The Dunsmuir Analysis 23 In determining the standard of review, Canadian courts invariably take their starting instructions from the Supreme Court’s decision in New Brunswick (Board of Management) v. Dunsmuir, 2008 SCC 9, [2008] 1 S.C.R. 190 (S.C.C.) [Dunsmuir] when the court moved from 20 years of the “pragmatic and functional analysis” to a revamped “standard of review” analysis. The new approach was to obviate the previous need to categorize review into a three-hued spectrum of review: correctness, “patent unreasonableness” and an intermediate “reasonableness simplic- iter,” and move to correctness and reasonableness. The Court then laid out a two-step inquiry to determine the appropriate standard of review: [62] In summary, the process of judicial review involves two steps. First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review. ... [64] The analysis must be contextual. As mentioned above, it is dependent on the application of a number of relevant factors, including: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by interpretation of enabling legislation; (3) the nature of the question at issue, and; (4) the expertise of the tribunal. In many cases, it will not be necessary to consider all of the factors, as some of them may be determinative in the application of the reasonableness standard in a specific case. 24 As the first step, reviewing courts must ascertain whether existing jurisprudence has previously determined “in a satisfactory manner” the degree of deference to be accorded “with regard to a particular category of question.” So, if a court has previously stated a standard of review for that tribunal, respecting that question, then further inquiry is unnecessary — the standard of review has been set. One might say that the first step is little more than the Court reiterating the principle of stare decisis and judicial common sense. If the first step yields no jurisprudential direction, then the second step of the analysis applies, calling for a four- factored consideration to determine the applicable standard of review. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 211

Step One — Prior Jurisprudence Determining Standard of Review 25 In the first inquiry both parties refer to Guinn v. Manitoba, 2009 MBCA 82, [2009] 9 W.W.R. 1 (Man. C.A.) [Guinn], a post-Dunsmuir decision of the Manitoba Court of Appeal. Guinn, similar to this appeal, dealt with a tribunal’s decision to restrict the “foreign” ownership of “farm land” in Manitoba. Mr. Guinn, an American citizen, argued that the marginal land he purchased was not “farm land” because it was incapable of being commercially farmed. The Farm Lands Ownership Act, CCSM c F35 specifically defined “farm land” as land “reasonably capable of being used for farming.” “Farming,” in turn, included, in addition to a specific list of usual farm activities, “...any activity undertaken to produce agricultural products.” 26 The Manitoba Court of Appeal found that Justice Bryk of the lower court had correctly determined the standard of review as “reasonableness.” However, Justice Bryk erred when he mistakenly thought that since he had the same information before him as the tribunal, he could substitute his decision for the tribunal’s decision instead of satisfying himself whether the evidence reasonably supported the tribunal’s conclusion. Accordingly, although the Court of Appeal disagreed with Justice Bryk’s conclusion, it agreed with his statement that the appropriate standard of review was reasonableness. 27 Skyline argues that the interpretation of “land holding” and “interest in farm land” is of such central importance to the legal system that it is beyond the expertise of the FLSB. Accordingly, it says, although Justice Bryk’s interpretation of the term “farm land” attracted deference on appeal based on a standard of reasonableness, that standard is not appropriate in this appeal. In my view where one tribunal is required to give meaning to the term “farm land,” while another is required to give meaning to the term “land holding,” the distinction is one without a meaning- ful difference. Both should attract the same standard of review. 28 In Guinn, Bryk J. referred to the Dunsmuir four-factored analysis and stated: [23] Burnside [counsel for Guinn] points out that by statute, the Board is granted jurisdiction only over farm land in Manitoba, so its jurisdiction is contingent upon the land being farm land. ... This court is urged to accept that the applicable standard of review is that of correctness and that this court should not show any deference to the decision of the Board. It is asked to undertake its own analysis in order to decide whether it agrees with the determination of the previ- 212 REAL PROPERTY REPORTS 52 R.P.R. (5th)

ous decision maker. If it does not, the court is entitled to substitute its own view. Burnside points to s. 16(1) of the Act which enables the court to “make such order as to him seems just.” [24] Questions of jurisdiction arise when the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter. Burnside argues that is precisely the situation that exists here. He says the Board must determine whether or not the land with which it is concerned falls within the definition of farm land. If it does not, he says the Board has no jurisdiction to deal with it. [25] Based on my reading of the Act, and specifically s. 8, the primary function of the Board is to determine whether or not any person intends to or has acquired an interest in farm land in contravention of the Act, that is, whether they are a person qualified to own an interest in farm land in the Province of Manitoba. An ancillary function in that process is to determine whether or not the land in question falls within the definition of farm land as provided in the Act...... [43] I find the standard of reasonableness rather than the standard of correctness is the appropriate standard to be applied here. 29 Justice Steel of the Manitoba Court of Appeal, reciting Justice Bryk’s finding of the standard of review as “reasonableness,” succinctly stated, “I agree with him.” 30 Although this decision from our neighbouring province’s Court of Appeal does not bind a Saskatchewan court, it has persuasive authority. And I see many parallels between the decision in Guinn and the appeal at hand: 1. In Guinn the tribunal had to interpret the meaning of a defined term “farm land” — while in this appeal the tribunal must interpret a similar term, “land holding.” If interpreting “farm land” did not invoke a “correctness” standard, then, similarly, interpreting “land holding” should not either. 2. In this appeal, Skyline argues that the interpretation “land holding” and its inclusive example under s. 76(e) of “any interest in farm land...” is a matter of “central importance to the legal system” and its meaning should be kept consistent with the phrase “interest in land” used in other Saskatchewan legislation, specifically The Land Titles Act, 2000, SS 2000, c L-5.1 [The Land Titles Act] and The Queen’s Bench Act, 1988, SS 1988, c Q-1.01 [The Queen’s Bench Act], a principle of statutory interpretation called Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 213

“horizontal coherence.” However, neither counsel for Skyline nor the FLSB could find an instance of the term “land holding” being used in any other Saskatchewan legislation (indeed, anywhere in Canada) other than the SFSA. And although The Land Titles Act uses the phrase “interest in land,” it does not use the phrase “interest in farm land” as used in ss. 76(e)(iii) of the SFSA. By comparison, the operative term in Guinn — “farm land” — is used (without specific definition) in several other Manitoba statutes, The Real Property Act, CCSM c R30, The Judgments Act, CCSM c J10 and The Registry Act, CCSM c R50 with a much greater like- lihood of potential mischief if horizontal coherence is a principle that binds administrative tribunals. The Manitoba courts in Guinn apparently saw no reason to temper the tribunal’s reasonable interpretation of “farm land” by applying a correctness standard to ensure consistency with the interpretation of the phrase “farm land” as used in other Manitoba statutes. On the contrary, they permitted the tribunal to interpret “farm land” in a manner consistent with its expertise and its unique legislative mandate. 3. Neither the Manitoba statute in Guinn nor the SFSA contain a privative clause, a fact that suggests less deference to the tribunal’s decision. Justice Steel in Guinn offered that while the first factor enunciated in Dunsmuir, the lack of a privative clause, should “point to a standard of correctness,” he found that “other factors indicate that reasonableness is the more appropriate standard to be applied.” (para. 36.) 4. As well, the governing statutes in both Saskatchewan and Mani- toba contain a right of appeal so that both jurisdictions are equally subject to the general view (although not expressly articulated in Dunsmuir) that a right of appeal may be seen as a counter-point to a privative clause, inviting a greater measure of curial review. However, a statutory right of appeal is no more determinative of the standard of review than the presence or absence of a privative clause. They are considerations, a part of the contextual analysis set out in Dunsmuir, but they are not determinative of the standard of review. (See following discussion at paras. 63 to 67) 31 Guinn has been cited as authority for the standard of review in Sas- katchewan respecting a FLSB decision. In Shields v. Saskatchewan (Farm Land Security Board), 2010 SKQB 170 (Sask. Q.B.) [Shields] Justice Malone, relying upon Guinn, expressly accepting the standard of 214 REAL PROPERTY REPORTS 52 R.P.R. (5th)

reasonableness in affirming a decision of the FLSB. However, in Shields counsel had agreed that reasonableness was the appropriate standard of review when the question was whether to allow the land owner additional time to establish residency in Saskatchewan. Shields is unhelpful in this appeal since Dunsmuir requires a prior judicial determination of standard of review by that tribunal’s decision on that question. Since Shields did not involve statutory interpretation of a pivotal term as in the instance appeal, the court’s choice in Shields to use the reasonableness standard does not apply to this appeal. At most, Shields shows a willingness of a Saskatchewan court to accept a measure of precedential authority from another province’s appellate court. 32 In summary, while this court is not strictly bound by the decision in Guinn, the parity of issues between Guinn and this appeal are compelling. The roles and the question before each tribunal are so similar that I am convinced that the standard of review in this appeal should be, as it was in Guinn, reasonableness. 33 However, in the event that I am incorrect in this assessment, I will consider the second step of the Dunsmuir analysis, remaining cognizant that both determining and applying the appropriate standard of review have become somewhat clouded since Dunsmuir.

Step Two — A Four-Factored Analysis or Rebuttable Presumption of Reasonableness? 34 Absent an earlier judicial determination of the standard of view, Dun- smuir offers these factors — presence of a privative clause, the purpose of the tribunal, the nature of the legal question, and the tribunal’s expertise, “considered together” — to consider in determining the standard of review. However, reviewing Supreme Court decisions and learned authors’ writings post Dunsmuir has prompted me to draw two conclusions: 1) the Supreme Court continues to struggle to provide certain and pre- dictable principles to explain the applicable standard of review; and 2) the Supreme Court has infrequently referred to the four-factored Dun- smuir analysis and, instead, has developed certain rebuttable presumptions which, if applicable, seemingly obviate the need to move to the second, Dunsmuir analysis. 35 Respecting the first conclusion and notwithstanding the Supreme Court’s continuing leadership in setting the standards of judicial review, locating the goalposts of correctness and reasonableness has remained an elusive target for those obliged to follow this leadership. The Supreme Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 215

Court, itself, has acknowledged that its efforts to bring clarity to the standard of review analysis are dogged with different views, obliging it to continually hone and reshape standard of review tests. In 2013, Justice Moldaver, in British Columbia (Securities Commission) v. McLean, 2013 SCC 67, [2013] 3 S.C.R. 895 (S.C.C.) [McLean], recognizing the continuing debate over the standard of review on his Court, stated the Court’s need to bring “predictability and clarity” to that inquiry: [20] Before turning to my analysis, I pause to note that the standard of review debate is one that generates strong opinions on all sides, especially in the recent jurisprudence of this Court. However, the analysis that follows is based on this Court’s existing jurisprudence — and it is designed to bring a measure of predictability and clarity to that framework. 36 That hoped-for clarity has remained elusive. Recently, in Commissioner of Competition v. CCS Corp., 2015 SCC 3 (S.C.C.) [Tervita], Justice Abella pointedly commented that the Court had back- tracked, abandoning an earlier established test of the standard of review. In Tervita a particularly phrased right of appeal prompted the court to find correctness as the standard of review when it had previously sig- naled that a right of appeal did not dislodge the presumption of reasonableness when a tribunal was interpreting its own statute. Justice Abella strongly disagreed with the correctness standard of review chosen by the majority of her peers. She commented on the new conundrum that the Court was creating for lawyers and judges, stating: 170 ...Through cases like McLean, Smith v. Alliance Pipeline Ltd., 2011 SCC 7 (CanLII), [2011] 1 S.C.R. 160, and Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61 (CanLII), [2011] 3 S.C.R. 654, judges and lawyers engaging in judicial review proceedings came to believe, rightly and reasonably, that the jurisprudence of this Court had developed into a presumption that regardless of the presence or absence of either a right of appeal or a privative clause — that is notwithstanding legislative wording — when a tribunal is interpreting its home statute, reasonableness applies. I am at a loss to see why we would chip away — again — at this precedential certainty. It seems to me that what we should be doing instead is confirming, not undermining, the reasonableness presumption and our jurisprudence that statutory language alone is not determinative of the applicable standard of review. [171] ... I am aware that it is increasingly difficult to discern the de- marcations between a reasonableness and correctness analysis, but until those lines are completely erased, I think it is worth protecting 216 REAL PROPERTY REPORTS 52 R.P.R. (5th)

the existing principles as much as possible. To apply correctness in this case represents a reversion to the pre-Pezim era. Creating yet another exception by relying on the statutory language in this case which sets out a right of appeal, undermines the expertise the statute recognizes. This new exception is also, in my respectful view, an in- explicable variation from our jurisprudence that is certain to engen- der the very ‘standard of review’ confusion that inspired this Court to try to weave the strands together in the first place. 37 This statement confirms that identifying the appropriate standard of review continues to confuse (with a hint that a discussion may even be afoot to erase the difference between reasonableness and correctness). Tervita also shows that the laborious analysis to determine the appropriate standard of review which so preoccupies lawyers and judges may net no difference in ultimately upholding or overturning a tribunal’s decision — both Justice Abella and the majority allowed the appeal even though they chose different standards of review. And, if one agrees with Justice Abella’s concern that judges and lawyers are confused, one can only imagine the confusion created among individuals who sit on Cana- dian tribunals without legal training, called upon to render expeditious and sound decisions. 38 My second observation is the apparent absence of significant reference to the second step of the Dunsmuir inquiry — the four-factored, contextual analysis. Although many courts, including the Supreme Court, continue to refer to Dunsmuir as the source to determine the standard of review, a systematic, step-by-step consideration of the analysis laid out in Dunsmuir is scarcely seen. Instead, from my review of the case law, the Dunsmuir analysis has been abbreviated, arguably displaced, if certain established presumptions apply which augur for the reasonableness standard, unless the presumption is rebutted by a stated exception, in which case correctness applies. This view I share with The Hon. Mr. Jus- tice Joseph T. Robertson, Peter Gall & Paul Daly, in Judicial Deference to Administrative Tribunals in Canada — Its History and Future (Mark- ham, ON: LexisNexis, 2014), who, at page 79, states that if an established presumption applies, the second step of the Dunsmuir analysis is unnecessary: In the absence of a case on point [the first step in Dunsmuir], the Supreme Court identifies several propositions (general rules and presumptions) that can be applied, thereby rendering it unnecessary to move to the second step. [Emphasis added] Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 217

39 In the following paragraphs at pages 79 to 80, the authors identify several presumptions that the Supreme Court has applied: deference and reasonableness for questions of policy, correctness for breaches of the duty of fairness and questions of law involving constitutional validity, reasonableness for review of Canadian Charter of Rights and Freedoms rights, reasonableness for interpretation of the tribunal’s home statute, and correctness for questions of general law that are of central importance to the legal system and outside the tribunal’s area of specialized expertise. Specifically, respecting the presumption of deference in questions of home statute interpretation, the learned authors comment, at pages 80 to 81, as follows: In fact, since Dunsmuir, the Supreme Court has not moved to the second step, save for those cases working their way through the Court at the time Dunsmuir was decided. Today, the typical case is one in which the reviewing court is faced with the rebuttable presumption that the tribunal’s interpretation of its home statute is owed deference. In response, the court looks to see whether the presumption has been rebutted based on the exceptional categories requiring the application of the correctness standard. [Footnotes omitted.] If the issue does not fall within one of the exceptional categories, the review standard is reasonableness. In fact, the deference doctrine has reached the point where the presumptions and rules have displaced the need to turn to the Bibeault factors outlined in Dunsmuir [the four-factored analysis]. Reviewing judges silently applauded this development, together with the reduc- tion in the number of deferential review standards.... In contrast, more often than not, the application of the chosen standard could be dealt with efficiently if not summarily. 40 The authors’ observations — that in the face of an articulated presumption of reasonableness “it is unnecessary to move to the second step” — are difficult to square with the emphatic direction in Dunsmuir that, “...where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors...to identify the proper standard of review.” [Emphasis added.] Admittedly, I am less than certain: does the presumption of reasonableness that the Court has articulated displace the need for the second step of the Dunsmuir analysis (as the learned authors and several decisions suggest), or does the presumption of reasonableness (particularly when the tribunal is interpreting its own statute) prima facie apply, only to be rebutted by certain exceptions which might include a 218 REAL PROPERTY REPORTS 52 R.P.R. (5th)

consideration of the factors invoked by the second contextual analysis in Dunsmuir? 41 I have chosen to adopt the second approach. The Supreme Court could not have jettisoned the clear and emphatic two-step analysis in Dunsmuir without an equally clear and emphatic statement that the presumptions have displaced the need to turn to the second step of Dun- smuir. The presumptions, as well as the second step of the Dunsmuir analysis, must co-exist. I have found favour with this approach, and guidance in its implementation, from the statement of Justice Moldaver in McLean. At para. 21 he applies the presumption of the reasonableness standard when a tribunal interprets its home statute, but qualifies the application of the presumption with two conditions stated in para. 22: [21] Since Dunsmuir... this Court has repeatedly underscored that “[d]eference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity” (para. 54). Recently, in an attempt to further simplify matters, this Court held that an administrative decision maker’s interpretation of its home or closely-connected statutes “should be presumed to be a question of statutory interpretation subject to deference on judicial review” (Alberta (Information and Pri- vacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61 (CanLII), [2011] 3 S.C.R. 654, at para. 34). [22] The presumption endorsed in Alberta Teachers, however, is not carved in stone. First, this Court has long recognized that certain categories of questions — even when they involve the interpretation of a home statute — warrant review on a correctness standard (Dun- smuir, at paras. 58-61). Second, we have also said that a contextual analysis may “rebut the presumption of reasonableness review for questions involving the interpretation of the home statute” (Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 (CanLII), [2012] 2 S.C.R. 283, at para. 16). 42 In determining the standard of review, Justice Moldaver immediately begins his analysis with a presumption of reasonableness without any prior reference to the second step of the contextual analysis under Dun- smuir. However, he qualifies the presumption of reasonableness when a tribunal interprets its own statute with the court’s need to consider whether: 1) “certain categories of questions,” as posed in A.T.A. v. Alberta (Information & Privacy Commissioner), 2011 SCC 61, [2011] 3 S.C.R. 654 (S.C.C.) [Alberta Teachers], warrant a correctness review; and 2) a “contextual analysis” rebuts the presumption of reasonableness. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 219

43 Frankly, I find that the inquiry into the “categories of questions” as posed in Alberta Teachers — “constitutional questions, questions of law, that are of central importance to the legal system ... and true questions of jurisdiction” (para. 30) — are subsumed under the third component of the Dunsmuir analysis, an inquiry into “the nature of the question in issue.” In my view, Justice Moldaver’s exceptions to the presumption of reasonableness in home statute interpretation based on “certain categories of questions” and a “contextual analysis,” which includes an inquiry into the “nature of the question in issue,” are both satisfied by applying the four-factored Dunsmuir analysis. Dunsmuir expressly requires an inquiry into the nature of the question in issue and, therefore, obviates the need for a separate inquiry into “certain categories of questions.” 44 So, I will apply the presumption stated in McLean that a tribunal’s interpretation of its home statute warrants judicial deference and attracts a reasonableness standard. I will effectively collapse Justice Maldover’s two-pronged inquiry into whether this presumption should be rebutted by completing the second stage of the Dunsmuir inquiry, beginning with “the nature of the question in issue.”

Nature of the Question in Issue: 45 The primary question to be resolved in this appeal — the correct interpretation of the term “landholding” — is clearly not a constitutional question or a question of jurisdiction. It may be a question of law of central importance to the legal system, a position Skyline strongly advances. 46 The decision in McLean is instructive because it deals with arguments similar to those Skyline raises in this appeal. In McLean, the statute applicable to the British Columbia Securities Commission required that all proceedings under the Securities Act, RSBC 1996, c 418 “must not be commenced more than 6 years after the date of the events that give rise to the proceedings.” At issue was what constituted an “event” for the purposes of the limitation period. Was it the event that occurred over six years previous when McLean was barred in Ontario from trading (as she argued) or was it the event that occurred within six years when McLean entered into a settlement agreement with the Ontario Securities Commis- sion? The B.C. Commission chose the more proximate date as the “event” thereby allowing it to act within the limitation period and deny McLean from certain trading activities. McLean appealed, raising essentially the same argument in her appeal as Skyline does in this appeal: that 220 REAL PROPERTY REPORTS 52 R.P.R. (5th)

interpreting the relevant statutory provision was of central importance to the legal system. 47 McLean’s argument that interpretation of “an event” under a statutory limitation period is a matter of general importance to the legal system is akin to Skyline’s argument that a “land holding” and an “interest in farm land” is of similar importance and, therefore, attracts a standard of correctness. Following is Justice Moldaver’s handling of McLean’s argument. After questioning the legitimacy of what he called a “wave of cases” focusing on the question of vires or jurisdiction, he considered whether a tribunal’s interpretation of the statute triggered a matter of general importance to the legal system: [26] A second wave — the one which the appellant now rides — focuses on “general questions of law that are both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” [Cited cases omitted.] In each of these cases, this Court unanimously found that the question presented did not fall into this exceptional category — and I would do so again here. [27] The logic underlying the “general question” exception is simple. As Bastarache and LeBel JJ. explained in Dunsmuir, “[b]ecause of their impact on the administration of justice as a whole, such questions require uniform and consistent answers” (para. 60). Or, as Le- Bel and Cromwell JJ. put it in Mowat, correctness review for such questions “safeguard[s] a basic consistency in the fundamental legal order of our country” (para. 22). [28] Here, the appellant’s arguments in support of her contention that this case falls into the general question category fail for three reasons. First, although I agree that limitation periods, as a conceptual matter, are generally of central importance to the fair administration of justice, it does not follow that the Commission’s interpretation of this limitation period must be reviewed for its correctness. The meaning of “the events” in s. 159 is a nuts-and-bolts question of statutory interpretation confined to a particular context. ... Accordingly, there is no question of law of central importance to the legal system as a whole, let alone one that falls outside the Commission’s specialized area of expertise. [29] Second, while it is true that reasonableness review in this context necessarily entails the possibility that other provincial and terri- torial securities commissions may arrive at different interpretations of their own statutory limitation periods, I cannot agree that such a result provides a basis for correctness review — and thus judicially Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 221

mandated “consisten[cy]...across the country”... If there is a problem with such a hypothetical outcome, it is a function of our Constitu- tion’s federalist structure — not the administrative law standards of review. [30] Third, and most significantly, the problem with the appellant’s argument is her narrow view of the Commission’s expertise. In particular, the appellant argues that limitation periods “are not in themselves part of substantive securities regulation, the area of the [Com- mission’s] specialised expertise” (A.R.F., at para. 9). The argument presupposes a neat division between what one might call a “lawyer’s question” and a “bureaucrat’s question”. The logic seems to be that because the meaning of “the events” in s. 159 cannot possibly require any great technical expertise — there is, after all, no specialized “bureaucratese” to interpret — why should the matter be left to the Commission? [31] While such a view may have carried some weight in the past, that is no longer the case. The modern approach to judicial review recognizes that courts “may not be as well qualified as a given agency to provide interpretations of that agency’s constitutive statute that make sense given the broad policy context within which that agency must work” [Cited cases omitted.] [32] In plain terms, because legislatures do not always speak clearly and because the tools of statutory interpretation do not always guarantee a single clear answer, legislative provisions will on occasion be susceptible to multiple reasonable interpretations ... The question that arises, then, is who gets to decide among these competing reasonable interpretations? [33] The answer, as this Court has repeatedly indicated since Dun- smuir, is that the resolution of unclear language in an administrative decision maker’s home statute is usually best left to the decision maker. That is so because the choice between multiple reasonable interpretations will often involve policy considerations that we pre- sume the legislature desired the administrative decision maker — not the courts — to make. Indeed, the exercise of that interpretative discretion is part of an administrative decision maker’s “expertise”. 48 Skyline devoted significant effort in this appeal to suggest that the FLSB’s interpretation of “land holding” and “interest in farm land” must be consonant with an interpretation of an “interest in land” as offered by the case law interpreting The Land Titles Act (for the purposes of being able to file a miscellaneous interest against a title to land) and with case law interpreting s. 46 of The Queen’s Bench Act (as constituting an interest in land to support the registration of a certificate of pending litigation 222 REAL PROPERTY REPORTS 52 R.P.R. (5th)

against land). I see no need for this concurrence. Nor do I envision a fouling of the principles of what constitutes an interest in land under either The Land Titles Act or The Queen’s Bench Act only because the FLSB has been afforded a standard of reasonableness in constructing a meaning for “land holding” for purposes unique to the policy of Part VI of the SFSA.

Purpose of the Tribunal and Legislation and Expertise: 49 I find that two of the components of the Dunsmuir contextual analysis — the purpose and expertise of the FLSB and the purpose of the ownership restrictions of the SFSA — are inextricably bound. Accordingly, I will address them holistically. 50 The FLSB is a multi-tasking board, drawing historical roots from three distinct statutes and three previously distinct and independent boards. Not until 1993 were the remnant boards totally subsumed within the current FLSB. Since then the FLSB has played an administrative role in three areas of Saskatchewan’s agricultural law, each contained within distinct Parts of the SFSA; Part II (Farm Land Proceedings), Part III (Home Quarter Protection), and Part VI (Farm Ownership). These roles originally arose at different times, under separate statutes, and for dispa- rate purposes. Today these roles are found in one statute — the SFSA — and administered by one board the FLSB. 51 The oldest role dates to 1944 when Saskatchewan enacted The Farm Security Act, 1944, SS 1944 2nd Sess c 30 [The Farm Security Act, 1944]. Passed on the heels of the Great Depression, it ensured that, absent an exclusionary order from the Provincial Mediation Board [PMB], a mortgagee could not register a final order of foreclosure respecting a homestead unless the mortgage secured the “purchase price” of the homestead. In the prosperous post-war agricultural scene, The Farm Security Act, 1944 was ignored: mortgagees simply had not obtained orders from the PMB. Given the farm debt crisis of the 1980s, The Farm Security Act, 1944 gained immediate significance. In 1988 The Farm Security Act, 1944 was repealed, but its essential terms were included in Part III of the newly enacted SFSA where the FLSB was assigned the role of gate- keeper of orders respecting homestead mortgages. Since 1988, the FLSB has granted class exclusionary orders for certain types of homestead mortgages and has granted or declined exclusionary orders respecting untold numbers of homestead mortgages in Saskatchewan, a 70 year old legacy dating to The Farm Security Act, 1944. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 223

52 The FLSB’s second role arose in 1984 under The Farm Land Security Act, SS 1984-85-86, c F-8.01 [The Farm Land Security Act]. The Farm Land Security Act, proclaimed as the farm debt crisis of the 1980s had just begun its rampage, put in place detailed procedures respecting foreclosure actions against Saskatchewan farm land. Integral to these proceedings was the newly created Farm Land Security Board. Four years later, The Farm Land Security Act was repealed, but the essence of its pro-mortgagor provisions was continued under Part II of the SFSA which required the FLSB’s involvement in all farm land foreclosure actions. Since 1988, the FLSB creates a report of the farmer’s financial affairs. Then, if a mediated settlement of the mortgage debt is not reached, the FLSB creates a written report providing two critical opinions: whether farmers are sincere in their efforts to pay the mortgage debt and whether they have a reasonable possibility of meeting their mortgage obligations. Only after the court gives “primary consideration” to the FLSB’s opinions (an express legislative deference), can the court decide whether to permit a mortgagee to commence an action. Since 1988, the FLSB has been engaged in innumerable farm land mortgage actions, creating financial reports and providing opinions respecting farmers’ viability and sincerity. 53 The FLSB’s third role was a late delegation, coming in 1993, when it was given administrative jurisdiction over farm land ownership. In 1974 Saskatchewan enacted The Saskatchewan Farm Ownership Act, 1974, SS 1973-74, c 98 to restrict ownership of Saskatchewan farm land, legislation that stayed discrete until 1988 when the SFSA co-opted farm ownership into Part VI — Farm Ownership. There, juxtaposed with the other Parts of the SFSA which exclusively addressed farm debt, Part VI has rather awkwardly lain since. For the first five years of the SFSA, while the FLSB dealt with matters under Part II and Part III of the SFSA, a separate board, the Saskatchewan Farm Ownership Board, dealt with farm ownership issues under Part VI. In 1993 the two boards were continued as the FLSB. 54 So, today the FLSB wields considerable administrative authority over three conceptually distinct areas of Saskatchewan agriculture. It minds the creation of exclusionary orders respecting homestead mortgages, it necessarily engages in all actions respecting defaulted farm land mortgages, and it determines whether or not ownership of Saskatchewan farm land falls within or beyond the strictures of Part VI of the SFSA. The Legislature has taken certain of the administrative roles of three previously distinct boards — the PMB, the Saskatchewan Farm Ownership 224 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Board, and the Farm Land Security Board — and has combined these roles into the current workings of the FLSB. 55 The entirety of the operations of the FLSB are appropriate contextual considerations in determining the deference a reviewing court should afford the FLSB’s expertise and decision making obligations. The FLSB is enfranchised with a significant and diversified portfolio of decision-making. Few Saskatchewan tribunals are as engaged in their respective industry as the FLSB is engaged with agriculture. 56 More specifically, under Part VI, the FLSB is given a weighty obligation to monitor, regulate and enforce limits on non-resident ownership of farm land in Saskatchewan. In a province that has revered the right to own land, this mandate to restrict land ownership is of no little consequence, as evidenced by the powers given to the FLSB under Part VI: • Section 88(4) allows the FLSB to extend the two-year period during which a non-qualifying person acquiring land (essentially through a remedy on a defaulted mortgage) might continue to hold title under conditions it might impose. • Section 89 allows the FLSB to order any person who acquires a land holding on behalf of a non-qualifying person to dispose of the land. • Section 90 allows the FLSB to direct a person having an aggregate land holding in excess of 10 acres to deliver to the board a disclosure statement in a prescribed form within 60 days after requested (in breach of which the person is liable to summary conviction and a fine of not more than $1,000.00). • Section 91 permits a non-qualifying person to apply to the FLSB for an exemption order from Part VI upon terms and conditions the FLSB might impose. • Section 92 permits the FLSB to cancel any exemption, consent or other order issued if a person fails to comply with the terms and conditions imposed. • Subsection 94(2) (the provision operative in Skyline’s appeal) allows the board to issue an order to a person having a land holding in contravention of Part VI to reduce its aggregate land holding to the land holding permitted by the SFSA. • Subsection 94(3) allows the FLSB to issue a pre-emptive order respecting a person who intends to obtain a land holding in contravention of the SFSA. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 225

• Subsection 94(4) allows the FLSB to apply to a judge for an order directing a person to comply with a disposition order under s. 94(2). • Subsections 95(1) and (2) allow the FLSB, where it has reason to believe that a person has or intends to obtain a contravening land holding, to conduct an investigation into the matter. An investiga- tor has all the powers of commissioners pursuant to The Public Inquiries Act, 2013, SS 2013, c P-38.01. Subsection 95(3) obli- gates the FLSB to submit a written report of its investigation to the minister if a person intends to obtain a contravening land holding. 57 These large and ample powers suggest that the legislature has en- trusted the FLSB to wield an authoritative hand in administering farm land ownership in Saskatchewan. In Q. v. College of Physicians & Surgeons (British Columbia), 2003 SCC 19, [2003] 1 S.C.R. 226 (S.C.C.), [Dr. Q.], Chief Justice McLachlin instructed reviewing courts to be mindful of the tasks the legislation has assigned to the tribunal. At para. 31 she wrote: 31 ...Reviewing courts should also consider the breadth, specializa- tion, and technical or scientific nature of the issues that the legislation asks the administrative tribunal to consider. In this respect, the principles animating the factors of relative expertise and legislative purpose tend to overlap. A legislative purpose that deviates substantially from the normal role of the courts suggests that the legislature intended to leave the issue to the discretion of the administrative decision-maker and, therefore, militates in favour of greater deference. 58 Not only are the FLSB’s powers of considerable breadth and speciali- zation, they also suggest that the FLSB has been asked to balance competing policy objectives and the interests of various constituencies, including non-Canadian interests wishing to seek investment opportunities in Saskatchewan agriculture. In Dr. Q., Chief Justice McLachlin drew a link between the degree of deference afforded in judicial review and the depth of policy choices delegated to the tribunal: 30 ...As a general principle, increased deference is called for where legislation is intended to resolve and balance competing policy objectives or the interests of various constituencies: see Pushpanathan, supra, at para. 36, where Bastarache J. used the term “polycentric” to describe these legislative characteristics. 31 A statutory purpose that requires a tribunal to select from a range of remedial choices or administrative responses, is concerned with 226 REAL PROPERTY REPORTS 52 R.P.R. (5th)

the protection of the public, engages policy issues, or involves the balancing of multiple sets of interests or considerations will demand greater deference from a reviewing court... 59 The general powers accorded to the FLSB under the SFSA, and particularly the specific powers under Part VI, allow the FLSB to implement a wide range of remedial choices and administrative responses which engage policy choices thereby engendering a reasonableness standard of review. 60 Little is known of the specific expertise of the members of the FLSB. In its written reasons, the FLSB offered at para. 38: Collectively, the members of this Board bring to bear more than 200 years of farming and farming related knowledge and experience, including the business and financing aspects of farming. Saskatche- wan’s economy, cultural fabric, indeed, our way of life, have deep roots in farm land. 61 Given the numerous tasks legislatively charged to the FLSB under Parts II, III and VI of the SFSA it must be afforded a significant measure of deference to implement its broad mandate.

Presence of a Privative Clause: 62 The SFSA has no privative clause, but it does contain a right of appeal. And, while the absence of a privative clause and the presence of a right of appeal might suggest that judicial deference should be less gen- erously accorded a tribunal, a comprehensive review of the case law shows that while this principle is commonly acknowledged, it is seldom determinative. Donald J.M. Brown & J.M. Evans in Judicial Review of Administrative Action in Canada, looseleaf (Rel 2014-3) vol 3 (Toronto: Carswell, 2014) at pages 14-26 to 14-27 offers this statement respecting the impact of privative clauses and rights of appeal: Today, however, with the collapsing of the two reasonableness standards into one, it is likely that such provisions [privative clauses] will be seen as indicating some legislative direction, but leaving greater weight to the assessment of the tribunal’s nature, purpose and expertise, and its relevance to the question in dispute. ... Although not adverted to by the majority in Dunsmuir, in the past the existence of a statutory right of appeal has been looked upon as the antithesis of a preclusive clause, instead signifying the application of a “correctness” standard, particularly where leave to appeal is required. However, the choice of the procedure for review is at best an Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 227

indirect indication of legislative intent, and it is well-established that an appellate court will not necessarily substitute its view for that of an agency on a question of law or a question of mixed law and fact. For that matter, deference has been accorded where the legislation restricts the right of appeal to questions of law or to questions of law and jurisdiction. [Emphasis original, footnotes excepted.] 63 Skyline relies upon the statement in Kivela v. C.U.P.E., Local 21, 2006 SKCA 38, 275 Sask. R. 271 (Sask. C.A.) [Kivela] as authority that the presence of a right of appeal prompts application of a correctness standard of appeal. However, I see nothing more in Justice Smith’s statement that a right of appeal would “arguably support a more expansive standard of review” than a re-statement of the principle stated above. In Kivela no determination was made of standard of review since Justice Smith found the tribunal’s decision was both reasonable and correct. 64 Skyline also cites Tervita as authority that a right of appeal militates for a correctness standard. Tervita is authority for a much lesser position than Skyline advocates. Albeit, in Tervita the Court found that the right of appeal attracted a correctness standard, a divergence from several previous decisions which held that the presumption of reasonableness applied notwithstanding the presence of a right of appeal. But the divergence from this presumption was occasioned only because of the specific language of the right of appeal under the Competition Tribunal Act, RSC 1985, c 19 (2nd Supp). Justice Rothstein, writing for the majority, acknowledged and emphasized this divergence, quoting, at para. 38, the specific appeal provision of that Act: “an appeal lies to the Federal Court of Appeal from any decision or order...of the Tribunal as if it were a judgment of the Federal Court.” [Emphasis original.] To distinguish his decision from previous decisions where reasonableness presumptively applied (and to address the dissent of Justice Abella), Justice Rothstein compared the immediate right of appeal to the right of appeal considered in previous cases which permitted that a person “may appeal to the Court of Appeal with leave of justice of that court.” These earlier cases, where reasonableness presumptively applied, not Tervita, bear comparison to an appeal from an order of the FLSB. In fact, in the earlier cases cited by Justice Rothstein, reasonableness was the appropriate standard even when the right of appeal was more narrowly guarded with an obligation to seek leave to appeal, a condition absent under the SFSA. 65 Skyline also suggests that the right of appeal under s. 97 of the SFSA is “exponentially broader than under many other statutes,” since it allows an appeal to a person merely “dissatisfied with an order of the board,” 228 REAL PROPERTY REPORTS 52 R.P.R. (5th)

and not, for example on more restrictive grounds like an error of law. However, the SFSA is not unique among Saskatchewan statues in allowing appeals without restriction or necessity of leave. Simply being dissatisfied with a tribunal’s decision, for example, grounds an appeal to court under The Motor Dealers Act, RSS 1978, c M-22 and The Auction- eers Act, RSS 1978, c A-34. 66 As well, in comparison to Manitoba’s Farm Lands Ownership Act, which allows an appeal to any person “affected by any order of the board,” arguably an even broader aperture for review than being “dissatisfied” with an order, the Manitoba Court of Appeal, in Guinn, found that neither the absence of a privative clause or the presence of a right of appeal dislodged reasonableness as the appropriate standard of review. 67 In summary, I find little that is persuasive to rebut the presumption that reasonableness is the standard the FLSB only because of the absence of a privative clause or the presence of a right of appeal.

Conclusion — Standard of Review 68 Given the principle of deference allowed a tribunal in the interpretation of its home statute as stated in Dunsmuir, and nudged by Justice Moldaver in McLean from a principle to a presumption, I find the presumption has not been rebutted and, accordingly, the standard of reasonableness applies.

Did the FLSB meet the Standard of Reasonableness? Skyline’s Grounds of Appeal 69 Although Skyline calls for correctness as the standard of review, most of its specific grounds of appeal suggest that the FLSB’S decision fails to meet even the standard of reasonableness. Skyline, at para. 65 of its brief of law, offers nine grounds of appeal: 65 Skyline appeals ... on the following grounds: a) The Transaction does not...result in any of the Skyline Enti- ties having a land holding... b) The Board erred in interpreting and applying section 76(e) of the SFSA; c) The Board erred in failing to properly apply the applicable principles of statutory interpretation; d) The Board erred in failing to conclude that for the Transac- tion to result in a land holding..., the Proposed Structure must Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 229

first result in the Skyline Entities having an interest in 134 OpCo’s farm land... e) The Board erred in holding that capital appreciation of farm land is a right or control that ordinarily accrues to the owner of farm land; f) In the alternative [to that the Board is correct under (e)]...the Board erred by misdirecting itself and by failing to conclude that none of the Skyline Entities will hold such a right, directly or indirectly... g) The Board erred in applying reasoning that ignores the principles of corporate law and the doctrine of privity of contract. ... h) The Board erred in applying flawed reasoning that is, among other matters, premised on (i) its misunderstanding and resulting mischaracterization of the terms of the Transaction Documents and other Skyline documents, (ii) incomplete and incorrect reasoning and conclusions respecting the effect of the Transaction and (iii) a mischaracterization of the intent of the Skyline Entities and the effect of the Proposed Skyline; and i) The Board erred by misdirecting itself in respect of the evidence. Inter alia, the Board considered irrelevant and extrane- ous evidence in its analysis and made observations, determi- nations and judgments in respect of the Transaction and the Skyline Entities’ intention that were prejudicial to the Skyline Entities. Further, the Board failed to consider, or give sufficient weight to, pertinent evidence, including without limitation, the provisions of the Skyline Structure and the Transac- tions Documents that were specifically included so as to comply with the SFSA. 70 In summary, Skyline alleges that the FLSB has “ignored,” “misdi- rected,” “mischaracterized,” “misunderstood,” or applied “flawed reasoning” to matters of evidence or principles of law? How do these allegations fare when the FLSB’s decision is reviewed based on a standard of reasonableness?

Judicial Authorities 71 In Agraira v. Canada (Minister of Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559 (S.C.C.) [Agraira] Justice LeBel cited prior decisions of his court and offered a summary of 230 REAL PROPERTY REPORTS 52 R.P.R. (5th)

principles to provide guidance in determining the margin of deference to be afforded a tribunal under the standard of reasonableness. • Questions confronting a tribunal may not lend themselves to one specific result. They often lend themselves to a range of possible, acceptable and reasonable conclusions, which must be defensible both in law and upon the facts. • As stated in Dunsmuir, reasonableness is mainly concerned with the presence of justification, transparency and intelligibility within the tribunals decision-making process. • A reviewing court must consider the tribunal’s decision as a whole. Neither a mere inadequacy of a tribunal’s reasons nor a lack of comment upon every issue raised by the parties is grounds alone for quashing the decision. 72 In Agraira the issue was the meaning of “national interest” arising from a decision of the Minister of Public Safety. Justice LeBel found that although the Minister did not expressly define the term, the court could attribute an “implied interpretation” taken from the Minister’s reasons, and then, borrowing from the statement in Alberta Teachers, “consider the reasons that could be offered for the decision...” Accordingly, Justice LeBel, after reviewing the Minister’s reasons, offered a court-authored, implied interpretation of what, in his view, “would have been” the Min- ister’s definition of “national interest.” Justice LeBel continued the measure of reasonableness to be accorded the Minister, a generous measure by any account: 86 Thus, the Minister’s implied interpretation of the term “national interest” — that it relates predominantly to national security and public safety, but does not exclude the other important considerations outlined in the Guidelines or any analogous considerations — is consistent with all these contextual indications of the meaning of this term. ... 88 This interpretation is compatible with the interpretation of the term “national interest” the Minister might have given in support of his decision on the appellant’s application for relief. It is consistent with that decision. The Minister’s implied interpretation of the term related predominantly to national security and public safety, but did not exclude the other important considerations outlined in the Guide- lines or any analogous considerations. In light of my discussion of the principles of statutory interpretation, this interpretation was emi- nently reasonable. Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 231

[Emphasis added.] 73 Agraira shows the court’s willingness to fill in the blanks of a tribunal’s reasoning to support its decision. 74 Since I have found that the reasonableness standard of review applies, Skyline cannot simply show that it offers a better informed, better articulated or more compelling interpretation of “land holding;” it must show (in addition to minimally showing that its interpretation is reasonable) that the FLSB’s interpretation is unreasonable. In the words of Dun- smuir, the decision must lack “justification, transparency and intelligibility.”

Review of the FLSB’s Decision for Reasonableness 75 The analysis provided by the FLSB allows me to conclude, similarly to Justice Ryan-Froslie respecting the Labour Relations Board’s decision in UFCW, Local 1400 v. Affinity Credit Union, 2015 SKCA 14 (Sask. C.A.), that the FLSB’s interpretation of its governing statutory provision is “reasonable and within the range of possible acceptable outcomes which are defensible in respect to both the facts and the law.” (para. 15) 76 The FLSB began its analysis of the interpretation of “land holding” by canvasing the principles of statutory interpretation, citing Campbell v. Saskatchewan (Workers’ Compensation Board), 2012 SKCA 56 (Sask. C.A.), a decision which incorporates the leading Canadian authorities on statutory interpretation: Elmer Driedger in The Construction of Statutes, 2d ed (Toronto: Butterworths, 1983) and Rizzo & Rizzo Shoes Ltd., Re, [1998] 1 S.C.R. 27 (S.C.C.). Reading the SFSA as a whole, the FLSB offered several reasons for its contextual interpretation of “land holding.” In examining this interpretation for reasonableness, I am cognizant that whether or not I would have provided the same analysis as the FLSB is a surveillance that the Supreme Court in N.L.N.U. v. Newfoundland & Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708 (S.C.C.), has stated is unnecessary and ill-advised: [16] Reasons may not include all the arguments, statutory provisions, jurisprudence or other details the reviewing judge would have preferred, but that does not impugn the validity of either the reasons or the result under a reasonableness analysis. A decision-maker is not required to make an explicit finding on each constituent element, however subordinate, leading to its final conclusion (Service Employ- ees’ International Union, Local No. 333 v. Nipawin District Staff Nurses Assn., 1973 CanLII 191 (SCC), [1975] 1 S.C.R. 382, at p. 391). In other words, if the reasons allow the reviewing court to un- 232 REAL PROPERTY REPORTS 52 R.P.R. (5th)

derstand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes, the Dunsmuir criteria are met. [17] The fact that there may be an alternative interpretation of the agreement to that provided by the arbitrator does not inevitably lead to the conclusion that the arbitrator’s decision should be set aside if the decision itself is in the realm of reasonable outcomes. Reviewing judges should pay “respectful attention” to the decision-maker’s reasons, and be cautious about substituting their own view of the proper outcome by designating certain omissions in the reasons to be fateful. 77 The FLSB rejects Skyline’s assertion that “any interest in farm land” must be consonant with, and limited to, the principle of an “interest in land” as developed under the jurisprudence respecting The Land Titles Act and this stricture had to be satisfied before one could look further in s. 76(e)(iii)(C) to determine whether such an interest could “directly or indirectly confer any right or control ordinarily accruing to an owner of farm land.” If such an interpretation was legislatively intended, the result would have been simply achieved by a statement that a “land holding” was “an interest in farm land.” Furthermore, if the restricted interpretation proffered by Skyline was accepted, then why would s. 76(e)(vi) be necessary — that a “land holding” includes “any interest in farm land other than that described in subclauses (i) to (v)?” 78 In support of its position the FLSB also cites the “inclusive” nature of the definition of “land holding,” where the introductory phrases states, “land holding includes...”, and not, as might be more commonly found in a definition, “land holding means....” The FLSB also points out that the definition of “land holdings” includes a “share” in a corporation, an un- orthodox type of “land holding” since a shareholder does not have an interest in the assets of a corporation. The FLSB correctly states that the definition of “land holding” is a creation of legislation, unique to the SFSA. 79 Finally, in its decision the FLSB defines “land holding” in a manner that it describes in its reasons as meeting the “objects and scheme of the SFSA” as “illuminated by a historical review of the legislation.” Given the judicially recognized ability of specialized tribunals to interpret legislation effecting policy, the FLSB decision is to be accorded reasonable deference. 80 The FLSB provides a detailed analysis of its reasons for concluding that a “land holding” cannot be as restrictively defined as Skyline suggests. Among its reasons, the FLSB finds that the totality of the proposed Skyline Agriculture Financial Corp. v. Saskatchewan Layh J. 233

structure between Skyline Entities and Farm Land Entities, in the words of s. 76(e)(iii), “directly or indirectly...confer[s] [upon Skyline Entities a] right or control ordinarily accruing to the owner of farm land.” The FLSB anchored its definition of “land holding” in a purposive way, citing Bruce Ziff’s Principles of Property Law, 6th ed (Toronto: Carswell, 2014) which, in turn, quoted Professor A.M. Honore’s conception of seven elements of property: Ownership comprises the right to possess, the right to use, the right to manage, the right to the income of the thing, the right to the capital, the right to security, the rights or incidents of transmissibility and absence of term, the duty to prevent harm, liability to execution, and the incident of residuarity. 81 From this framework of property rights, the FLSB gave primacy to the substance of the Skyline Structure, not to its form. The FLSB found that the combination of the Mortgage, Loan, Swap, Derivative, Index and other agreements gave to Skyline Entities many of the rights and controls respecting Saskatchewan farm land that the SFSA does not countenance them to receive, most particularly, but not limited to, the benefit of any increase in the capital value of Saskatchewan farm land under the Deriv- ative and the right to enjoy the income from the farm land under the Swap. At para. 52 of its reasons, the FLSB offered a summary of its findings: 52. ...the Skyline Structure divides the “farmer” into three entities and involves four entities on the Skyline side. Skyline Lending provides 100% purchase financing and takes the mortgage on the farm; Skyline Stream has the right to control operation and management of the farm and takes 18% of the gross revenue; Skyline Capital gets the benefit of any capital appreciation of the land. Each of these Skyline Entities are wholly owned subsidiaries of Skyline ParentCo. The Board does not accept that distribution of the rights and control ordinarily accruing to the owner among the three commonly owned Sky- line Entities means that the Board cannot consider such rights and control as a whole. 82 On the other side of the corporate ledger, respecting those corporations included in the Farm Land Entities, the FLSB found disfavour with the minimal rights left to the “putative farmer” comparing its position to a “tenant under a crop share arrangement.” The FLSB concluded at para. 59: 59. The Board concludes that the true effect of the Skyline Structure is to transfer the bulk of the bundle of rights associated with land 234 REAL PROPERTY REPORTS 52 R.P.R. (5th)

ownership from OpCo to the Skyline Entities in a piecemeal fashion. The Skyline Structure is a series of agreements that confers upon the Skyline Entities rights and controls which normally accrue to a land owner, which collectively constitute a land holding within the meaning of section 76(e) of the SFSA. Upon careful examination, it becomes clear that the Skyline Structure is an attempt to get around the SFSA and allow non-Canadian entities the opportunity to profit and derive income from the increasing value of Saskatchewan farm land and to control operation thereof. 83 I agree with the sentiment of Skyline’s counsel that Skyline Entities’ efforts should not be characterized as attempting to “get around the SFSA,” when an equally apt and more magnanimous characterization allows that Skyline Entities has attempted to comply with the legislation, as seems apparent from its repeated contacts with the FLSB and its willing disclosure of agreements. Nonetheless, I cannot find fault with the reasonableness of the decision. 84 Accordingly, the appeal is rejected and the Order of the FLSB stands. There shall be no order for costs, a position endorsed by the FLSB when a tribunal avoids arguing the merits of the appeal and confines its submissions to the standard of review. Appeal dismissed. 1613185 Alberta Ltd. v. 837757 Alberta Ltd. 235

[Indexed as: 1613185 Alberta Ltd. v. 837757 Alberta Ltd.] 1613185 Alberta Ltd, Plaintiff and 837757 Alberta Ltd, Defendant Alberta Court of Queen’s Bench Docket: Calgary 1401-06857 2015 ABQB 224 Master A.R. Robertson, In Chambers Heard: March 4, 2015 Judgment: April 8, 2015 Real property –––– Sale of land — Miscellaneous –––– Plaintiff buyer entered contract to buy multi-family residential building with month-to-month tenancies in place from defendant seller for $1.2 million — Parties used relatively standard form Commercial Real Estate Purchase Contract but struck out certain passages and did not fill in all blanks — Buyer paid initial, non-refundable $25,000 deposit and closing day set for June 16, 2014 — On June 9, 2014, lawyer for seller forwarded Statement of Adjustments, Transfer of Land and Certifi- cate of Exempt Supply of Real Property, confirming time of essence — Lawyer for buyer advised buyer had financing in place but was waiting for lender to provide instructions to counsel and requested extension to June 24 — Lawyer for seller agreed to extension to June 18 only — Buyer unable to tender purchase monies on June 18 — Seller declared contract at end and deposit forfeited, then “activated” agreement with third party to purchase property for $50,000 less — Buyer brought action for specific performance and registered certificate of lis pendens — Seller counterclaimed, seeking removal of lis pendens and judgment for shortfall of $25,000 from original purchase price — Seller brought application for summary judgment dismissing buyer’s claim — Application dismissed — While parties did not dispute that time of essence, buyer claimed obligation to tender purchase price never arose due to seller’s failure to deliver all required documents — Contract clearly required seller to deliver all agreements/documents/materials which reasonably related to property and environmental consent documents — That included estoppel certificates, leases, structural report, real property report and buliding inspection report — Not enough to say buyer’s lawyer made no protest and should have asked for more — Failure to meet own obligations by tendering required documents meant seller not entitled to rely on time being of essence and declare contract at end. 236 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Cases considered by Master A.R. Robertson, In Chambers: Digger Excavating (1983) Ltd. v. Bowlen (2001), 2001 CarswellAlta 1135, 2001 ABCA 214, 44 R.P.R. (3d) 11, 286 A.R. 291, 253 W.A.C. 291, [2001] 11 W.W.R. 618, 97 Alta. L.R. (3d) 41, [2001] A.J. No. 1125 (Alta. C.A.) — considered Global First Ltd. v. 1237007 Alberta Ltd. (2008), 2008 ABQB 65, 2008 CarswellAlta 96, 67 R.P.R. (4th) 292, 90 Alta. L.R. (4th) 33, 439 A.R. 220, [2008] A.J. No. 75 (Alta. Q.B.) — referred to Robinson v. Harris (1892), 21 S.C.R. 390, 1892 CarswellOnt 34, [1892] S.C.J. No. 68 (S.C.C.) — referred to Shaw v. Holmes (1952), [1952] 2 D.L.R. 330, 1952 CarswellOnt 224, [1952] O.W.N. 267, [1952] O.J. No. 518 (Ont. C.A.) — considered Windsor v. Canadian Pacific Railway (2014), 2014 ABCA 108, 2014 Carswell- Alta 395, [2014] 5 W.W.R. 733, 94 Alta. L.R. (5th) 301, 371 D.L.R. (4th) 339, 56 C.P.C. (7th) 107, (sub nom. Windsor v. Canadian Pacific Railway Ltd.) 572 A.R. 317, (sub nom. Windsor v. Canadian Pacific Railway Ltd.) 609 W.A.C. 317, [2014] A.J. No. 256 (Alta. C.A.) — followed Statutes considered: Court of Queen’s Bench Act, R.S.A. 2000, c. C-31 s. 9(3)(d) — referred to

APPLICATION by seller for summary judgment dismissing buyer’s claim.

Nicholas M. Ramessar, for Defendant / Applicant Clive O. Llewellyn, for Plaintiff / Respondent

Master A.R. Robertson, In Chambers: Introduction 1 In this interesting application for summary judgment, the defendant (who was the intended seller in a real estate transaction), asks the court to grant summary judgment to summarily dismiss the claim of the plaintiff (who was the intended buyer of the land). The buyer sued for specific performance and registered a certificate of lis pendens shortly after the closing failed. 2 The defendant counterclaimed. It wants the certificate removed from title because it wants to sell to another company, crystallize a $50,000 loss by doing so, keep the plaintiff’s $25,000 deposit, and obtain judgment for the remaining $25,000. 3 Since each party has a claim against the other, and their names are not distinctive, generally throughout these reasons I will refer to the defen- 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 237

dant as the “Seller” and the plaintiff as the “Buyer”, which is how they are referenced in the Commercial Real Estate Purchase Contract (the “Contract”) that they signed. 4 From the perspective of the Seller, the Buyer has slandered the title and prevented it from closing a sale to another party. From the perspective of the Buyer, the Seller has simply tried to frustrate the transaction although it has not strictly complied with its own obligations. The Buyer continues to attempt to close the transaction. 5 I have concluded that the Seller was not in a position to demand the tender of funds because it was in default of several obligations under the Contract. 6 The two lessons learned here are these: first, do not strike out passages in a standard form agreement without a careful review of the remaining words, and second, do not act in haste to resell property to a third party until it is clear that the first transaction has failed.

The Facts The Business Landscape 7 The transaction involved a multi-family rental building with month- to-month tenancies in place. The Seller was clear that time would be of the essence. That expectation had been reinforced a couple of times, both prior to signing the Contract, in the Contract, and in subsequent correspondence from the Seller’s lawyer enclosing the transfer of land and other documents. 8 The Seller says the Buyer did not close on time, it did not have to wait past the closing date for the Buyer’s purchase monies to arrive, and so it is entitled to sell to a third party for $50,000 less. It claims damages of $50,000, less a $25,000 forfeited deposit.

The Contract 9 The parties started with a relatively standard form Commercial Real Estate Purchase Contract that had been drafted by the Buyer’s lawyer, but the representatives of the Buyer and Seller did not fill in all of the blanks, and with a pen struck out certain passages. In particular, the provisions dealing with conditions precedent were only partly struck out, leaving a remnant passage that no longer had the effect that was intended in the base draft before the strikeouts. 238 REAL PROPERTY REPORTS 52 R.P.R. (5th)

10 After the strikeouts, the Contract still required the Seller to deliver estoppel certificates (to be obtained from the tenants) and other documents. 11 Although the paragraph setting out the conditions and the stated “Condition Day” (being the date when the conditions had to be waived) had been struck out, the heading, “Buyer’s Conditions” remained. The immediately following paragraph said: Within three (3) Business Days of the Final Signing of this Contract (Section 18), the Seller will provide to the Buyer true copies of all agreements/documents/materials which reasonably relate to the Pro- perty and the Buyer’s Conditions and which are in the possession of the seller or under its control (the “Documents”). The Documents are required for the Buyer in order for it to decide whether the conditions are satisfied with should be waived. Any delay by the Seller in providing the documents will extend the Buyer’s Conditions Day. 12 The Contract does not contain a definition of “Buyer’s Conditions”. As it was capitalized, it suggests that the words are a defined term, but they are not. The only reference to that term that aids in interpretation is in the heading. Accordingly, the obligation to provide these things remains under the heading “Buyer’s Conditions” but the deadline for waiving conditions has been struck out, and the Contract says that any delay in providing them extends the “Buyer’s Condition Day”, now not a stated date. 13 The immediately following subparagraph is headed “Financing Con- dition”. It says, “The Buyer being able to arrange a new mortgage loan upon terms acceptable to the Buyer and/or the buyer being approved to assume an existing mortgage loan upon terms acceptable to the Buyer.” This remnant is, of course, not a sentence but it was clearly intended to have some meaning. 14 The immediately next following subparagraph is headed, “Due Dili- gence Conditions” and in handwriting it says, “Per Schedule “B”. Almost all of the pre-printed due diligence conditions (9 of them) were struck out, leaving only the reference to Schedule “B” and a provision allowing the Buyer to retain its own consultants to conduct inspections, reviews and tests and prepare reports. This provision provided that access to the property would be available during normal business hours. Although it provided that the rights of existing tenants must be respected, there was no specific requirement for prior notice to gain access. 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 239

15 Schedule “B” was a typed document that addressed environmental concerns, and, amongst other things, specified that the Seller was, within 7 days of acceptance of the Contract, to provide an executed “Owner Consent Phase 1 Environmental Site Assessment” and “The executed Owner Disclosure in respect of the Phase 1 Environmental Site Assess- ment”. It also allowed inspections by the Buyer’s agents. 16 Schedule “B” also required the Seller to provide the rent roll to the Buyer within 7 days of acceptance. 17 A further heading, “Additional Buyer’s Conditions” was struck out. 18 The next passage was headed, “Seller’s Conditions”, and it was simply not completed. Accordingly, there was no “Seller’s Condition Day” stated. 19 The next paragraph said this: Subject to clauses 4.1 and 4.2 [the Buyer’s Conditions clause and the Seller’s Conditions clause], the Buyer and the Seller may give written notice to the other party on or before the stated Condition Day advising that a condition will not be waived, has not been satisfied and will not be satisfied on or before the Condition Day. If that notice is given, then this contract is ended upon the giving of that notice. 20 No such notice was given by either party. 21 The purchase price was $1,200,000, of which $25,000 was paid by initial non-refundable deposit. The closing day (called “Completion Day”) was set for June 16, 2014. 22 The rent roll required by Schedule “B” was provided, but neither the “owner consent” nor an “owner disclosure” were provided by the Seller. There appears to have been a misunderstanding on this. The Buyer says it expected to receive a standard form consent with the engineering firm’s name left blank before it went to any firm for the phase 1 assessment, and the Seller says it was waiting to hear who the environmental engineering firm was so that the form could be completed. It was not providing “a blanket consent to the world”, but rather it was prepared to provide consent only to the firm retained by the Buyer. But there seems to have been no communication at the time about why it was not provided. 23 There was a prior exchange of emails on May 2, which set out some business terms in point form, including a different closing date (June 15, 2014 which was a Sunday), a provision about buying the shares of the 240 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Seller instead of the real estate, and saying, “any other condition beyond the above will null our agreement”, although as mentioned the final version had a financing condition. The signed Contract did not incorporate this email exchange by reference of by expressly attaching them as a Schedule. 24 In my view they represent part of the negotiations, they did not represent the final agreement in any event, and cannot be referred to now except under the parol evidence rule, and the cryptic wording does not offer enough assistance to resolve any confusion in the wording in the Contract. 25 In its brief, the Seller says that in cross-examination the witness for the Buyer “testified that he understood that clause 4 (conditions) was not part of the Agreement”, and refers to page 29, lines 9-21, but the testimony there does not support that assertion. The witness acknowledged in cross-examination that when something is crossed out, that means it is not part of the contract. 26 The witness for the Seller says in his affidavit that “There were no conditions precedent to the Agreement.” He goes on to explain the meaning of the strikeouts and Schedule “B”. This is self-serving evidence - legal argument and document interpretation disguised as evidence. 27 But that does not change the fact that not all of clause 4 was struck out. The heading “Buyer’s Conditions” remained, under that heading the Seller’s obligation to provide the agreements/documents/materials remained, and the Financing Condition remained. 28 What was struck out was the provision that explained why conditions were there, when they had to be satisfied or waived, and the consequence of the Buyer failing to give notice of the waiver or acknowledgement of satisfaction of the conditions. The commitments of the Seller and the heading remained intact. The most important thing that was struck out was the date for satisfaction or waiver. It did not say, for example, “There are no conditions precedent conditions.” The remnant wording said there were Buyer’s Conditions (unless we are to ignore the heading as well as the middle sentence in the remaining paragraph following), but the wording left in place did not flesh out when they had to be satisfied or waived, and did not expressly say what would happen if they were not. 29 On Friday, June 6 — being 10 days before the expected closing - the Buyer requested that an appraiser be allowed access to the building on Monday, June 9. The Seller advised that the inspection could occur four 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 241

days later, on the following Tuesday, June 10. The appraisal was, of course, required by the lender that was to finance the purchase. 30 In its brief, the Seller argues that clause 3.5(e) of the Contract says that “According to the terms of the Agreement, the Deposit is forfeit if [the Buyer] failed to perform its obligations.” But that argument is premised on the assertion that there were no conditions, or if there were they were all satisfied or waived, and the Buyer failed to perform. 31 The Seller also argues that it “was not put on notice at the material times that [the Buyer] considered that it had breached the Agreement”. However, this action was commenced June 20, two days after the extended June 18 closing date, although the court file does not include an affidavit of service.

The Seller’s Tender of Closing Documents 32 On June 9, 2014, the lawyer for the Seller enclosed the Statement of Adjustments, the Transfer of Land, and a Certificate of Exempt Supply of Real Property. The letter set out trust conditions and provided for payment by direct deposit to the Seller’s lawyer’s trust account. In the letter, he reaffirmed that time was to remain of the essence. 33 It is not in dispute that the lawyer for the Buyer did not challenge the list of documents enclosed, either at or shortly after the time of receipt. 34 On June 16, the lawyer for the Buyer advised the Seller’s lawyer that the Buyer had financing organized, but the lender had yet to send instructions to its lawyer. She confirmed that the Buyer wished to close the transaction and requested an extended closing date of June 24. The Seller’s conveyancing lawyer agreed to provide an extension for closing, but only for two days, to June 18, 2014.

The Failed Closing: The Seller’s Perspective 35 The Buyer’s financing was not in place, and the tender of purchase monies not done, by June 18, and so the Seller or took the position that the deal was at end, that the $25,000 deposit had been forfeited, and the Seller attempted to resell the property to another party. 36 The Seller says it tendered the transfer of land and related documents to the Buyer. It understood that the Buyer was going to demolish the building and its interest in the tenants was slight. When its lawyer tendered the documents on June 9, only the documents listed above were enclosed. No one said its tender was inadequate. Time was of the essence, and the Buyer had not tendered the purchase price. 242 REAL PROPERTY REPORTS 52 R.P.R. (5th)

37 It already had an agreement, the state of which is not clear from the evidence currently before the Court, already in hand with a third party. We are told that after the failure of the Buyer to close on time the agreement with the third party was “activated.” It was for $50,000 less than the Buyer here was prepared to pay. The Seller now takes the position that it had to sell to that party, although the evidence does not disclose whether that agreement was enforceable by the third party at that time. It may not have been. It would appear that the extended closing date of two days to June 18 did not require the third party’s approval, and without clear evidence of what the relationship was with that third party, it is difficult to understand why the Seller would not agree to a further extension of a few days while the Buyer continued to assert its intention to close, and its counsel was advising that financing was in place but that she had to wait for the lender to instruct its counsel. 38 It seems clear that once there was any basis for doubt as to whether the Buyer would close the transaction, the Seller did what it could close the other transaction with the third party, notwithstanding the Buyer’s affirmation of the Contract and stated intention to close.

The Failed Closing — The Buyer’s Perspective 39 This action was commenced June 20, 2014 and a certificate of lis pendens obtained June 20 as well. However, legal description was incorrect and amended certificate of lis pendens was obtained from the court clerk on July 10, 2014. (I assume it was registered against the title shortly thereafter, although the evidence does not disclose a current search of title.) The Buyer still wants to close. 40 The Buyer says that although it acknowledges that it did not have “conditions” relating to the estoppel certificates and other documents identified in the Contract, it felt it was still entitled to the documents. Although its long-term plan was to demolish the building, it would have to go through the process of getting a demolition permit and no doubt many other steps before that was done. It was not going to do that the day after closing. It was going to honour the tenancies for the time being. Its witness says the Buyer still wanted the estoppel certificates. 41 The obligation was to transfer clear title, because the entry for listing permitted encumbrances was left blank. There was a caveat on the title filed by Coinamatic Pacific Ltd. The tender documents did not address its existence, or provide a copy of the lease which it purports to protect, or address its possible discharge. 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 243

42 In cross-examination after these proceedings were commenced, litigation counsel for the Buyer first learned of (a) a structural report that was in the possession of the Seller from over 20 years earlier; (b) that the Seller had in its possession a real property report but the roof had been replaced and might extend over the property line; (c) that there was in the possession of the Seller a boiler inspection report; and (d) other documents not previously disclosed. He says the Buyer’s real estate lawyer could not have asked for many of these things - she did not know they existed. It was the Seller’s obligation pursuant to the commercial real estate purchase contract, to provide “true copies of all agreements/documents/materials which reasonably relate to the Property” within three business days of “the Final Signing of the Contract” (which occurred May 16, 2014). 43 As to the question why the Buyer’s lawyer did not address the missing estoppel certificates and Coinamatic lease (or discharge of the lease), he explained that she was focused on trying to get the financing final- ized. The witness for the Buyer admitted in cross-examination that he was not looking for the estoppel certificates to waive a condition, but he felt that Buyer was still entitled to them.

The Parties’ Positions on Summary Disposition 44 I am asked to decide summarily that the Buyer no longer has an interest in land, and dismiss the action with the consequence that the certificate of lis pendens would be discharged. The Buyer’s counsel alerts me to the fact that he has sought specific performance of the Contract, and anticipates bringing a summary judgment application for that equitable relief, which would have to be before a Justice in chambers, as Masters in Chambers do not have jurisdiction to grant specific performance, since it is a mandatory injunction: Court of Queen’s Bench Act, RSA 2000 Chap. C-31, s. 9(3)(d). 45 Accordingly, both parties feel that the matter is capable of final determination by summary judgment, although they fundamentally disagree on what that outcome should be.

Analysis 46 It is clear that most, if not all, of the relevant facts are not contested. The Contract, with its inadequacies, says what it says, and it is clear that time was of the essence (the Contract says in clause 7.1, “All time periods, deadlines and dates in this Contract shall be strictly followed and 244 REAL PROPERTY REPORTS 52 R.P.R. (5th)

enforced.”). The letter tendering closing documents is clear. The absence of a response is clear. The failure to pay the funds on June 18 is clear. The request for an extension of time, and the extension for only two days is clear. We are now told that had only two more days been allowed for closing, the Buyer could have closed, but that would not have been apparent at the time — the extension request was for 10 days, eight more than were given. 47 It must also be noted that there was a deadline for the Owner Consent Phase 1 Environmental Assessment and the Owner Disclosure in respect of Phase 1 Environmental Assessment, being 7 days from acceptance, and the Seller did not meet that deadline, or provide those documents at all. However, as mentioned there is a dispute over why they were not given, and there is no evidence that the Buyer retained an environmental consulting firm. 48 Also, the Contract also had a three day deadline after “Final Signing of this Contract” (that is, acceptance) for the delivery of the various things that reasonably related to the Property, and the Seller did not meet that deadline, or provide the things at all. 49 It is also clear is that in June 2014 both sides were trying to close the transaction. The Seller was trying to sell, and the Buyer was trying to buy. It seems, in hindsight, to have been an error in strategy by the Seller to have attempted to “pull plug” so quickly and to commit (as we are now advised) to sell the same lands to a third party. 50 The question before this Court is whether it was entitled to “pull the plug” when funds did not arrive on June 18, 2014. If so, then is the Seller entitled to damages? 51 The Buyer argues that even if the Seller is successful in this application it should not be entitled to a damage award, because it had a clear opportunity to mitigate its damages — by closing the sale to the Buyer. 52 The parties do not dispute the fact of that time was of the essence for this Contract. However, the Buyer argues that for the Seller to rely upon this requirement, the Seller must have shown itself to be ready, desirous, prompt and eager to carry out his agreement, that he was not himself the cause of the delay, or otherwise in default, and the Seller has not subsequently recognized the agreement as still subsisting — that is, “he must not play fast and loose [with requirement] at his pleasure”: Digger Excavating (1983) Ltd. v. Bowlen, 2001 ABCA 214, 2001 CarswellAlta 1135 (Alta. C.A.) at para. 18, citing Robinson v. Harris (1892), 21 S.C.R. 390 (S.C.C.) and other cases. 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 245

53 Furthermore, recent case law says that the party seeking to rely on the “time of the essence” clause be acting in good faith: Digger Excavating (1983) Ltd. at para. 19, quoting Perell and Engell, Remedies and the Sale of Land, (2nd Ed.) (Toronto: Butterworths, 1998). 54 Furthermore, the Buyer argues that the duty to make the tender of purchase funds “does not arise until the Seller has done that which it was a incumbent upon him to do in order to close the sale”: Shaw v. Holmes, 1952 CarswellOnt 224, [1952] 2 D.L.R. 330 (Ont. C.A.) at para 20. 55 The Seller focuses on the fact that the time of the essence clause was never waived, but it also argues that the things not delivered do not justify the Buyer’s failure to tender funds. It argues that the things not delivered were breaches of a “subsidiary term”, citing Global First Ltd. v. 1237007 Alberta Ltd., 2008 ABQB 65, 2008 CarswellAlta 96 (Alta. Q.B.). However, in that case the Court focussed on whether time had remained of the essence in the facts before it, concluded that the issue could not be resolved on a summary judgment application, and then at paragraph 22 the Court said, in obiter dicta, that the vendors had argued that its failure to provide certain engineer’s working documents did not justify the purchaser’s failure to close. The Court said, “That seems very likely to be correct. It is clear that the engineer’s working documents were not necessary for the transfer or contemplated use of the lands.” [Emphasis added.] She noted that those “documents could be replaced, and the cost of doing so supports an action for damages, but does not justify rescission of the contract or excuse the purchaser’s failure to pay”, but then she went on to point out that she had already concluded that the purchasers had an arguable claim that the time for closing had not expired, so her view on this point did not dispose of the purchaser’s claim to the lands. 56 Here the Contract clearly required the delivery of “all agreements/documents/materials which reasonably relate to the Property” and the environmental consent documents. Some of those were historical and likely could not reasonably be replaced, some of them would have been the month-to-month lease agreements, and they related to the shorter term contemplated use of the lands. 57 However, the environmental consents seem not to have been any bar- rier to closing — the Buyer appears never to have retained an environmental consulting firm. 58 The Buyer submits that until the Seller tenders that which it is required to be tendered, the obligation to tender the purchase price never 246 REAL PROPERTY REPORTS 52 R.P.R. (5th)

arises. As to the argument that the Buyer’s lawyer did not specifically request things that were in the Contract, he says that the request was actually in the Contract, and it was never addressed by the Seller. The Buyer’s lawyer was not legally obliged to ask for the things that were expressly called for in the Contract, although she might have done so as a matter of courtesy. But since the Seller is relying on a very strict interpretation of the Seller’s rights, so is the Buyer. Having provided no estoppel certificates, no discharge of the Coinamatic lease, no month-to- month leases, no building report, no real property report, no information about the roof possibly extending over the property lines, and no consent for environmental inspection, he argues that the Seller had no entitlement to the purchase price. 59 Had the parties been working more cooperatively, there may well have been a request for this further information to make it clear that the Seller’s tender of closing documents was not adequate, but also there would have been a reasonable longer extension of time, a matter of a few days, for the Buyer’s financing to be fully in place. The Buyer’s litigation counsel says that if the Seller insists on strict compliance with the terms of the contract, the Buyer is entitled to do the same. The old expression that applies is, “live by the sword, die by the sword.” 60 The Seller says that the only conditions were those set out in Sched- ule “B”, relating to the rent roll and the environmental consent. 61 The Buyer says that is clearly not true. Financing remained as an express condition in the body of the contract. With the “Buyer’s Condition Day” having been struck out, he says that the “Buyer’s Condition Day” effectively became the day of closing. There is, perhaps, a question as to whether that condition had been waived as at June 18, 2014, when the Buyer’s lawyer advised the financing was arranged, and that the Buyer was only waiting for the instructions to the lender’s counsel and instructions in turn to her (and presumably the formal execution and registration of documents). But if it were only waived then, it would clearly have taken some time for the mortgage to be prepared, signed, registered, and a certificate of title received showing its registration. 62 And even if the financing condition had been waived, the Seller still had an outstanding obligation to provide the other documents. Having not even disclosed that some of them existed, the Buyer says that the Seller cannot complain that the Buyer did not expressly ask for them. No doubt once the transaction had closed, if it had closed, the Buyer’s re- quests for estoppel certificates and other documents would have been 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 247

met with the argument by the Seller that its obligations under the contract had merged with the closing, and it was not, in any event, able to provide estoppel certificates after closing; the Buyer would then be the landlord. Perhaps the Buyer could get them from the tenants, or perhaps not. If there were outstanding disputes over rent, maintenance, the terms of the month-to-month lease, it might be too late for the Buyer to do anything about it, and it might not be able to obtain the estoppel certificates. 63 The root problem would appear to be that the parties took a form of agreement, with many blanks in it, left many of them still blank, and marked it up with a pen, leaving the Contract in some confusion as to what was a “condition”, what iwa not, and what the Seller’s obligations were in the absence of a clear date for waiver of its obligations. 64 The Seller argues that the rule of contra proferentum applies because the base agreement was prepared by the Buyer’s lawyer. However, the drafting problems here arose from the fact that changes were made by the Buyer and Seller in a meeting working together, without legal counsel, without a real estate agent, and probably sharing a pen. The Contract cannot be interpreted in favor of, or against, the interests of either party. 65 Counsel for the Seller attempted to close based on an understanding which was not unreasonable, given the state of the Contract, and no doubt based upon what his client was telling him. Counsel for the Buyer says the Buyer’s inability to close on time resulted, in part, from at least one day’s delay in getting the appraisal. The real estate lawyer had been focusing on the critical financing, and apparently she never got to the point of determining what documents should have been provided but were not. The non-disclosure issue was made worse when the Buyer learned in these proceedings that the Seller had other documents that should have been tendered, of which (I infer) neither counsel were previously aware existed.

Conclusion 66 In the somewhat unique circumstances of this case, it is my conclusion that the Seller had an obligation to tender the further documents — at least the estoppel certificates, any month-to-month leases in its possession that were still in force, the Coinamatic lease, the structural report, the real property report and the boiler inspection report, all relating to the use of the lands being sold and being mandated by the express terms of the Contract — and without a remaining “Buyer’s Condition Day” set out in the remnant wording, the condition date for the express condition 248 REAL PROPERTY REPORTS 52 R.P.R. (5th)

of financing was the closing day — except that in the circumstances that mandated some realistic time for the arranged financing to be put in place. Having failed to provide these documents and to allow the financing to be put in place, the Seller was not in a position to rely on the “time of the essence” provision in the Contract and declare that the Contract was at end on the basis that the Buyer had not tendered funds. I agree with the Buyer’s argument that he who lives by the sword must die by the sword. 67 All that is required is for the Court to conclude that the application brought by the defendant is unsuccessful because the facts do not support it, there being no current cross-application before me by the plaintiff, but in the spirit of the approach mandated by the Court of Appeal in Windsor v. Canadian Pacific Railway, 2014 ABCA 108, 2014 CarswellAlta 395 (Alta. C.A.), in light of the position of both parties that the matter may be dealt with summarily, in light of the fact that most if not all of the material facts are not in dispute (there is a debate over why the environmental consent was not provided, but the case does not turn on that alone), and in light of the fact that the plaintiff’s application for summary judgment for specific performance must be brought before a Justice, I have set out my views clearly. 68 As a matter of judicial economy and to avoid contrary findings on the record, if my decision is appealed I suggest that it should be heard before a Justice together with the plaintiff’s application for summary judgment and specific performance. 69 Accordingly, the application to summarily dismiss the plaintiff’s claim is dismissed. 70 Had I found that the Seller’s position prevailed, I would not have awarded damages, because the obvious way in the circumstances for the Seller to mitigate its damages would have been to take steps to let the Buyer close, once it knew that financing was approved, that the Buyer was waiting for the lender’s counsel to get “up to speed”, and that the only immediate alternative was to sell the lands for less to a third party. 71 I have not expressly made a finding that the Seller did not act in good faith in calling the Contract at end and attempting to sell to a third party. The haste with which the Seller attempted to resell, having an agreement of some kind already in hand apparently with the prior expectation of selling immediately to another party for a lower price, raises suspicions. However, I am not able to conclude that it acted in bad faith. 1613185 Alberta Ltd. v. 837757 Alberta Ltd. Master A.R. Robertson 249

72 The parties may speak to me about costs. Application dismissed. 250 REAL PROPERTY REPORTS 52 R.P.R. (5th)

[Indexed as: Burns v. Woodsdale Estates Ltd.] Mary Lorraine Burns, Plaintiff and Woodsdale Estates Ltd., Cloverdale Holdings Ltd., Colleen May MacDonnell and Allan John MacDonnell, Defendants British Columbia Supreme Court Docket: Kelowna 91717 2015 BCSC 212 J.S. Sigurdson J. Heard: August 5-8, 11-14, 2014 Judgment: February 16, 2015* Real property –––– Easements — Nature of easements –––– In 2002, plaintiff purchased lot A, which was accessed by gravel road through adjacent property, lot B — Plaintiff contemplated future subdivision of lot — When plaintiff purchased property, owner of lot B agreed to unregistered agreement to add additional property to lot A and to adjust property lines between properties — Agreement provided that upon subdivision of lot A, lot B would dedicate road or portion of land to satisfy governmental requirements for subdivision-compliant road — Previously, in 1996, easement agreement was registered against lot B that granted owner of lot A easement to construct and maintain ingress and egress to and from lot A and provided that grantor under grantee would be equally responsible for construction, maintenance and repair of road — Owner- ship of lot B had changed since plaintiff acquired lot A — Plaintiff brought application for declaration that registered easement was binding on current owner and assignees and successors, order that unregistered 2002 agreement was binding on existing owner, successors and assignees and declaration that she had continuing right to build road as required by district for subdivision approval — Application granted in part — Law was clear that only negative covenants in easement ran with land — Easement agreement contained positive covenants — Positive covenant that did not run with land should not be enforced as matter of contract — Doctrine of privity of contract prevented imposing positive obligation on non-party — Positive covenants under easement agreement could not be imposed on defendants — Defendants agreed to be bound by 2002 agreement and court should make declaration that they were bound by agreement — How- ever, declaration was not made that successors and assignees of defendants were

*Additional reasons at Burns v. Woodsdale Estates Ltd. (2015), 2015 BCSC 758, 2015 CarswellBC 1242 (B.C. S.C.). Burns v. Woodsdale Estates Ltd. 251 bound by agreement, based on doctrine of privity of contract and fact that they had no notice — Plaintiff had not proven defendants violated any rights she had under easement agreement or 2002 agreement — There was no evidence that defendants were not prepared to comply with obligations in connection with property — It was not appropriate to grant declaration in connection with road, as orders sought were not grounded in real dispute and were speculative. Cases considered by J.S. Sigurdson J.: Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 58 O.R. (3d) 481, 211 D.L.R. (4th) 1, 157 O.A.C. 135, 2002 CarswellOnt 850, 50 R.P.R. (3d) 1, [2002] O.J. No. 1023 (Ont. C.A.) — considered Bhasin v. Hrynew (2014), 379 D.L.R. (4th) 385, 2014 SCC 71, 2014 CSC 71, 2014 CarswellAlta 2046, 2014 CarswellAlta 2047, [2014] 11 W.W.R. 641, 27 B.L.R. (5th) 1, 4 Alta. L.R. (6th) 219, 464 N.R. 254 (S.C.C.) — considered Brown v. Belleville (City) (2013), 30 R.P.R. (5th) 167, 114 O.R. (3d) 561, 8 M.P.L.R. (5th) 169, 359 D.L.R. (4th) 658, 2013 ONCA 148, 2013 Carswell- Ont 2605, 302 O.A.C. 354, 13 B.L.R. (5th) 1, [2013] O.J. No. 1071 (Ont. C.A.) — followed Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd. (1999), 127 B.C.A.C. 287, 207 W.A.C. 287, 67 B.C.L.R. (3d) 213, 47 C.C.L.T. (2d) 1, 1999 A.M.C. 2840, 50 B.L.R. (2d) 169, [1999] 3 S.C.R. 108, [2000] 1 Lloyd’s Rep. 199, 176 D.L.R. (4th) 257, 245 N.R. 88, 1999 CarswellBC 1927, 1999 CarswellBC 1928, [1999] I.L.R. I-3717, [1999] 9 W.W.R. 380, 11 C.C.L.I. (3d) 1, [1999] S.C.J. No. 48 (S.C.C.) — followed Greater Vancouver (Regional District) v. British Columbia (2011), 2011 BCCA 345, 2011 CarswellBC 2232, 339 D.L.R. (4th) 251, 20 B.C.L.R. (5th) 266, 86 M.P.L.R. (4th) 1, 309 B.C.A.C. 124, 523 W.A.C. 124 (B.C. C.A.) — considered Greenwood Shopping Plaza Ltd. v. Neil J. Buchanan Ltd. (1980), 1980 Car- swellNS 26, 71 A.P.R. 119, (sub nom. Greenwood Shopping Plaza Ltd. v. Beattie) [1980] 2 S.C.R. 228, 111 D.L.R. (3d) 257, 32 N.R. 163, 39 N.S.R. (2d) 119, 10 B.L.R. 234, [1980] I.L.R. 1-1243, 1980 CarswellNS 80, [1980] S.C.J. No. 59 (S.C.C.) — considered London Drugs Ltd. v. Kuehne & Nagel International Ltd. (1992), [1993] 1 W.W.R. 1, [1992] 3 S.C.R. 299, (sub nom. London Drugs Ltd. v. Brassart) 143 N.R. 1, 73 B.C.L.R. (2d) 1, 43 C.C.E.L. 1, 13 C.C.L.T. (2d) 1, (sub nom. London Drugs Ltd. v. Brassart) 18 B.C.A.C. 1, (sub nom. London Drugs Ltd. v. Brassart) 31 W.A.C. 1, 97 D.L.R. (4th) 261, 1992 CarswellBC 913, 1992 CarswellBC 315, EYB 1992-67042, [1992] S.C.J. No. 84 (S.C.C.) — followed Nordin v. Faridi (1996), 17 B.C.L.R. (3d) 366, [1996] 5 W.W.R. 242, 69 B.C.A.C. 280, 113 W.A.C. 280, 1996 CarswellBC 87, [1996] B.C.J. No. 61 (B.C. C.A.) — followed 252 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Vision Avant-Garde Inc. v. British Columbia (Superintendent of Financial Insti- tutions) (2000), 2000 CarswellBC 549, 17 C.C.L.I. (3d) 137, 2000 BCSC 423, [2000] B.C.T.C. 123, [2000] B.C.J. No. 486 (B.C. S.C.) — considered Statutes considered: Land Title Act, R.S.B.C. 1996, c. 250 Generally — referred to

APPLICATION by plaintiff for declaration that registered easement was binding on current owner and assignees and successors, order that unregistered 2002 agreement was binding on existing owner, successors and assignees and declaration that she had continuing right to build road as required by district for subdivision approval.

Henry C. Wood, Q.C., for Plaintiff Jeffrey G. Frame, for Defendants

J.S. Sigurdson J.: Introduction 1 This case concerns a landowner’s attempt to clarify and enforce rights in and against an adjacent property, and against current and future adjacent property owners, in connection with the future subdivision of her property. The plaintiff, at the time of her purchase, had the benefit of an easement over the adjacent property, and entered into an agreement with the adjacent property owner. 2 The plaintiff seeks a number of orders to attempt to clarify her legal relationship with the present and future owners of the adjacent property. She does this in order to provide herself with commercial certainty so that she can proceed with her development, or at least attempt to register the agreement against the adjacent property. 3 In brief outline, the facts are as follows. In 2002, the plaintiff, Ms. Burns, purchased Lot A which overlooks Wood Lake near Kelowna. She intended to live with her husband in the home on Lot A but also contemplated future subdivision. Lot A was accessed by a gravel road through the adjacent property, Lot B. 4 The owner of Lot B agreed, in an unregistered agreement entered into at the time of the plaintiff’s purchase in 2002, to add additional property to Lot A and adjust the property line between Lots A and B up to the existing road upon request. The agreement also provided that upon subdivision of Lot A, Lot B would dedicate the road or a portion of land, to Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 253

satisfy municipal or other governmental requirements for a subdivision- compliant roadway. Earlier, in 1996, an easement agreement was registered against Lot B that granted the owner of Lot A an easement to construct and maintain ingress and egress to and from Lot A and also provided that the grantor and grantee under the easement would be equally responsible for the construction, maintenance and repair of a road. 5 Now 12 years after the purchase of Lot A by Ms. Burns, the subdivision of Lot A has still not occurred nor has the property transfer and property line adjustment from Lot B taken place. Ms. Burns asserts that she has important rights under the unregistered 2002 contract and the registered easement that have been threatened or violated and she seeks to enforce and clarify those rights in this proceeding. 6 Ownership of Lot B has changed since the plaintiff acquired Lot A. The shares of the company owning Lot B are held by the person who sold Lot A to the plaintiff. Suspicion and distrust have developed between the owners of Lot A and Lot B such that the plaintiff now says she is concerned that her rights under the 2002 contract and registered easement may not be respected in the future. 7 Accordingly, Ms. Burns seeks a number of declarations, including a declaration that the registered easement agreement, together with what may be positive covenants to share costs and construct a road, is binding not only on the current owner but also its assigns and successors. 8 As to the unregistered 2002 agreement with the original owner of Lot B to dedicate land and the roadway, the plaintiff seeks an order that the agreement is binding on the existing owner and as well its successors and assigns. 9 The final order sought by the plaintiff is a declaration that she has a continuing right to build a road as required by the district for subdivision approval and to which the defendants are obliged to contribute. 10 The defendants say that no relief should be granted. 11 The defendants argue that the easement is registered and that no declaration that it is binding is necessary. The defendants say that no order should be made that purports to bind the current owner or successors and assigns as to positive covenants in the easement as they do not run with the land. 12 As to the unregistered 2002 agreement, the defendants, one of which is the current owner of Lot B, say there is no purpose in the Court granting a declaration that the current owner of Lot B is bound as that has 254 REAL PROPERTY REPORTS 52 R.P.R. (5th)

been admitted by the defendants on many occasions. As such, they say that there is no real dispute between the parties and there is no basis for a declaration. The defendants also say that it is unworkable, and without legal foundation, to make an order that successors without notice of the unregistered agreement are bound. 13 As to the various declarations sought by the plaintiff claiming anticipatory breach, specific performance or damages, the defendants say that no order should be made as there has been no breach established or failure to comply on the part of the defendants proven. The defendants say that the plaintiff seeks a series of declarations where there is really no dispute. 14 As to the declaration of a continuing right to build a subdivision-compliant roadway with the defendants’ contribution that the plaintiff seeks, the defendants say this is a purely speculative matter and the Court should not make an order in the absence of a factual situation and a real dispute. 15 Finally, the defendants seek an order that the unregistered 2002 agreement expires if the plaintiff’s rights under it have not been exercised within a reasonable time.

Issues 16 After I review the facts I will discuss the particular orders that are sought. I should point out the plaintiff withdrew her claims for damages for conspiracy, inducing breach of contract, interference with contractual relations, and for any orders in connection with the Land Title Act, R.S.B.C. 1996, c. 250, provided the declaration she seeks that Cloverdale is bound by the 2002 agreement is granted. 17 The overarching issue in this case is the extent to which it is appropriate to make declarations of future rights, particularly when there is no precise dispute between the parties.

Facts 18 I will now describe the facts of this litigation in more detail. 19 The subject properties are located in the Okanagan in British Colum- bia. Lot A is about 8.85 hectares in size and overlooks Wood Lake. Lot A rises steeply from Oyama Road, leveling off on a bench. On that bench lies the adjacent property, Lot B, which is immediately to the east or uphill side of Lot A. To the south of Lots A and B is a developed residential subdivision which is accessed by Darlene Road. Darlene Road Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 255

ends at the south boundary of Lot B just east of the boundary between Lot A and Lot B. There is no access to Lot A from Oyama Road and the access to the house on Lot A is from a 1996 easement across Lot B. 20 Lots A and B were originally part of a larger group of properties owned by the Macdonnell family. Allan John Macdonnell is the defendant Colleen Macdonnell’s father. Colleen Macdonnell acquired Lot A in 1989 and built a house on it. Her access to her house on Lot A was along the gravel road through Lot B that continued north from where Darlene Road ended. The road through Lot B not only provided access to Colleen Macdonnell’s home on Lot A but provided access to Ms. Macdonnell’s brother Kevin’s property, which is located north of Lot B. 21 Access to Lot A is of course of vital importance but the certainty of access to Lot A is not a new issue. 22 In 1994, in a foreclosure proceeding, two banks holding mortgages over Lot A sought a declaration of an easement over the farm road on Lot B then owned by Woodsdale Estates Ltd., a company owned and run by Ms. Macdonnell’s father, Allan Macdonnell. The bank’s petition for a declaration in that respect was dismissed. 23 In the mid-1990s Ms. Macdonnell wanted to subdivide and develop Lot A and entered a joint venture agreement with Lyle Kallis, apparently to finance the development of Lot A. Under their joint venture agreement of March 20, 1996, Mr. Kallis contributed $240,000 to retire the foreclosure that I referred to and Ms. Macdonnell contributed the land, Lot A, to the joint venture. Ms. Macdonnell and Mr. Kallis became the co-owners of Lot A. Mr. Kallis, as a condition of entering the joint venture, required an easement over Lot B. It became a condition precedent that an agreement binding on Woodsdale Estates Ltd. (then the owner of Lot B) respecting access to Lot A was entered into in terms satisfactory to Mr. Kallis. 24 Before the joint venture agreement was entered into between Ms. Macdonnell and Mr. Kallis on March 20, 1996, they had entered into an earlier agreement of March 12, 1996 which called for some preliminary roadwork on Lot B for which Woodsdale would be entitled to charge up to $10,000. It was also contemplated at that time that there would be additional property required for the development of Lot A. It was referred to by the parties as “an additional 2 or 3 acres” apparently so that there would be sufficient land to facilitate subdivision into the appropri- ately-sized lots. The evidence in this case suggests that generally the parties contemplated a 4-lot subdivision of Lot A. 256 REAL PROPERTY REPORTS 52 R.P.R. (5th)

25 When Ms. Burns purchased Lot A there had also been some reference to an additional 2 to 3 acres required from Lot B. There is no suggestion in this case of a misrepresentation. The difference between the amount of the property adjustment (about 1 acre) and the 2 to 3 acres referred to initially between Mr. Kallis and Ms. Macdonnell is likely explained by the fact that, if a typical road for the subdivision is 20 metres in width, the amount in excess of the farm road for the necessary road dedication and the boundary adjustment might roughly be in the range of that 2 to 3 acres. 26 An easement against Lot B was registered on March 22, 1996. I will refer to some of the relevant portions. The grantor is Woodsdale Estates Ltd., then the owner of Lot B, and the grantee was Colleen May Thomp- son (Macdonnell), then the owner of Lot A. The grantor’s property, Lot B, is referred to as the servient tenement and the grantee’s property, Lot A, is referred to as the dominant tenement. The easement agreement provided as follows: 1. The Grantor, as owner of the Servient Tenement, subject to the reservation contained in paragraph 2 hereof, does hereby grant, convey and confirm unto the Grantee, as owner, of the Dominant Tene- ment, and for the benefit of the Dominant Tenement, and to be appurtenant to the Dominant Tenement for the use and enjoyment of the Grantee, the full, free and uninterrupted right, license, liberty, easement, privilege and permission at all times and from time to time: (a) to enter upon the Easement Area and construct and maintain a roadway for the purpose of ingress, egress and regress to and from the Dominant Tenement; (b) to enter upon and pass and repass over the Easement Area by day and by night, on foot and with or without vehicles for the purpose of ingress and egress and regress to and from the Dominant Tenement with machinery, materials, vehicles, equipment or otherwise for the purpose of this easement; (c) to keep the Easement Area clear of all or any part of any trees, growth or obstructions which might interfere with or endanger the use of the Easement Area for or incidental to the purpose aforesaid; (d) for the servants, agents, contractors, workmen and other persons acting for or on behalf or at the invitation of the Grantee, to enter and exit from the Easement Area with machinery, materials, vehicles and equipment necessary for or incidental to the purpose aforesaid. Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 257

... 3. The right, license, liberty, easement, privilege and permission herein granted by the Grantor to the Grantee shall be construed as running with the Dominant Tenement and the Servient Tenement and shall be appurtenant to and for the benefit of the Dominant Tenement in perpetuity, and it is expressly agreed that the terms of this Agree- ment shall attach to and run with and be for the benefit of each and every part or parcel into which the Dominant Tenement or any part thereof may hereafter be subdivided. 4. The Grantor and the Grantee shall be equally responsible for the construction, maintenance and repair of the roadway on the Easement Area and the Grantee covenants and agrees to maintain the said roadway in a reasonable state of maintenance and repair. 5. It is expressly agreed between the parties hereto that all grants, covenants, rights, licenses, liberties, privileges and other terms of this Agreement shall be read and held as made by and with, granted to and imposed upon the respective heirs, executors, administrators, transferees, successors in title and assigns of the parties hereto and the owner (s) and occupier(s) from time to time of the dominant and Servient Tenements and its and their respective licensees, invitees, customers, agents, suppliers, contractors, servants and workmen and all other persons with their express or implied permission or claiming through them. ... 8. None of the covenants herein contained shall be personal or binding upon the Grantee, save and except during the Grantee’s ownership of any interest in the Dominant Tenement and with respect only to that portion of the Dominant Tenement owned by the Grantee from time to time, but the Servient Tenement nevertheless shall be and remain at all times charged therewith. None of the covenants herein contained shall be personal or binding upon the Grantor, save and except during the Grantor’s ownership of any interest in the Ser- vient Tenement, and with respect only to that portion of the Servient Tenement owned by the Grantor from time to time. 27 There was evidence at trial of work done on the easement gravel road by a work crew sometime after March 1996 but before August 2002. 28 When the attempts to develop Lot A under the Macdonnell/Kallis joint venture did not come to fruition in a timely way, Mr. Kallis did not want to continue the project. Ms. Macdonnell began searching for a new co-venturer or buyer and this is when the Burns entered the picture. 258 REAL PROPERTY REPORTS 52 R.P.R. (5th)

29 In July 2002, Ms. Macdonnell was contacted by Mark Burns about the possible purchase of Lot A. Mr. Burns is a lawyer. Although the legal documents were in Ms. Burns’ name, all negotiations and preparation of documents relating to the purchase were done by Mr. Burns for his wife. 30 On September 3, 2002, an agreement in writing in connection with the sale was reached between Ms. Burns, Allan Macdonnell and Wood- sdale Estates Ltd. I will refer to it as the Burns/Woodsdale agreement. The Burns/Woodsdale agreement provided for the granting of land from Lot B and the dedication of a roadway for the subdivision. The recital to the Burns/Woodsdale agreement provided: ... and in order to assist Colleen Macdonnell [in] completing this sale to Burns, Woodsdale is prepared: (1) to grant hereunder to Burns a certain portion of the Woodsdale Lands; (2) to dedicate a roadway for the purpose of a subdivision or other disposition of Lot A; (3) to make available to Lot A and any subdivision thereof water for do- mestic, fire and irrigation purposes; and (4) to terminate the JV- Woodsdale Agreement as defined herein; all in accordance with the terms and conditions contained herein. 31 Key provisions of the Burns/Woodsdale agreement appear in clauses 2 through 5 and they read: 2) The line colored in green on the Plan represents the current boundary between Lot A and Lot B; 3) A road has been constructed on Lot B as an extension of Darlene Road running across the Woodsdale Lands to the northeast corner of the boundary of Lot A; 4) Upon request from Burns, Woodsdale and Allan Macdonnell agree to transfer to Burns to be added to Lot A, the area outlined in purple on the Plan; such transfer to be at no cost to Burns; Burns shall be responsible for the preparation of the documentation required to effect the transfer and the registration thereof. Woodsdale shall execute in registrable form and return to Burns the required documentation within 10 days of receipt from Burns. It is understood and agreed that the eastern boundary of the lands proposed to be transferred shall be surveyed at the expense of Burns to establish the area in as close a proximity to the westerly side of the road as it exists on the date hereof to correctly establish the new boundary. 5) In the event Burns is desirous of proceeding with a subdivision of Lot A as amended which requires the dedication of the road as outlined in red on the Plan or as is otherwise required by governmental authorities of competent jurisdiction, Woodsdale agrees to dedicate without charge the lands represented by such roadway upon written Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 259

request from Burns; Burns agrees to prepare all the required documentation including survey plans to effect the dedication and Wood- sdale and Allan agree to execute or cause to have executed all such required documentation within a reasonable period of time from request. 32 Accordingly, in conjunction with the Burns/Woodsdale agreement, Lot A was transferred by Mr. Kallis and Ms. Macdonnell to Ms. Burns on November 26, 2002. However, the Burns/Woodsdale agreement, if it could be registered, was not registered against Lot B. 33 Lot B did not remain owned by Woodsdale. 34 As of 2003, Woodsdale held Lot B in trust for the benefit of Mr. Macdonnell’s daughter’s company Cloverdale Holdings Ltd. In 2005 Cloverdale became the registered owner of Lot B but it was not until 2011 that Mr. Macdonnell relinquished control over Lot B by instructing his lawyers to release the title of Lot B to Cloverdale. Accordingly Cloverdale is now the registered owner of Lot B as well as the beneficial owner. The shares of Cloverdale are held by the defendant, Ms. Macdonnell. 35 The subdivision or development of Lot A by the plaintiff has not taken place, likely contrary to the parties’ expectations. 36 It is not necessary to review the correspondence between the parties from 2008 when the plaintiff was proceeding with plans to develop Lot A until the litigation was started in June 2011. Nevertheless, it is appropriate to say in brief that Mr. Burns thought that Ms. Macdonnell was slow in signing letters of permission to prepare and submit a preliminary subdivision plan for approval and Ms. Macdonnell found the tone and content of Mr. Burns’ communications to be offensive. 37 In 2009, Mr. Burns complained about Ms. Macdonnell’s conduct in what he saw as the intentional destruction of the visual historical road edge on Lot B, indicating the boundary of the property to be transferred and her brother’s efforts to secure an access agreement over the “adjustment” lands. However, Ms. Macdonnell reminded her brother of the agreement with the Burns to adjust the property line and acknowledged her obligations under the Burns/Woodsdale agreement to Ms. Burns. Ms. Macdonnell indicated she was committed to upholding the terms of the agreement. Ms. Macdonnell’s then lawyer incorrectly stated that once the realignment of the property line and property transfer was completed, Ms. Burns was no longer permitted to use Lot B to access Lot A. Ms. Macdonnell’s position was subsequently clarified. Mr. Burns asserted 260 REAL PROPERTY REPORTS 52 R.P.R. (5th)

that the easement over Lot B gave him certain rights. He wrote that it gave him a right “to cross all of Lot B at any time. Further, the owner of Lot B is restricted from constructing or placing anything anywhere on Lot B that interferes with the prescribed rights granted to Lot A”. 38 By a letter of August 22, 2010, Mr. Burns asserted that Cloverdale as the owner of Lot B “[would] be responsible along with us for the costs associated with the road construction and maintenance thereof, [and] we will attempt, as a courtesy, to keep her apprised of our progress”. This is the first time according to the defendants, as appears to be the case, that the Burns asserted that Cloverdale, as the owner of Lot B, was responsible to share these costs. 39 By letter of September 19, 2010, Mr. Burns said that it had come to his attention that “your client may have plans to construct buildings and other improvements on Lot B”. 40 On November 1, 2010, counsel for Ms. Macdonnell responded to the August 22 letter and referred to the Burns/Woodsdale agreement. Mr. Frame, counsel for the defendants, argues that this response acknowledged that: There is an agreement that is binding on both Ms. Burns and our client, by which Ms. Burns may request that our client transfer to her the land outlined in purple (on the sketch enclosed). When such a request is received, it is Cloverdale’s intention to comply; in particular, to execute the necessary subdivision and transfer documents. 41 In March 2011, the plaintiff retained Mr. Ferguson, a surveyor, and then renewed her efforts to adjust the boundaries. 42 In June 2011, Ms. Macdonnell retained a surveyor, Jason Shortt, and his survey crew to confirm the location of the western edge of the road, to stake out the previously unregistered waterline and investigate a survey post of unknown origin along the boundary of Kevin Macdonnell’s property. Mr. Burns was suspicious of the placement of stakes within the boundary adjustment line. It was following the discovery of the Shortt survey crew that Mr. Burns instructed his counsel to commence these legal proceedings. In these proceedings the plaintiff sought a declaration that the Burns/Woodsdale agreement was valid, a declaration that the defendants had committed an anticipatory breach of that agreement, an order for specific performance, damages and a certificate of pending litigation. Ms. Macdonnell acknowledges that the Shortt survey crew was there to address water line issues. Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 261

43 In the defendants’ response to the notice of civil claim filed on June 28, 2011, Cloverdale confirmed its knowledge of the Burns/Woodsdale agreement, and that it was bound by its terms to the same degree and extent as Woodsdale. 44 The notice of civil claim was amended substantially in April 2014 removing a plea for rectification. The plaintiff sought registration of the Burns/Woodsdale agreement, alleged a trust, raised conspiracy and alleged civil fraud in the Land Title Act context. 45 The plaintiff has abandoned her claims for fraud, conspiracy, induce- ment of breach of contract, positive covenants in the easement that run with the land, interference with contractual relations, any trust claim against Ms. Macdonnell and any request in this proceeding that the Burns/Woodsdale agreement be registered if the Burns/Woodsdale agreement is held to be binding on Cloverdale.

Summary of Relief Sought and Parties’ Positions 46 I now turn to the specific orders that are sought by the plaintiff in relation to the registered easement and the unregistered Burns/Woodsdale agreement and the positions taken by the defendants. The plaintiff seeks: Easement Agreement (a) a declaration that all terms of the easement agreement, excluding clause 4 (the positive covenant), are binding upon Cloverdale as an equitable charge running with the land; I understand that the plaintiff now concedes this order is unnecessary as there is no dispute that the negative covenants in the easement agreement run with the land. (b) a declaration that Cloverdale and its assigns and successors in title to Lot B are bound by the terms of the easement agreement, including clause 4, as matter of contract; This is disputed as Cloverdale says it is under no obligation under the easement to contribute towards the cost of construction, maintenance, or repair of a road. These covenants it says are positive covenants that are conceded not to run with the land. The issue I will discuss below is whether there is a contractual connection created by the enurement clause, or some other basis, that binds Cloverdale to this positive burden for the benefit of the plaintiff as owner of Lot A. 262 REAL PROPERTY REPORTS 52 R.P.R. (5th)

(c) in the alternative to the order sought in (a) above, an order against Woodsdale for damages suffered by the plaintiff as successor in title to Lot A as a result of Woodsdale’s breach of the easement agreement in failing to ensure that its successor in title, Cloverdale, was bound by all obligations upon the grantor under the easement agreement; The defendants, on the other hand, say that there is no obligation on Woodsdale to ensure successors in title are bound by the terms of the easement and that is done by the Land Title Act. The defendants also say that to suggest there is an additional obligation to extract promises from purchasers that they are bound by other terms in a registered document that do not run with the land is novel and defeats the purpose of the Torrens system. In any event, it is conceded that there have been no damages for an alleged breach of the positive covenant in clause 4 of the easement agreement in any event. Burns/Woodsdale Agreement (d) a declaration that all covenants and terms applicable to Woodsdale and Allan Macdonnell under the Burns/Woodsdale agreement are binding on Cloverdale (except for those aspects of the agreement relating to the supply of water to Lot A that are beyond the control of Cloverdale); The defendants’ position is there is no purpose to this declaration as there is no disagreement. Cloverdale has stated repeatedly that it is bound by the Burns/Woodsdale agreement to the extent that Woodsdale was. The defendants say as such there is no justiciable issue that gives rise to the plaintiff’s entitlement to a declaration. (e) a declaration that all covenants and terms applicable to Woodsdale and Allan Macdonnell under the Burns/Woodsdale agreement are binding on Cloverdale’s assigns and successors in title as a matter of contract (except those aspects of the agreement related to the supply of water to Lot A that are beyond the control of Cloverdale); The defendants say that there is no legal basis for this order and further that it is totally unnecessary and unworkable if successors are bound despite having no notice. The defendants say that if Cloverdale failed to notify its successor of its obligations the plaintiff’s remedy would be in damages against Cloverdale. Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 263

(f) a declaration that Cloverdale has committed an anticipatory breach of the Burns/Woodsdale agreement with regard to the obligation to transfer the lands from Lot B required to effect the boundary line adjustment to Lot A; The defendants say that Cloverdale has not failed nor neglected to perform its obligation, nor has it put itself in a position where it is unable to perform its obligation. (g) an order for specific performance by Cloverdale of the transfer of lands from Lot B required to effect the boundary line adjustment of Lot A in accordance with the terms of the Burns/Woodsdale agreement, including the requirement to execute documents as may be reasonably required for that purpose; The defendants say that there has been no refusal to perform, and therefore no basis for the order for specific performance exists. (h) alternatively, an order against the defendants Allan Macdonnell and Woodsdale Estates for damages suffered, or to be suffered, by the plaintiff resulting from the breach of the Burns/Woodsdale agreement by their failure to bind Cloverdale, Woodsdale’s effective successor in title to Lot B, to perform all covenants and terms applicable to Woodsdale or Allan Macdonnell to the extent that they are capable of performance by Cloverdale; The defendants say this is unnecessary and adds nothing for if Woodsdale transferred Lot B to a party that would not honour the terms of the Burns/Woodsdale agreement then Woodsdale would be in breach or would have committed an anticipatory breach, but that has not occurred. Easement Agreement and Burns/Woodsdale Agreement (i) a declaration that the plaintiff and her successors in title have a continuing right to construct a new road upon Lot B in relation to a subdivision of Lot A subject to the restrictions imposed under clause 5 of the Burns/Woodsdale agreement; The defendants say the relief sought is too broad and speculative as it is not known what road the plaintiff may wish to build or might be required to build as a condition of subdivision approval.

Discussion 47 The plaintiff in this proceeding seeks clarity of her rights in connection with the adjoining lands Lot B, and the present and future owners of 264 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Lot B, so that she will be able to proceed with the development or sale of her property, Lot A. 48 In general, the defendants argue that this litigation was unnecessary, and oppose the declarations and orders sought by the plaintiff. They argue that no basis for any relief has been established; the declarations are needless either because there is no dispute or issue between the parties, since there is no obligation, the obligation has been admitted by the defendants, or because the obligation to the extent it exists flows from registration. The defendants also say that damages cannot be awarded because none have been proven and no breach has been established, and that any claim for a declaration as to rights in the future is either without a legal basis or is speculative.

The Easement 49 I will discuss first the issues relating to the easement, then discuss the issues relating to Cloverdale’s obligations under the Burns/Woodsdale agreement and then discuss whether I ought to make any of the declaratory orders or orders for damages that are sought by the plaintiff. 50 Let me start with the discussion about the easement and the nature of the obligations binding on Cloverdale as the owner and subsequent owner of Lot B. 51 Cloverdale is the present owner of Lot B which is subject to the registered easement. 52 In Nordin v. Faridi, [1996] B.C.J. No. 61 (B.C. C.A.), Rowles J.A. described what an easement is and the nature of the obligations that rest on a subsequent owner of land that is encumbered by an easement. She said at paras. 31, 33, 34 and 35: 31 An easement is a right which one person may exercise with respect to the land of another. The four requirements for an easement were set out in Re Ellenborough Park, [1956] Ch. 131, and have been accepted in Canada in Dukart v. District of Surrey, [1978] 2 S.C.R. 1039 at 1050. 1. There must be a dominant and a servient tenement. 2. The easement must accommodate the dominant tenement. 3. The dominant and servient tenement owners must be different persons. 4. The right granted must be capable of forming the subject- matter of the grant. Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 265

..... 33 The first two classes of easements are known as positive easements and the third as a negative easement. A positive or affirmative easement confers a right to commit some act upon the servient tenement whereas a negative easement involves merely a right to prohibit the commission of certain acts upon the servient tenement which the servient owner would have been otherwise entitled to commit. See Halsbury’s Laws of England, 4th ed., vol. 14, at para. 26; C. Sara, Boundaries and Easements, (London: Sweet & Maxwell, 1991) at pp. 159-160. 34 Neither class of easement, however, involves the imposition of a positive obligation upon the servient tenement holder. As Sara states in Boundaries and Easements, supra, at pp. 160-161: It is an essential characteristic of an easement that it does not place on the owner of the servient tenement any obligation to act. Such an obligation can only be imposed by a positive covenant, the burden of which will not pass with the land. As a result the owner of the servient tenement has no obligation to maintain a right of way or, as the law is generally understood, to keep in repair a building in respect of which there is an easement of support...... Apart from the anomalous position of fencing easement, if a person wishes to place a positive burden on the owner or occupier of neighbouring land, he must do so by covenant which (as it is not a restrictive covenant) will not run with the land. Since the abolition of manorial incidents, therefore, it is impossible to burden land (as opposed to the landowner) with any positive obligations owed towards the neighbouring land. 35 Similarly, an easement is described in Halsbury’s Laws of En- gland, supra, at para. 23, as follows: A true easement is either a right to do something or a right to prevent something; a right to have something done is not an easement, nor is it an incident to an easement. An easement merely imposes an obligation to submit to the commission of some act upon the servient tenement by the dominant owner, or an obligation upon the servient owner to refrain from the commission of some act upon his own land. Accordingly an easement does not cast any burden upon the owner of the servient tenement to commit any act upon that or any other tenement. The owner of 266 REAL PROPERTY REPORTS 52 R.P.R. (5th)

a servient tenement is not bound to execute any repairs necessary to ensure the enjoyment or convenient enjoyment of the easement, but he must not deal with his tenement so as to render the easement over it incapable of being enjoyed or more difficult of enjoyment by the dominant owner. 53 The law is clear that only negative covenants in an easement run with the land. 54 A brief statement of the fact that the burden of the covenant does not as a general rule run with the land was stated in Megarry and Wade, The Law of Real Property (2008, Sweet & Maxwell Ltd., London) at para. 32-017 of the 7th edition. The Burden of the Covenant The general rule: the burden does not run. The rule at law is that the burden of a covenant will not pass with freehold land. This is of particular relevance to positive covenants, for the burden of restrictive covenants may run in equity. The rationale for the distinction between positive and restrictive covenants was explained by the House of Lords in Rhone v. Stephens. “Equity cannot compel an owner to comply with a positive covenant entered into by his predecessors in title without flatly contradicting the common law rule that a person cannot be made liable upon a contract unless he is a party to it. En- forcement of a positive covenant lies in contract: a positive covenant compels an owner to exercise his rights. Enforcement of a negative covenant lies in property: a negative covenant deprives the owner of a right over property.” In that case, the common owner of a house and cottage sold the cottage and covenanted “for himself and his successors in title” with the purchaser to maintain part of the roof of the house which also covered part of the cottage. The House held that the purchaser’s successor in title could not enforce the covenant against the vendor’s successor in title, and declined to overrule the earlier authority which held that the burden of positive covenants would not run with the land. To have done so would have retrospectively imposed liabilities on many property owners who had entered into positive covenants on the basis of a clearly settled rule of law. Any solu- tion lay in the hands of Parliament. 55 Equity allowed for the enforcement of negative covenants. That did not contravene the common law rule of privity of contract. This was explained by Cronk J.A. in Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 58 O.R. (3d) 481 (Ont. C.A.). She noted that equity cannot compel an owner to comply with a positive cov- Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 267

enant entered into by a predecessor in title because of the common law rule that privity of contract meant that a person could not be liable on a contract unless he was a party to the contract. She indicated that enforcement of a positive covenant lies in contract but that enforcement of a negative covenant lies in property. Cronk J.A. said: 31 Hence, it was reasoned that the enforcement of a negative covenant in equity did not contravene the common law rule of privity of contract because, in essence, equity was simply giving effect to a legal right whose scope was restricted by the covenant. As Lord Tem- pleman noted in Rhone v. Stephens, there was some suggestion in the jurisprudence following Tulk v. Moxhay that any covenant affecting land was likewise enforceable in equity provided that the owner of the land had notice of the covenant prior to his purchase. However, this extension of the principle did not survive the decision of the Court of Appeal in Haywood v. Brunswick Permanent Benefit Build- ing Society (1881) 8 Q.B.D. 403 (Eng. Q.B.). The Court of Appeal in Haywood decided that, in the absence of privity of contract, it would not extend the doctrine of Tulk v. Moxhay to affirmative covenants compelling a man to lay out money or do any other act of an active character. Equity will intervene only where there is a negative covenant, expressed or implied. 32 Lord Templeman concluded his review of the existing state of the law as follows (at p. 71): For over 100 years it has been clear and accepted law that equity will enforce negative covenants against freehold land but has no power to enforce positive covenants against successors in title of the land. To enforce a positive covenant would be to enforce a personal obligation against a person who has not covenanted. To enforce negative covenants is only to treat the land as subject to a restriction. 33 It is common ground between the parties that this is also the settled law in Ontario. Positive covenants do not run with freehold land, either at law or in equity. Hence, consonant with the result in Rhone v. Stephens, Amberwood is not bound to pay the interim expenses contained in the Reciprocal Agreement simply by reason of having acquired the land with notice of the covenant. 56 This is not a claim against the original party to the easement who would be bound in contract. The question is whether a positive covenant is binding on a successor in title. The clause in question in this case, the parties agree, contains positive covenants. While the plaintiff concedes 268 REAL PROPERTY REPORTS 52 R.P.R. (5th)

that it is unnecessary for an order that the easement agreement excluding clause 4 is binding as it runs with the land, she seeks an order that clause 4 of the easement is binding as well on Cloverdale and its successors and assigns. The plaintiff says that this is a matter of contract and relies on an implied obligation to bind successors and the duty of good faith of parties in the performance of contracts. 57 Should a positive covenant that does not run with the land nevertheless be enforced as a matter of contract? The defendant says that such a finding would run afoul the leading case in BC, Nordin, where the Court of Appeal noted: 39 The Supreme Court of Canada held that there was no privity of contract or privity of estate between the parties and that the covenant to repair and reconstruct the stairway did not run with the land. At p. 167, Cartwright J. referred to the following passage from D.H. Mc- Mullen, Gale on Easements, 12th ed. (London: Sweet & Maxwell, 1950) at p. 77: The rule in Tulk v. Moxhay does not extend to affirmative covenants requiring the expenditure of money or the doing of some act. Such covenants do not run with the land either at law or in equity. The doctrine only applies to covenants which are negative in substance though they may be positive in form. ... 43 ...I am of the view that the order made by the trial judge, based on his interpretation of the easement agreement, cannot be supported. I am also of the view that the two other findings made by the trial judge cannot sustain the judgment. Those findings were that the water system was connected and operating as agreed to by the parties at the time of hook-up by Nordin and that the defendants, by their conduct, acquiesced in that result. There was, however, no privity of contract between the plaintiff and defendants and any “acquiesence” [sp] on the part of the defendants could not create a positive obligation on the servient tenement which would run with the land. 58 However, the plaintiff says that given recent developments in the law the positive covenant is binding. She relies on Brown v. Belleville (City), 2013 ONCA 148 (Ont. C.A.), to support her position that the positive obligation in the easement is binding on Cloverdale and relies on what she argues is a reasonable construction of the enurement clause, a principled exception to the privity rule, an implied term and a legal duty not to act in a manner to deprive a person of a contractual benefit whether by Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 269

act or omission. Her counsel referred me to the recent decision of the Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71 (S.C.C.), that discussed the duty of good faith and honesty in performance of contracts. 59 I turn to a discussion of Brown. The case concerned a 1953 agreement entered by the City’s predecessor and a local farmer where the municipality agreed to perpetually maintain and repair part of a storm sewer drainage system that it had constructed on and near the farmer’s lands. The farmer’s heirs sold the land to a purchaser who later resold it. Both subsequent purchasers tried to enforce the agreement, the City purported to repudiate the agreement but the Court found the repudiation was not accepted by either of the subsequent purchasers. The last purchaser sued to enforce the contract but was met by arguments that he had no standing to enforce the covenant because there was no privity of contract. 60 The contract under which the owner agreed to provide the necessary access on an indefinite basis to the City was in exchange for the City’s positive covenants, summarized at para. 11, that: (1) it would maintain the storm sewer in good working condition “at all times”; and (2) it would make good “any and all damage caused the Owner either by virtue of the original construction of the said sewer interfering now or in the future with the Owner’s use and enjoyment of his land in any way or as a result of lack of repair or of acts done at any time by the Corporation in maintaining and repairing the said sewer”. 61 The original contract, which was unregistered, contained an enurement clause that read: THIS INDENTURE Shall [sic] inure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, successors and assigns. 62 The Court of Appeal in Brown recognized the longstanding principle of privity of contract and noted that the plaintiff was not a party to the agreement he was trying to enforce. Cronk J.A. said: 73 The common law doctrine of privity of contract, an established principle of contract law, stands for the proposition that “no one but the parties to a contract can be bound by it or entitled under it”: Greenwood Shopping Plaza Ltd. v. Neil J. Buchanan Ltd., [1980] 2 S.C.R. 228, at para. 9. See also London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299, at p. 416; Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co., [1915] A.C. 847 (H.L.), 270 REAL PROPERTY REPORTS 52 R.P.R. (5th)

at p. 853. In this case, it is common ground that the Browns have no privity of contract with the City in respect of the Agreement. They are not signatories to the Agreement and no explicit assignment or transfer of the Agreement was made in their favour. 63 However, she observed that the doctrine of privity of contract has recently been weakened: 79 It is important to note at the outset that the doctrine of privity of contract is of considerably diminished force in Canada as a continuing principle of contract law. It has been subject to a wealth of repeated academic and judicial criticism, leading to frequent calls for law reform in Canada and elsewhere. See for example, London Drugs, at pp. 418-26; Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108, at para. 26; McCamus, at pp. 296- 301. Indeed, several Commonwealth jurisdictions have abrogated the privity doctrine entirely, or in specific contexts, by statute. In other instances, the reach of the doctrine has been “significantly under- mined by a growing list of exceptions to the rule”: McCamus, at p. 299. See also Angela Swan and Jakub Adamski, Canadian Contract Law, 3rd ed. (Markham: LexisNexis Canada Inc., 2012) at p. 229. ... 64 Cronk J.A. observed that the enurement clause does not fall within or constitute, by itself, a recognized exception to the privity rule, such as trust or agency, but that the language of the clause was critical. She agreed with the finding of the motion judge that the words of the enurement clause “clearly demonstrate that it was in the contemplation of the parties that there would be subsequent owners of Mr. Sills’ [sic] property” and that the plaintiffs were successors of Mr. Sills, as contemplated under the enurement clause (at para. 81). 65 The Court of Appeal held that the subsequent purchaser had standing to sue the City which flowed from the enurement clause in the contract. The Court held that the broad and unqualified language of the enurement clause constituted an express stipulation by the contracting parties that they intended the benefit of the agreement to be shared by the future owners of the lands. Thus, the Court held that the Browns were not strangers to the agreement; rather, they stepped into the farmer’s shoes and had standing to enforce the agreement as against the City as if they were the original covenantee(s) to the agreement. In the Court’s view, a strict application of the doctrine of privity of contract would have ignored the nature, stated purpose and express terms of the agreement. The City’s Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 271

public policy argument against the enforcement of the covenant, the Court held, failed for lack of evidentiary support. 66 The Court of Appeal held that because of the amalgamation of two municipalities the City was, in effect, the original covenantor and that in consideration for continuing access, the City undertook to maintain and repair the drainage system, indefinitely, for the benefit of the property owner. 67 The Court of Appeal referred to Greenwood Shopping Plaza Ltd. v. Neil J. Buchanan Ltd., [1980] 2 S.C.R. 228 (S.C.C.), a case where the Supreme Court of Canada had not extended the benefit of a limited liability clause in an agreement made by an employer to its employee because of privity of contract. 68 In discussing Greenwood, Cronk J.A. referred to the subsequent decision of the Supreme Court of Canada in London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299 (S.C.C.). I pause to note that a two-part test for extending a contractual benefit to include a contracting party’s employees was described by Justice Iacobucci in London Drugs, at para. 257: ...I am of the view that employees may obtain such a benefit if the following requirements are satisfied: 1) The limitation of liability clause must, either expressly or im- pliedly, extend its benefit to the employees (or employee) seeking to rely on it; and 2) the employees (or employee) seeking the benefit of the limitation of liability clause must have been acting in the course of their employment and must have been performing the very services provided for in the contract between their employer and the plaintiff (customer) when the loss occurred 69 Cronk J.A. in Brown discussed how Iacobucci J. distinguished Green- wood at para. 92: ...As relevant here, he noted, at p. 431, that unlike the facts in London Drugs, (1) Greenwood involved a lease rather than a contract for services; (2) there was little, if any, evidence to support a finding that the parties to the contract at issue in Greenwood intended to confer a benefit on the parties who sought the protection of the limited liability clause; and (3) in Greenwood, the parties seeking to obtain benefits under the contract were viewed as complete strangers and not third-party beneficiaries. In light of these distinguishing features, Iacobucci J. concluded, at p. 431, that Greenwood is of limited use in a determination of third-party beneficiary rights. This conclusion, 272 REAL PROPERTY REPORTS 52 R.P.R. (5th)

and the distinguishing aspects of Greenwood identified by Iacobucci J. in London Drugs, apply equally to this case. 70 Cronk J.A. noted that the principled exception to the privity rule introduced in London Drugs was again considered and applied, this time unanimously, by the Supreme Court in Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108 (S.C.C.). In that decision, the Court clarified that satisfaction of the first branch of the London Drugs test is a threshold requirement: to invoke the exception, there must be a showing that the contracting parties intended to extend the benefit in question to the third party seeking to rely on the contractual provision. Further, under the second branch of the test, the intention to extend the benefit of the contractual provision to the actions of a third-party beneficiary is irrelevant unless the actions of the third party come within the scope of the contract in general, or the provision in particular, between the initial contracting parties. 71 As to the first branch, the Court of Appeal said that there can be no question that, under the terms of the agreement, the original contracting parties intended to extend the benefit of the City’s covenants under the agreement to an ascertainable group or class of persons that included the Browns. Thus, there was a compelling argument in favour of relaxing the doctrine of privity in this case, given the inclusion of an enurement clause that expressly referred to “successors” of Mr. Sills, like the Browns. 72 As to the second branch, the Court of Appeal found it persuasive that the landowner provided access to his lands for the purpose of the maintenance and repair of the drainage system that the municipality had in- stalled. This provision of access was “the ‘very activity’ contemplated by and required of them under the Agreement containing the provision upon which they seek to rely”: Brown, at para. 109. As such the Browns were entitled to the benefit of the City’s covenant. 73 The defendants however say that the Brown case is distinguishable from the case at hand and, in any event, should not be found to be applicable to the facts of the case at bar. I agree. 74 The case at hand concerns the enforcement of a positive obligation against a non-party to the easement agreement. The authority referred to by the plaintiff, the Brown decision, concerned the concept of conferring a benefit or third party beneficiary rights on a non-party to the contract. 75 The Supreme Court of Canada in London Drugs and Fraser River Pile established that to meet the first stage of the test required to make an Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 273

exception to the doctrine of privity of contract, the party seeking such ruling must show that the contracting parties intended to extend the benefit in question to the third party seeking to rely on the contractual provision. The exception in those cases was sought by the party that wished to avail itself of a contractual benefit through express or implied inclusion. In the case at bar, the plaintiff seeks to impose a positive obligation on a non-party to the easement agreement. There is a clear distinction between extending a benefit to a third party and imposing an obligation on a third party. In my view, the decisions of the Supreme Court in London Drugs and Fraser River Pile do not support relaxation of the doctrine of privity of contract for the latter. 76 The result that is sought by the plaintiff would be contrary to the result in Nordin. There, our Court of Appeal considered an easement that had a similar enurement clause to the one in the case at bar but the Court said that the doctrine of privity of contract prevented imposing the positive obligation on a non-party, albeit a successor. As noted above, the Court of Appeal concluded about the easement that “there was ... no privity of contract between the plaintiff and defendants and any ‘acquiescence’ on the part of the defendants could not create a positive obligation on the servient tenement which would run with the land” (at para. 43). 77 I have concluded that what is admittedly a positive obligation under the easement agreement similarly cannot be imposed on Cloverdale. The case is distinguishable from Brown, where a benefit was conferred rather than a positive obligation imposed. The result the plaintiff seeks is contrary to the conclusion of the Court of Appeal in Nordin that, in the absence of privity of contract, acquiescence on the part of the holder of the servient tenement does not create a positive obligation that runs with the land. The plaintiff says that the conclusion in Nordin was not the product of full argument. However the conclusion in Nordin is consistent with the established jurisprudence that successors in title are not bound by positive obligations as they do not run with the land. The arguments of implied term, good faith or of the enurement clause in the easement agreement in my view do not change the conclusion. The facts of this case do not satisfy the first part of the London Drugs test. 78 I turn to the question of the damages sought by the plaintiff for the alleged failure of Woodsdale to ensure that successors in title are bound by all the covenants in the easement. The defendants say that there is no basis for liability as notice and the effect on subsequent purchasers is 274 REAL PROPERTY REPORTS 52 R.P.R. (5th)

governed by the registration provisions of the Land Title Act and they argue that there have been no damages in any event. 79 I find that even if Woodsdale was under an implied obligation to bind subsequent purchasers or was under an obligation to act honestly to ensure that subsequent purchasers agreed to be bound by positive covenants, the plaintiff has not proven or suggested any damages. While I recognize that the plaintiff is attempting to clarify her position for commercial certainty, I think that, in the absence of any damages, there is no real issue or dispute and the Court should not make a finding of liability or grant a declaration against Woodsdale.

Burns/Woodsdale Agreement 80 I now turn to the question of the Burns/Woodsdale agreement and whether I should make a declaration that it is binding on Cloverdale. 81 The plaintiff seeks a declaration that all covenants and terms applicable to Woodsdale and Macdonnell under the Burns/Woodsdale agreement (except for those related to the supply of water to Lot A that are beyond the control of Cloverdale) are binding on Cloverdale. A further declaration sought is that those obligations are binding on Cloverdale’s assigns and successors in title as a matter of contract. 82 The defendants oppose the first request on the basis that it is unnecessary as Cloverdale acknowledges that it is bound and that there is no present dispute justifying the declaration. As to the latter request, the defendants say that this is unworkable as this would violate the concept of privity of contract and bind successors without knowledge. Cloverdale, I note, appears to acknowledge an obligation to inform its successors of these obligations and says that the failure to do so would result in a claim for damages against Cloverdale. 83 The other relief sought is an application for an order that the defendants Allan Macdonnell and Woodsdale Estates are liable for damages for failing to bind Cloverdale to agree to perform the covenants applicable to Allan Macdonnell and Woodsdale Estates. 84 I will deal first with the declaration that is sought that Cloverdale is bound by the terms of the Burns/Woodsdale agreement. 85 The defendants say that as Cloverdale has admitted in the pleadings and on numerous occasions leading up to this action, and in this action, that it is bound by the terms of the Burns/Woodsdale agreement, there is no proper basis for a declaration. The defendants rely on a number of Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 275

cases including Greater Vancouver (Regional District) v. British Colum- bia, 2011 BCCA 345 (B.C. C.A.), and Vision Avant-Garde Inc. v. British Columbia (Superintendent of Financial Institutions), 2000 BCSC 423 (B.C. S.C.). 86 In Greater Vancouver (Regional District) v. British Columbia, the Court of Appeal said the following about granting declaratory relief: 50 In arguing that the forms of declaration I have described in para. 48 are possible outcomes, the District relies strongly on R. 5(22) of the Supreme Court Rules (now Supreme Court Rule 20-4), which is the modern version of a rule first introduced in England in 1875 to overcome a common law rule to the contrary. Rule 5(22) provided: No proceeding shall be open to objection on the ground that only a declaratory order is sought, and the court may make binding declarations of right whether or not conse- quential relief is or could be claimed. (See Zamir, The Declaratory Judgment (1962) at 10-1; Kourtessis v. M.N.R., [1993] 2 S.C.R. 53; Guaranty Trust Co. of New York v. Han- nay & Co., [1915] 2 K.B. 536 (C.A.) at 557-62; Kaska Dena v. Brit- ish Columbia (Attorney General), 2008 BCCA 455, 85 B.C.L.R. (4th) 69, at para. 12. See also the Crown Proceeding Act, R.S.B.C. 1996, c. 89, s. 11(2).) 51 There is no doubt that the balance of judicial opinion is in favour of the liberal exercise of the declaratory power (Zamir, supra, at 12, citing Dyson v. Attorney General, [1911] 1 K.B. 410; see also Zamir and Woolf, The Declaratory Judgment (2002) at s. 3.012). At the same time, it is also clear in Canada that a declaratory order is not available to provide an opinion that will not settle a “real” dispute between the parties. As Dickson C.J.C. stated for the majority in Op- eration Dismantle Inc. v. Canada, [1985] 1 S.C.R. 441: ... the preventative function of the declaratory judgment must be based on more than mere hypothetical consequences; there must be a cognizable threat to a legal interest before the courts will entertain the use of its process as a preventive measure. As this Court stated in Solosky v. The Queen, [1980] 1 S.C.R. 821, a declaration could issue to affect future rights, but not where the dispute in issue was merely speculative. ... [At 457.] Dickson J. also stated in Canada v. Solosky, [1980] 1 S.C.R. 821, in an oft-quoted passage: Declaratory relief is a remedy neither constrained by form nor bounded by substantive content, which avails persons 276 REAL PROPERTY REPORTS 52 R.P.R. (5th)

sharing a legal relationship, in respect of which a ‘real issue concerning the relative interests of each has been raised and falls to be determined. [At 830.] 87 In the context of this case, given that it relates to a dispute over the respective rights and obligations of adjacent landowners in connection with the future development of Lot A, when that development depends on the terms of an agreement with a different party who was a predecessor in title, I think that the dispute is real and hardly speculative. While the concession Cloverdale is prepared to make is relevant, I think it is also a relevant consideration that the plaintiff intends to seek registration of the Burns/Woodsdale agreement. She may have more difficulty doing so if there is an outstanding question of whether Cloverdale could ever withdraw its admission that it is bound by the terms of the Burns/Woodsdale agreement. 88 I think that the Court should make a declaration that Cloverdale is bound. The exact basis of the defendants’ admission is not clear to me but I think it was correctly made. It was likely made because the original contracting parties extracted that commitment, as they were presumably obliged to, from Cloverdale at the time of the transfer and because Cloverdale had knowledge of the terms of the Burns/Woodsdale agreement at the time it acquired Lot B. In granting the declaration, I need not determine the precise legal basis underlying that admission. 89 If Cloverdale was not prepared to make the admission, declaratory relief would clearly be appropriate. In these circumstances, the fact that Cloverdale is prepared to admit its obligation to comply with the covenants in the Burns/Woodsdale agreement is in my view not a bar to the Court granting a declaration. 90 Mr. Wood argues that it is important that the plaintiff be able to advise prospective purchasers or assignees of the plaintiff that Cloverdale is bound. I agree. I think that the plaintiff is also entitled to the declaration because it is seeking to attempt to have the agreement registered against Lot B. I make no comment on whether that agreement can or should be registered but, in all the circumstances, I grant the declaration that is sought. 91 The more difficult question is the scope of the declaration and whether it should be said that Cloverdale’s successors and assigns are bound as well. 92 I have several difficulties with the plaintiff’s submission that there should be a declaration that the assignees and successors of Cloverdale Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 277

are bound. First, the doctrine of privity of contract is against the relief sought by the plaintiff. Second, although the contract provides that it is binding on the heirs, executors, successors and assigns, and that may impose an obligation on a party to have a successor or assign agree to be bound, I was shown no authority that says that parties without notice are bound, or that a Court can and should make a declaration to that effect. 93 As such, I decline to make a declaration that the successors and assigns of Cloverdale are bound by the terms of the Burns/Woodsdale agreement.

Specific Performance and Damages 94 Let me now turn to the claims by the plaintiff in connection with damages and specific performance. 95 In terms of the property adjustment obligation in the Burns/Woodsdale agreement, there are claims for damages and for specific performance, but neither of those claims in my view are made out. The plaintiff has not shown that the defendants have violated any rights that the plaintiff has under the easement agreement or the Burns/Woodsdale agreement, notwithstanding the plaintiff’s suspicions in that regard. 96 I have reviewed the evidence in brief about the activities of the surveyor hired by Cloverdale and some of the communications between the parties. I do not agree with the plaintiff’s counsel that the defendant Cloverdale has indicated an intention to encumber the adjustment lands. 97 There is no evidence that satisfies me that Cloverdale was not prepared to comply with its obligations in connection with the property that it is bound to contribute to Lot A by way of adjustment. There was no breach by Cloverdale, no anticipatory breach and no basis to say that it would not comply with the property adjustment requirement if presented with the requisite plans or documents for signature. 98 As to specific performance, the plaintiff says that tender is not required if the other party has demonstrated that it is not prepared to complete. That may be so, but it has not been shown that Cloverdale will not complete its obligations. In fact, I find the evidence shows that it will.

The Road Issues 99 The plaintiff seeks a number of declaratory orders in connection with the road on Lot B. She seeks a declaration that she has a continuing right to construct a new road on Lot B in relation to a subdivision of Lot A, 278 REAL PROPERTY REPORTS 52 R.P.R. (5th)

subject to the restrictions imposed under clause 5 of the Burns/Woodsdale agreement. Mr. Wood says that the construction of a new road is subject to the district requiring more in terms of a road than currently exists. Mr. Wood also seeks to clarify whether Clause 4 of the easement agreement requires the owner of Lot B to contribute equally to the costs of construction, maintenance and repair of the roadway and whether it requires the owner of Lot B to contribute to any costs of construction of the roadway that may be required by the municipal authorities as part of the approval of subdivision of Lot A. 100 The plaintiff in her written reply put it this way: While the Plaintiff has no desire to locate the subdivision roadway outside the 20 metre area designated on the sketch to the Burns/Woodsdale Agreement, she asserts that the Easement Agree- ment is unambiguous in granting a broad authority to Lot A to construct “a roadway” upon Lot B. It contemplates a single roadway - there is no right to construct multiple roads - but there is no language in the agreement that necessarily restricts that to a reconstruction of the existing roadway, nor does it confine the right to so construct to when the existing road becomes difficult to use .... 101 The opposition to the declaration sought is that it is too broad, that it is speculative, that it is unclear what road the plaintiff will be building, where or why, and that there is no basis for the Court to grant a declaration in the absence of a factual situation. Cloverdale, I note, concedes that the plaintiff has the right to build a subdivision-compliant road and the right to reconstruct the easement road if it becomes difficult to use but says that the plaintiff now appears to be arguing that the easement was modified by the Burns/Woodsdale agreement. 102 For a number of reasons I think that it is not appropriate to grant the declaration in connection with the road. There are a number of circumstances that may arise in the future upon which the parties may have a dispute and become engaged in litigation, but at this stage the various orders sought are not grounded in a real dispute and are purely speculative disputes. I think that the plaintiff is asking the Court to act as a legal advisor to resolve possible disputes between the parties and I respectfully decline to make the declarations that are sought. I also decline to do so as some of the relief sought is dependent on a finding that I have not made, namely that Cloverdale is bound by the positive covenants in the easement agreement. Burns v. Woodsdale Estates Ltd. J.S. Sigurdson J. 279

Implied Terms 103 The defendants in argument sought a declaration of an implied term that the boundary adjustment and land dedication was to occur within a reasonable time because to do otherwise would sterilize Lot B. 104 While seeking this relief may illustrate the mutual frustration of the parties, I decline to make the order sought. It was not relief that was pleaded and was opposed by the plaintiff in argument in reply on that basis. I find it is not appropriate in the circumstances to make the order that is sought.

Conclusion 105 I grant the declaration that Cloverdale is bound by the terms of the Burns/Woodsdale agreement but otherwise I dismiss the claims of the plaintiff. 106 The parties may file written submissions on costs in the event that they cannot agree. Those submissions should be filed with the Court on a schedule agreed to by counsel and completed within 45 days. Application granted in part. 280 REAL PROPERTY REPORTS 52 R.P.R. (5th)

[Indexed as: Shannon v. Frank George’s Island Investments Ltd.] Joel Shannon, David and Dinah Grace, and Gower Holdings Limited, Applicants and Frank George’s Island Investments Limited, Anton and Gabriele Viehbeck, Seabright Holdings Limited and Paul Pleau, Respondents and The Attorney General of Nova Scotia, Intervenor Nova Scotia Supreme Court Docket: Hfx 420496 2015 NSSC 76 James L. Chipman J. Heard: January 12-16, 2015 Judgment: March 11, 2015* Civil practice and procedure –––– Judgments and orders — Res judicata and issue estoppel — Res judicata — Whether cause of action identical –––– Respondent neighbours owned island and property on mainland — Applicant property owners owned land on mainland in close proximity to land owned by neighbours — Property owners successfully brought application for order re- straining neighbours from using property to transport materials to island — Neighbours now wanted to use different lane, located on applicant S property, to transport people and goods from mainland to island — Owners brought application for, inter alia, damages for trespass and declaration that neighbours were estopped from arguing that lane was public road — Application granted in part on other grounds — Neighbours were not estopped from arguing lane was public road — Prior application had not decided this issue and had dealt with different lane that was found to be right of way — Present application related to distinct cause of action, notwithstanding that several of same parties and properties were involved — There was no attempt to rely on new facts that could have been discovered with reasonable diligence in prior application — There was no attempt to impose new legal conception on same facts — Due to this ruling on res judicata and issue estoppel, neighbours were not held liable for trespass on S property and for their past excessive use of right of way.

*Additional reasons at Shannon v. Frank George’s Island Investments Ltd. (2015), 2015 CarswellNS 319, 2015 NSSC 133 (N.S. S.C.). Shannon v. Frank George’s Island Investments Ltd. 281

Real property –––– Easements — Particular easements — Right of way — Public right of way or highway –––– Private right of way — Respondent neighbour F Ltd. owned island, respondent neighbour V owned property on T lane, and respondent neighbour S Ltd. owned property on C lane — Applicant property owner S owned land on L lane, over which was granted C lane and T lane — Applicant property owners G and G Ltd. owned land on C lane — Neighbours wanted to use lanes, located on S property, to transport people and goods from mainland to island — Owners brought application for, inter alia, declaration that lane was private right of way — Application granted in part — Lane on S property was private right of way, restricted in use to that of private road, only for limited purpose of access to benefitted properties, and only in private capacity — Benefitted parties included G, G Ltd., and S Ltd., but not F Ltd. — Benefitted parties were expressly prohibited from using right of way to transfer goods and persons to adjacent or nearby properties for benefit of non- benefitted parties — Neighbours did not meet high burden of establishing dedication of public right of way over private property — Based on expert evidence, lane and road in question was private after first half-mile off highway. Cases considered by James L. Chipman J.: Angle v. Minister of National Revenue (1974), 1974 CarswellNat 375, 28 D.T.C. 6278, 1974 CarswellNat 375F, [1975] 2 S.C.R. 248, 47 D.L.R. (3d) 544, 2 N.R. 397, [1974] S.C.J. No. 95 (S.C.C.) — followed Danyluk v. Ainsworth Technologies Inc. (2001), 54 O.R. (3d) 214 (headnote only), 201 D.L.R. (4th) 193, 10 C.C.E.L. (3d) 1, 2001 C.L.L.C. 210-033, 272 N.R. 1, 149 O.A.C. 1, 7 C.P.C. (5th) 199, 34 Admin. L.R. (3d) 163, 2001 CarswellOnt 2434, 2001 CarswellOnt 2435, 2001 SCC 44, [2001] 2 S.C.R. 460, 54 O.R. (3d) 214 (note), 2001 CSC 44, 54 O.R. (3d) 214, [2001] S.C.J. No. 46, REJB 2001-25003 (S.C.C.) — followed Erschbamer v. Wallster (2013), 356 D.L.R. (4th) 634, 41 B.C.L.R. (5th) 160, 2013 CarswellBC 425, 2013 BCCA 76, (sub nom. Wallster v. Erschbamer) 334 B.C.A.C. 120, (sub nom. Wallster v. Erschbamer) 572 W.A.C. 120 (B.C. C.A.) — considered Frank Georges Island Investments v. Nova Scotia (Attorney General) (2004), 23 R.P.R. (4th) 157, 2004 NSSC 136, 2004 CarswellNS 280, 1 C.P.C. (6th) 117, 225 N.S.R. (2d) 264, 713 A.P.R. 264, [2004] N.S.J. No. 277 (N.S. S.C.) — considered Hoque v. Montreal Trust Co. of Canada (1997), (sub nom. Hoque v. Montreal Trust Co.) 162 N.S.R. (2d) 321, (sub nom. Hoque v. Montreal Trust Co.) 485 A.P.R. 321, 1997 CarswellNS 427, 1997 NSCA 153, [1997] N.S.J. No. 430 (N.S. C.A.) — followed Kennedy v. Hickey (2011), 2011 NLTD(G) 120, 2011 CarswellNfld 312, 10 R.P.R. (5th) 269, 974 A.P.R. 13, 313 Nfld. & P.E.I.R. 13 (N.L. T.D.) — considered 282 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Seabright Partners LLC v. Frank George’s Island Investments Ltd. (2010), 2010 NSSC 368, 2010 CarswellNS 648, 295 N.S.R. (2d) 232, 935 A.P.R. 232 (N.S. S.C.) — followed Silvern Estates Ltd. v. British Columbia (2007), 400 W.A.C. 281, 242 B.C.A.C. 281, 2007 CarswellBC 1026, 2007 BCCA 284, [2007] B.C.J. No. 1003 (B.C. C.A.) — followed Viehbeck v. Pook (2012), 2012 NSSC 48, 2012 CarswellNS 70, 16 R.P.R. (5th) 97, 990 A.P.R. 99, 313 N.S.R. (2d) 99 (N.S. S.C.) — followed Statutes considered: Highway Act, S.N.S. 1908, c. 4 Generally — referred to s. 3 — considered s. 4 — referred to s. 9 — considered s. 13 — considered s. 14 — considered s. 24 — referred to Public Highways Act, R.S.N.S. 1989, c. 371 Generally — referred to s. 2(f) “highway” — considered s. 11(1) — considered s. 11(1)(a) — considered s. 11(1)(c) — considered Rules considered: Nova Scotia Civil Procedure Rules, N.S. Civ. Pro. Rules 2009 R. 55 — considered R. 55.04 — considered R. 55.04(2) — referred to R. 55.04(3) — referred to R. 55.09 — considered

APPLICATION by property owners for declaration that lane was private right of way, and for damages for trespass.

A. Douglas Tupper, Q.C., Victoria Crosbie (articled clerk), for Applicants Matthew J.D. Moir, John A. Keith, Q.C., for Respondents Sheldon Choo, for Intervenor Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 283

James L. Chipman J.: Introduction 1 This proceeding involves the question of whether a particular stretch of road is a public road or a private one. 2 By Notice of Application in Court filed October 11, 2013, the Appli- cants (then not including Joel Shannon) applied for an order and declaratory relief on over 30 grounds. This was met by the Respondents’ Notice of Contest filed November 7, 2013, stating the Application should be dismissed. By consent order issued December 19, 2013, the Attorney General of Nova Scotia (the “Province”) was added as Intervenor. The Notice of Application was amended on February 3, 2014 and further on May 21, 2014. This latter amendment added Joel Shannon as an Appli- cant along with setting out an additional ground and an amendment to the declaration sought. At the outset of the hearing the Applicants confirmed they were no longer seeking a contempt order. 3 The main litigants have had an acrimonious relationship dating back over 15 years. In 1999 the Respondent Frank George’s Island Invest- ments Limited (“FGIL”) acquired Frank Georges Island, a 60 acre island in St. Margaret’s Bay. In 2001 the Respondents Anton Viehbeck and his wife, Gabriele Viehbeck, acquired their residence at 54 Tern lane (for- merly known as 288 Umlah Road). In 2010 the Respondent Seabright Holdings Limited (“SHL”) acquired 248 Captain Hemlock Lane (“CHL”). SHL also now owns a parcel of land on Frank Georges Island. Anton Viehbeck is Director, President and Secretary of FGIL. The Re- spondent Paul Pleau is President of SHL. 4 The aforementioned properties are all within close proximity to properties owned by the Applicants in Umlah Point, Seabright, Halifax County, Nova Scotia. In 2004 the Applicant Dinah Grace and nine of her neighbours sought to be joined as defendants in FGIL’s quieting of titles action in respect of Frank Georges Island. All ten applications were dismissed by Moir J in Frank Georges Island Investments v. Nova Scotia (Attorney General), 2004 NSSC 136 (N.S. S.C.). Later the matter settled with the Province and in December 2004 a certificate of title was issued by the Court naming FGIL sole owner of Frank Georges Island. 5 In the later 2000s FGIL began transporting materials from 54 Tern Lane to Frank Georges Island. A number of Umlah Point property owners, including the Applicants David Grace and his wife, Dinah Grace, took objection to this and brought an application in Court. Another appli- 284 REAL PROPERTY REPORTS 52 R.P.R. (5th)

cant was Seabright Partners, LLC, the predecessor in title to land located at 24 Lanyard Lane now owned by the Applicant, Joel Shannon. The application was allowed by Scaravelli J in Seabright Partners LLC v. Frank George’s Island Investments Ltd., 2010 NSSC 368 (N.S. S.C.). 6 In the present Application both the Amended Notice of Application and Notice of Contest refer to the decision of Justice Scaravelli, albeit as will be more fully discussed, the Applicants and Respondents offer markedly different interpretations of what the decision stands for. 7 A few years ago Anton Viehbeck and Gabrielle Viehbeck commenced an application in Court seeking a declaration they are entitled to use motor vehicles on a shared twenty foot right-of-way across the property of John Pook and Jill King-Pook, two of the applicants in the matter before Scaravelli J. Further, the application involved intervenors including some of the same applicants in the matter before Moir J as well as Seabright Partners, LLC (again, the predecessor in title to land located at 24 Lanyard Lane now owned by the Applicant Joel Shannon). The Viehbecks’ application was allowed by Wood J in Viehbeck v. Pook, 2012 NSSC 48 (N.S. S.C.).

Preliminary Issues 8 During a January 2, 2015, Pre-Trial Conference, it was agreed the voluminous evidence by way of affidavits (including exhibits) and statutory declarations would be before the Court, subject to counsels’ submissions on admissibility, which I received on January 9, 2015. At the commencement of trial I advised counsel that I accepted their written submissions and would treat the evidence in the manner requested. That is to say, most of the statements in the affidavits and statutory declarations were entered into evidence. The exceptions pertained to stipulated examples of argument and hearsay. Additionally, the Court confirmed with the parties that the only cross-examination (and potential re-examination) would be of these deponents: 1. Allen B. Robertson, the Applicants’ expert; 2. Shona Poirier, Acquisition and Disposal Officer with the Nova Scotia Department of Transportation and Infrastructure Renewal (“DTIR”); and 3. Dinah Grace and possibly David Grace (the Respondents ultimately did not cross-examine Mr. Grace). Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 285

Background 9 To recapitulate, the Applicants and Respondents own property in Umlah Point, Seabright, Halifax County, Nova Scotia, as follows: 1. Joel Shannon - 24 Lanyard Lane bearing PID 514760 (“Shannon Property”); 2. David and Dinah Grace - 280 CHL bearing PID 512707; 3. Gower Holdings Limited - Lots B7-AX, B-2 and C CHL bearing PIDs 415075110, 40872541 and 0061453; 4. FGIL - Frank Georges Island; 5. Anton and Gabrielle Viehbeck - 54 Tern Lane bearing PID 00512749; and 6. SHL - 248 CHL bearing PID 00613513 (“SHL Property”) as well as a parcel of land on Frank Georges Island. 10 To reach these properties (with the exception of Frank Georges Is- land) by vehicle, one must take Highway 333 (also known as the Peggy’s Cove Road) and then Umlah Road. The parties agree Highway 333 and part of Umlah Road are public roads. The Applicants say CHL and Tern Lane (which form part of what was once known as Umlah Road and which is granted over the Shannon Property) is a right-of-way, whereas the Respondents assert all of (old) Umlah Road is a public road. In this Application the Court is asked to determine this critical distinction. If the Applicants have their way, the Respondents will be prevented from using the right-of-way for commercial purposes. If the Respondents prevail, they will be permitted to use the public road to access the SHL Property to transfer goods and/or persons to Frank Georges Island, where in 2007 FGIL subdivided 15 building lots. 11 In November, 2010, approximately one month after the 2010 Order was issued, SHL acquired the SHL Property. In 2013, SHL began permitting the Viehbecks to use the waterfront property to transport men, equipment and materials (by way of the Viehbecks’ barge) to Frank Georges Island. 12 The Applicants assert that SHL is a company incorporated as a fa¸cade to deliberately hide Mr. and Mrs. Viehbeck’s absolute control of SHL so as to confuse the similar identities of the parties in this Application and the one before Justice Scaravelli. The Respondents deny this accusation and say that Mr. Pleau is the true President of SHL. 286 REAL PROPERTY REPORTS 52 R.P.R. (5th)

13 The Applicants characterize the Respondents’ behaviour as in defi- ance of the 2010 Order. That is to say, they assert it is the same behaviour that was expressly prohibited by Justice Scaravelli with the only difference being that the Viehbecks are now using the SHL Property as opposed to 34 Tern Lane to access Frank Georges Island. The Respon- dents take issue with this characterization of their behaviour. They say that the application before Scaravelli J did not involve SHL or Paul Pleau as parties or the SHL Property. The Respondents assert that the SHL Pro- perty fronts on Umlah Road, which is a public road. In the result, they argue that the road may be used for commercial means. Having made this point, the Respondents add that whereas the Applicants repeatedly suggest the Viehbecks intend to develop a subdivision on Frank Georges Island, there is no evidence corroborating this, and I find this to be an accurate statement.

Application of Res Judicata and Issue Estoppel 14 With their February 3, 2014, amended Notice of Application, the Ap- plicants sought a declaration that the Respondents be estopped from arguing that what the Applicants characterize as a right-of-way is a public road, because this issue was dealt with in the prior proceeding. In short, the Applicants take the position that this characterization applies to the entire road system on Umlah Point past Houlihan’s Cove, affecting not only the properties which formed the subject matter of the prior litigation but also the SHL Property, which lies between those properties and Hou- lihan’s Cove. 15 The Applicants argue by reason of res judicata that the Respondents should be barred from re-litigating this case. In support of their position, the Applicants cite Erschbamer v. Wallster, 2013 BCCA 76 (B.C. C.A.), per Tysoe JA, Hall and Smith JJA concurring, at para 12: The general principles of the doctrine of res judicata were reviewed by this Court relatively recently in Cliffs Over Maple Bay. The doctrine has two aspects, issue estoppel and cause of action estoppel. In brief terms, issue estoppel prevents a litigant from raising an issue that has already been decided in a previous proceeding. Cause of action estoppel prevents a litigant from pursuing a matter that was or should have been the subject of a previous proceeding. If the technical requirements of issue estoppel or cause of action estoppel are not met, it may be possible to invoke the doctrine of abuse of process to prevent relitigation of matters. Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 287

16 The Applicants take the position that issue estoppel, cause of action estoppel, and abuse of process are all relevant to the within application. These concepts were reviewed in Angle v. Minister of National Revenue (1974), [1975] 2 S.C.R. 248 (S.C.C.), at p. 254: This form of estoppel, as Diplock L.J. said in Thoday v. Thoday, at p. 198, has two species. The first, “cause of action estoppel”, precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction. We are not here concerned with cause of action estoppel as the Minister’s present claim that Mrs. Angle is in- debted to Transworld in the sum of $34,612.33 is obviously not the cause of action which came before the Exchequer Court in the s. 8(1)(c) proceedings. The second species of estoppel per rem judi- catam is known as “issue estoppel”, a phrase coined by Higgins J. of the High Court of Australia in Hoystead v. Federal Commissioner of Taxation, at p. 561: I fully recognize the distinction between the doctrine of res judicata where another action is brought for the same cause of action as has been the subject of previous adjudication, and the doctrine of estoppel where, the cause of action being different, some point or issue of fact has already been decided (I may call it “issue-estoppel”). Lord Guest in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), at p. 935, defined the requirements of issue estoppel as: ...(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.... 17 In Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (S.C.C.) at para 33, Justice Binnie observed that issue estoppel requires a two-step analysis. Firstly, whether the three-part test described above has been met. Secondly, whether despite this fact, the Court should exercise its discretion to apply the doctrine. The Applicants argue that the three-part test has been met and that the doctrine should be applied, thus dispensing with the matter. 18 The Respondents argue that because the SHL Property was never part of what was considered by Justice Scaravelli, the (now) owners of the SHL Property should not be shackled to the decision. They go on to state that the Applicants have muddled the issues in play in this proceeding 288 REAL PROPERTY REPORTS 52 R.P.R. (5th)

and the earlier one. They point out that Scaravelli J was mainly concerned with the determination of a right-of-way concerning property along what was acknowledged to be a private lane, Tern Lane. In this application, however, they say the question relates to the SHL Property along Umlah Road, which they argue is a public road. 19 Further, the Respondents refer to the Nova Scotia Court of Appeal as the authority to be followed in Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153 (N.S. C.A.), per Cromwell JA (as he then was), Free- man and Roscoe JJA concurring. In particular, they cite paras 38 and 65, which read: [38] Although many of these authorities cite with approval the broad language of Henderson v. Henderson, [1843-60] All E.R. Rep. 378 (Eng. V.-C,), to the effect that any matter which the parties had the opportunity to raise will be barred, I think, however that this language is somewhat too wide. The better principle is that those issues which the parties had the opportunity to raise and, in all the circumstances, should have raised, will be barred. In determining whether the matter should have been raised, a court will consider whether the proceeding constitutes a collateral attack on the earlier findings, whether it simply asserts a new legal conception of facts previously litigated, whether it relies on “new” evidence that could have been discovered in the earlier proceeding with reasonable diligence, whether the two proceedings relate to separate and distinct causes of action and whether, in all the circumstances, the second proceeding constitutes an abuse of process. ... [65] My review of these authorities shows that while there are some very broad statements that all matters which could have been raised are barred under the principle of cause of action estoppel, none of the cases actually demonstrates this broad principle. In each case, the issue was whether the party should have raised the point now asserted in the second action. That turns on a number of considerations, including whether the new allegations are inconsistent with matters actually decided in the earlier case, whether it relates to the same or a distinct cause of action, whether there is an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, whether the second action is simply an attempt to impose a new legal conception on the same facts or whether the present action constitutes an abuse of process. [emphasis added] Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 289

20 In argument counsel for the Applicants acknowledge Hoque to be the appropriate authority to be followed in Nova Scotia. With this in mind, I will now apply the law to the facts here. 21 I find the new allegations pertain mainly to the SHL Property and whether the entirety of the road leading to the SHL Property is private or public. In reading the decision of Justice Scaravelli, I find that these new allegations (as to whether the road is public or private) are distinct from matters decided in the earlier case which concerned the nature and extent of the grant of right-of-way over properties around, but not including, the SHL Property. 22 I find the within Application relates to a distinct cause of action (application), albeit, several of the same individuals and properties are involved. I do not find that what is involved with this Application is an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, as the earlier case did not concern itself with the characterization of the road in the context of the SHL Pro- perty. Further, I do not regard the position of the Respondents in this the second application as simply an attempt to impose a new legal conception on the same facts. Indeed, this Application involves new affidavit and expert evidence. Finally, the present Application and response is anything but an abuse of process as it involves a legitimate contest to determine the status of the road in question. I might add that the Appli- cants have seen fit to abandon their contempt application. 23 In coming to my decision I do not feel it is necessary to weigh in on the Applicants’ argument that SHL is a sham company. Indeed, all I have before me to sort through this allegation are the discovery transcripts of Messrs. Viehbeck and Pleau. Asked to make such a finding, which involves allegations of fraud, I would want viva voce evidence. In any event, this determination is not required to come to my conclusion on this aspect of the Application. 24 In summary, I have determined that the within Application concerns some of the same, but also some different, owners and locations as were considered by Justice Scaravelli. Furthermore, this Application also involves public rights, as my decision must consider the history of Umlah Road and whether or not the public has a right to access the portion in question. In the result, for all of the reasons discussed, I decline the Ap- plicants’ invitation to apply res judicata and issue estoppel. 290 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Evidence 25 During the application exhibits were entered by agreement. Apart from what is reviewed below, the exhibits primarily consisted of additional material (maps and the like) providing historical context to the road system in this area, referred to as District 12, Halifax County.

Applicants 26 The Applicants’ evidence consisted of the following affidavits (several with numerous exhibits): 1. David and Dinah Grace - sworn September 23, 2013 2. David Grace - sworn November 12, 2013, March 18 and June 18, 2014 3. Dinah Grace - sworn March 18, 2014 and June 18, 2014 4. John Lindley - sworn March 18, 2014 5. Lisa MacDormand - sworn March 18, 2014 6. Richard Hattin - sworn March 18, 2014 7. Jeff Theriault - sworn March 18, 2014 8. Barbara Jones - sworn March 18, 2014 9. Patricia D. Lindley - sworn March 18, 2014 10. John G. Pook - sworn March 17, 2014 11. Robert Radchuk - sworn March 14, 2014 12. Joel Shannon - sworn March 19, 2014 13. Allen B. Robertson - sworn November 24, 2014 and January 7, 2015 27 The Applicants also entered a Trustee’s Deed dated November 2, 2010 between Alexander and Edward Rettie (grantor) and SHL (grantee) and a Form 24 registered November 22, 2013. They entered discovery transcripts of Paul Pleau (deposed April 16, 2014) and Anton Viehbeck (deposed April 15, 2014) as well as expert reports of Dr. Robertson dated September 2 and November 21, 2014. 28 Dr. Robertson is an historian and his curriculum vitae was entered as an exhibit. He was qualified as an expert in history and in the geographi- cal aspects of history. 29 Dr. Robertson’s reports were not in compliance with Rule 55 and Ap- plicants’ counsel did not file a statement of qualification pursuant to Rule 55.09. While I had some initial concerns about these omissions, the Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 291

cross-examination of Dr. Robertson served to allay these concerns. In- deed, I was satisfied that when Dr. Robertson was challenged on the contents of his reports, he had turned his mind to Rule 55.04. When the expert was stepped through the requirements of this rule, given his answers, I formed the strong impression that although he did not overtly refer to Rule 55 in his written opinions, Dr. Robertson made the appropriate representations to the Court. Further, on the basis of his viva voce and written opinions, I find that Dr. Robertson gave a concise statement of his opinions containing proper information (see Rule 55.04(2)) in support of each opinion. Finally, Dr. Robertson’s reports contained required information needed for assessing the weight to be given to each opinion (see Rule 55.04(3)).

Respondents 30 The Respondents’ evidence consisted of the following affidavits: 1. Anton Viehbeck - sworn April 16 and September 26, 2014 2. Matthew Moir - sworn February 18, August 5, October 8 and De- cember 19, 2014 3. Paul Lumsden - sworn June 16, 2014 4. James F.E. White - sworn June 27, 2014 5. Thomas F. Giovannetti - sworn December 19, 2014 31 The affidavits contained voluminous exhibits. Indeed, Mr. Moir’s February 16, 2014 affidavit appended nine other affidavits and 18 statutory declarations of individuals primarily attesting to their historical knowledge of road usage and the like. 32 The Respondents also entered the discovery transcripts of David Grace (deposed April 16, 2014) and Dinah Grace (deposed April 16, 2014). They entered expert reports prepared by Dr. White, Mr. Lumsden and Mr. Giovannetti. 33 Dr. White is an historian and he was qualified as an expert in the field of Nova Scotia history, capable of giving opinion evidence on the subject of the historical situation of Seabright and Umlah Point. 34 Mr. Lumsden is a photogrammetrist and he was qualified as an expert in this field, capable of giving opinion evidence on the subject of the interpretation of aerial photography. 35 Mr. Giovannetti is a qualified Nova Scotia land surveyor and professional engineer. He was qualified to give opinion evidence on, inter alia, 292 REAL PROPERTY REPORTS 52 R.P.R. (5th)

the subjects of the interpretation of aerial photography, mapping, survey- ing, distances and measuring.

Intervenor 36 The Intervenor’s evidence consisted of three affidavits of the Prov- ince’s DTIR Acquisition and Disposal Officer, Shona Poirier, sworn February 24, April14 and June 4, 2014, with accompanying exhibits.

Onus and Burden of Proof 37 Given my determination that this Application concerns a fresh issue, I must now go on to assess the parties’ arguments concerning the extent to which Umlah Road is a public road in the context of the evidence and law. Before doing so, it is important to establish which party carries the onus and on what standard of proof. 38 In Silvern Estates Ltd. v. British Columbia (2007), 242 B.C.A.C. 281, 2007 BCCA 284 (B.C. C.A.), Finch CJBC, Donald and Smith JJA concurring, endorsed the trial judge’s interpretation of the required standard of proof for determination whether a road is a public road, and held that the correct standard was a preponderance of probabilities requiring cogent and substantial evidence: [23] The learned chambers judge held, correctly, that the petitioner bore the onus of proving the facts necessary to bring a road within the deeming provisions of the Highway Act. He also held, correctly, that the standard of proof was on a “preponderance of probabilities which, in these circumstances, requires cogent and substantial evidence...”, citing Dunstand v. Hell’s Gate Enterprises Ltd. (1987), 20 B.C.L.R. (2d) 29 (C.A.). [24] He said: [15] Where, as in the present matter, a petitioner relies on historical evidence of travel and expenditure of public money to invoke the rule “once a highway, always a highway”, the evidence must establish that the road at issue is in the same location as the travelled road on which public money was spent in the past. As a declaration that land constitutes a public highway affects other interests in land, the evidence going to location must be cogent and substantial. [emphasis added] 39 In assessing this application I adopt the above standard. That is to say, here the Respondents have the burden of proving that the road in Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 293

question is public. To succeed, they must prove their case with cogent and substantial evidence on a balance of probabilities, which I prefer to the analogous preponderance of probabilities.

Consideration of the Evidence and Law Respecting the Road in Question Statutory Framework 40 A roadway in Nova Scotia is considered a public roadway only if it meets the definition of a “public highway” under the Public Highways Act, R.S.N.S. 1989, c. 371, s. 1 (“PHA”), or if it has been shown on balance of probabilities to have been “dedicated” as such. Therefore, if a roadway does not satisfy the legislative requirements of the PHA as a public highway, the public can only obtain a right-of-way over private lands via the common-law doctrine of dedication, which has also now been codified in the PHA. 41 Section 11 of the PHA defines public roadways in Nova Scotia as follows: Except in so far as they have been closed according to law, (a) all allowances for highways made by surveyors for the Crown; (b) all highways laid out or established under the authority of any statute; (c) all roads on which public money has been expended for opening, or on which statute labour has been performed prior to the twenty-first day of March, 1953; (d) all roads passing through Indian lands; (e) all roads dedicated by the owners of the land to public use; (f) every road now open and used as a public road or highway; and (g) all alterations and deviations of, and all bridges on or along any road or highway, shall be deemed to be common and public highway until the contrary is shown. 42 Subsection 11(c) provides that a roadway will automatically be considered a public roadway if public money was expended for opening it, or if statue labour was performed on it prior to March 21, 1953. 43 The Applicants argue there is no probative evidence that public money was expended or statute labour was performed on the portion of 294 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Umlah Road they assert to be private prior to March 21, 1953. The Re- spondents state otherwise, pointing to among other evidence, a 1908 Re- turn of Road Tax for Road Section 2, District 12 (“1908 Road Tax Re- turn”). The Intervenor highlights the evidence of Ms. Poirier (inclusive of her affidavit exhibits of mapping, surveys and road expenditure reports) in supporting the Applicants’ position. They say the records do not support the notion that statute labour was ever performed and/or public funds ever spent on the road in question. 44 The Respondents attached the 1908 Road Tax Return to their lawyer’s October 8, 2014, affidavit. In correspondence of the same date (addressed to the Court and copied to counsel), Mr. Moir referred to the 1908 Road Tax Return as “lynchpin”: This evidence is lynchpin. It proves the respondents’ case without any consideration of the significant evidence proving dedication and acceptance of this road by its owners from time to time by the public. If statute labour was performed on this road prior to March 21, 1953, then pursuant to paragraph 11(1)(a) of the Public Highways Act it is “deemed to be a coming and public highway unit the contrary is shown.” Once a public highway; always a public highway - unless there has been a formal road closure which there has not been. 45 If the 1908 Road Tax Return constitutes evidence that statute labour was performed on the Road, then (barring any formal closure of the Road) pursuant to the PHA the Road is public. Accordingly, I must now examine the 1908 Road Tax Return in the legislative and historical context, bearing in mind the evidence, inclusive of the expert evidence of Drs. Robertson and White and Messrs. Giovannetti and Lumsden.

Legislative Context 46 On April 16, 1908, The Highway Act, S.N.S. 1908, c.4, was passed. Section 3 stated: Every male person of more than eighteen and less than sixty years of age shall pay annually a poll tax of $1.00 for the maintenance of the public roads of the Municipality in which he resides. 47 Under the Act, municipalities also assessed additional sums required for maintenance of public roads as determined by the amount of real and personal property an individual owned (s. 4). Pursuant to s. 9 each Muni- cipal Council was given the ability to define, set off and alter road sections, and was to appoint a Surveyor of Highways for each road section in the municipality. Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 295

48 Section 13 allowed a person liable for poll or property road tax to commute the cash payment by rendering service or work upon the highway by himself or a substitute upon approval by the Surveyor. Section 14 stated that in the Municipality of the County of Halifax the number of hours for a day’s work was ten. The Surveyor was required within twenty days after the specified time for commutation road work had expired to make a general return to the Municipal Clerk of each and every person who has not paid, or by labour commuted his road tax (s. 24). 49 I have reviewed the Highway Act from the time in question. In my view, the 1908 Road Tax Return would have been used by the Surveyor to record whether or not the individuals listed completed their statutory obligations. Importantly, the Surveyor was not required by the statute to note where the work was done, only to record if the work was done and if there was any amount still owing. Accordingly, caution should be taken before assuming the 1908 Road Tax Return is evidence of statute labour being done on specific roads (here, Umlah Road) within the road section.

Historical Context/Expert Evidence Review 50 In asking the Court to adopt their line of reasoning, the Applicants emphasized Dr. Robertson’s opinion and noted it is the Respondents who carry the burden of proof in establishing whether the road is a public road. 51 The Applicants provided a strong critique of the Respondents’ experts’ opinions, especially the opinions of Mr. Giovannetti. 52 The Intervenor asked the Court to examine the legislative and historical context. They argued the “best evidence” of the extent to which statute labour has been performed on Umlah Road is in the provincial road list (exhibit N of Ms. Poirier’s February 24, 2014, affidavit). 53 In their argument, the Respondents urged the Court to prefer the opinions of their experts over that of Dr. Robertson, whose opinion they characterized as flawed. Respondents’ counsel highlighted the 1908 Road Tax Returns and 15 additional pieces of evidence as follows: 1) 1908 Faribault Map 2) 1908 Creation of Highway Board 3) 1918 to 1923 Expense Reports 4) 1921 Board Map 5) 1924 Highway Board Map 296 REAL PROPERTY REPORTS 52 R.P.R. (5th)

6) 1931 Aerial Photograph 7) 1934 Road Section Descriptions 8) 1935 Lindsay Zwicker Deed 9) 1939 to 1940 Road Section Descriptions 10) 1945/1946 Hydrographic Office US Navy Map 11) 1947 Aerial Photograph 12) Declarations of Local Residents 13) Dyer Tea House 14) 1951/1958 Reardon Subdivision 15) 1958 to Present Deeds to SHL Property 54 The Respondents submit that this evidence leads to the inevitable conclusion that all of the old Umlah Road is public. In particular, they emphasize the 1908 Road Tax Returns (which will be reviewed in detail, infra) as well as nos. 8 and 12 from the above list. 55 The 1935 Lindsay Zwicker Deed is found attached to Mr. Viehbeck’s April 16, 2014, affidavit as exhibit N. The Deed describes a property in the relevant area (deeded from Lindsay and Jennie Zwicker to Edward K. Clarke and Bernard Feetham on September 16, 1935). Within the property description are the words, “... coming out to meet the public road leading into Lindsay Zwicker’s home.” While this certainly offers an argument in favor of the Respondents’ position, I do not regard the Deed as necessarily accurate and certainly not determinative of the issue as to how the road is to be characterized. 56 With respect to the “Declarations of Local Residents”, these are found within the affidavits and statutory declarations submitted with Mr. Moir’s February 18, 2014, affidavit. In short, I find these sworn statements to be vague and not helpful in sorting through the issues of road dedication. For example, there is no evidence tying the past traversing over the road (deposed by several of the residents) to the 1908 Road Tax Returns. In particular, none of the deponents speak to themselves or their forbears working on the relevant part of Umlah Road. 57 Taken together, I do not regard this evidence as coming anywhere near what is required to establish dedication. In Frank Georges Island Investments v. Nova Scotia (Attorney General), supra, Justice Moir dealt with the concept of dedication at paras. 37 and 38: [37] The branch of property law known as dedication and acceptance developed in reference to roadways passing over private lands. If the Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 297

owner dedicated the roadway to the amorphous public and the public accepted the dedication, say by many of the members of a commu- nity making use of the roadway, then a public right of way could be privately enforced... [38] According to Duff, J. as he then was, writing for the majority in Bailey v. City of Victoria (1920), 60 S.C.R. 38 at p. 53, land may be dedicated to the public if two conditions are satisfied: “first, there must be on the part of the owner the actual intention to dedicate ... and second, it must appear that the intention was carried out by the [road]way being thrown open to the public and that the way has been accepted by the public.” He followed (p. 55) Lord MacNaghten in Simpson v. Attorney General, [1904] A.C. 477 at p. 493: “that the mere acting so as to lead persons into the supposition that a way is dedicated to the public does not in itself amount to dedication”. How- ever, it is also said that “Open and unobstructed use by the public for a substantial period of time is, as a rule, the evidence from which a trier of fact may infer both dedication and acceptance.” Brooke, J. A. in Gibbs v. Grand Bend (1995), 26 O.R. (3d) 644 (OCA) at p. 680. Mr. Keith points out that public use is merely evidence going towards proof of the two conditions. So, in Attorney-General v. Esher Linoleum Co. Limited, [1901] 2 Ch. 647 at p. 650 the Court stressed that “user is but the evidence to prove dedication” and “what always has to be investigated is whether the owner of the soil did or did not dedicate certain land to the use of the public.” With roadways, there needs to be proof of “an actual intention on the part of a predecessor in title of the plaintiff to dedicate the road as a public highway”: Reed v. Lincoln (1974), 6 O.R. (2nd) 391 (CA) at p. 396. [emphasis added] 58 Accordingly, a public right-of-way may be created by dedication and acceptance. Two conditions must be satisfied to create a public right-of- way by dedication: 1. There must be an express or implied intention to dedicate; and 2. the public must accept the dedication. 59 In Anger and Honsberger, Law of Real Property (2nd Ed.), vol 2, at page 1001 the authors note: An owner of land may establish a public highway by the dedication and the acceptance by the public of the land for use as a highway. This is known as a common law dedication. Both the intention to dedicate and the acceptance by the public must be proved in order to establish a dedication. No formal act of adoption is required to indicate acceptance. It usually is inferred by public user of the highway. 298 REAL PROPERTY REPORTS 52 R.P.R. (5th)

... Open and unobstructed use by the public for a substantial time is as a rule evidence from which both dedication and acceptance may be inferred. User, however, is but the evidence to prove dedication; it is not use, but dedication, which creates a highway, as a public highway cannot be created by prescription. The expenditure of public funds to maintain a highway is an inference of both dedication and acceptance. [emphasis added] 60 In Kennedy v. Hickey, 2011 NLTD(G) 120 (N.L. T.D.), a laneway ran along the defendant’s property. The plaintiff and his family had used the laneway for over 20 years to access a river and their property on the other side of the defendant’s property. The public had also used the property since the 1930s to access the river to fish and wash clothes. While Leblanc J found that the plaintiff had a prescriptive easement to the laneway, he was not satisfied that a public right-of-way was established, noting at para 36: The evidence of the extent of the usage by the public and the period of time that such usage occurred is not entirely clear from the Plain- tiff’s testimony or other evidence presented. The fact that members of the public crossed over the land in question to fish or to get water or even to wash clothes is not, of itself, sufficient to establish the existence of a “public highway” at law. [emphasis added] 61 Accordingly, while there was evidence that the laneway was used by the public and the public usage had occurred over an extended period of time (over 20 years), the court was not satisfied that there was sufficient usage for a sufficient period of time to establish the necessary intention and acceptance required to prove that dedication applied. There is, therefore, a high threshold to establish a public right-of-way over private property. Given the evidence here, I am not satisfied the Respondents have met their burden. 62 To help assess the historical context, I turn to the expert evidence. The Applicants’ expert, Dr. Robertson, offers a detailed review of Dis- trict 12 and then notes, at page 14 of his September 2, 2014, report: It is not disputed that Umlah Road was in use for a considerable length of time; this present researcher has not found information, however, which would indicate that the road beyond the “Head of Halloran’s Cove” [ie. Houlihan’s Cove] was considered a public road. Nineteenth and Twentieth century records are consistent in dis- Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 299

criminating between responsibility for public roads and permissions given for statute road labor on private roads. 63 Dr. Robertson goes on to conclude his initial report as follows: In summary the following observations may be made: 1. Though there are early maps indicating a roadway from the old Peggy’s Cove Road to the peninsula of Umlah Point these do not provide any documentation to confirm that the road is a public roadway without recourse having to be made to written or published documentation. 2. Documentation is consistent that public roadway responsibility for Umlah Road was only for that portion described as being from the Seabright Road to the Head of Halloran’s Cove. There is no documentation that public responsibility extended across the wetland/saltmarsh/bog portion of the Umlah Road onto the peninsula of Umlah Point. 3. The only economic activity by non-residents of Umlah Point out of Redmond(’s) Cove are for the east side of the cove, namely the old limestone kiln (in operation at some time in the mid-1800s), and the swimming of livestock to Franks George Island from Callishaw’s Point which latter place was closer to the mouth of the Cove near Johnson’s Cove and not the head of Redmond(’s) Cove. 4. Pre-1900 references to road work for Umlah Road appear to be contained in permissions for assigning a portion of statute road labour on private roads by the Umlah family by petition as contained in the minutes of the council for the municipality of the county of Halifax. The same records note debates on private road over public road assignment of statute road labour, and the provision that councillor’s reports on roads to council not include private roads or roads on which merely statute road work had been permitted. I therefore state that I have come to the foregoing conclusions based on access to records consulted, and that in my professional capacity as a historian and consultant that these are my interpretations of the evidence. 64 He buttresses his opinion that the road in question is private with his subsequent report of November 21, 2014, providing a detailed review of the type of documentation in existence, particularly referencing the road sections in District 12. At page 9 of this report he notes: Actual records of specific roads receiving Statute Road work do exist in the form of petitions of the nineteenth century for permission to 300 REAL PROPERTY REPORTS 52 R.P.R. (5th)

work on one’s own (read private) roads in lieu of work elsewhere. The Minutes and Reports for 1882 contained the notice from District 29 for such work: Petitions were submitted from Henry Aker and Jasper McDonald and others in District 29, who lived some distance from the main road, and wished to put their statute labor on their own roads. The same occurred in District 12 [1887]: Read Petitions from J.R. Umlah and Edmund Redmond. Also Levi Longard and others, in District 12, asking to be allowed to do their Statute Labor on their own Roads. 65 Dr. Robertson continues at page 10 to recommend caution when reading the historical material: It is essential in historical analysis to understand extant documentation and the pitfalls of assuming certain “facts” on a cursory reading. This excursus into Statute Road Labor returns well illustrates that aspect. Background details of the history of Statute Road Labor clari- fies context, the function and process of road poll taxes, and the actual nature of required record keeping. 66 Dr. Robertson then sets forth nine conclusions, including: It cannot be assumed that the labor was expended on any particular road noted within the road section itself; and The Municipal Statute Labor document was not intended to show on which particular road statute labor was done. Instead, that document confirmed that certain persons in a road section (as defined) had in fact completed their required Statute Labor, in lieu of taxes. 67 In his subsequent affidavits, deposed November 24, 2014, and Janu- ary 7, 2015, Dr. Robertson provides further support for his conclusions. In particular, he states he has examined: 1. the 1908 Faribault map; 2. the Statute Road descriptions for District 12; and 3. other relevant documents, inclusive of the 1901 Federal Census of Canada for Nova Scotia, Halifax County - French Village Polling District. 68 Dr. Robertson deposes that having reviewed this documentation, he is able to determine the approximate bounds of the Statute Road section markers along the Peggy’s Cove Road (now 333 Highway). He then sets forth the sections (nos. 1, 1.5, 2, 3, 4, 5, 5.5, 6, 7, 8, 9 and 10). He concludes by explaining why he has not relied on the mileage references, Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 301

providing a logical explanation as to why they are inaccurate (see para 3 of each affidavit). 69 The Respondents’ historical expert, Dr. White, provided a June 27, 2014, affidavit attaching his curriculum vitae and June 27, 2014, report. While a very interesting read of the history of St. Margaret’s Bay, I did not find Dr. White’s report to offer much on point. For example, at the close of his report, on page 13, he states: Answers to the key questions of when and by whom a road to Umlah’s Point and to Redmond’s Cove was built were not found in the sources consulted for this report. However, from the foregoing the following facts may be inferred: • That the close proximity of Frank George’s Island to the mainland facilitated access by many people over a period of at least 100 years (1850-1950) for a variety of purposes, including but not necessarily limited to, fishing, farming, pas- turing livestock, hunting and logging. • Access to Frank George’s Island was most easily and safely accomplished via the beach on the north side of Redmond’s Cove, because the passage between the island and the mainland is shallowest at that location. • It may therefore be inferred that a road existed from the beach to Umlah Point road, and furthermore, that this road was used by inhabitants of, and owners of property on, Frank George’s Island, as well as others accessing the beach at Redmond’s Cove for other purposes. Those other purposes include fishing, bird-hunting, gathering eelgrass, harvesting lobsters and/or shellfish, and obtaining sand. 70 On the basis of the above and the entirety of Dr. White’s report, I do not find his opinion offers much for the Court to consider in the context of the question of whether the old Umlah Road is public or private. 71 Similarly, I did not find the Respondents’ expert, Paul Lumsden, offered much in assessing the critical question. He deposed a June 16, 2014, affidavit attaching his curriculum vitae and May 15, 2014, report. At the outset of his report, the expert says his report is in response to a request from Mr. Giovannetti “... to produce topographic mapping and photo analysis from various years of aerial photography spanning the years from 1931 to 2002”. 72 Mr. Lumsden reviewed the various years of aerial photography of the Umlah Point area and then made “observations” in his report at pp. 3 and 4. At this point I should indicate that the Court ruled his opinion be re- 302 REAL PROPERTY REPORTS 52 R.P.R. (5th)

stricted to his area of expertise. Accordingly, the portion of his report dealing with Mr. Lumsden’s view of whom may have traveled Umlah Road was struck. 73 Having reviewed the entirety of Mr. Lumsden’s report and accompanying photographs, I do not find it offers any assistance in determining the issue before the Court. 74 The Respondents’ third expert, Mr. Giovannetti, is both an accredited Nova Scotia land surveyor and a professional engineer. His affidavit deposed December 19, 2014, sets out his education, training and experience. The affidavit also refers to his report (enclosing various exhibits, including Mr. Giovannetti’s curriculum vitae) of the same date, confirming he addressed six questions. The questions were asked by Respon- dents’ counsel and are set forth at page 2 of Mr. Giovannetti’s report: 1. The degree to which the roads indicated on the Jackson Sheet and the 1908 Faribault map is consistent or inconsistent with the 1931 aerial photography. 2. The location where one mile ends assuming one travels westward along the roads indicated, starting at the intersection between the main highway and the southerly portion of the road indicated. 3. The location where one half mile ends assuming one travels westward along the roads indicated, starting at the intersection between the main highway and the southerly portion of road indicated. 4. The locations of any swellings and structures lying along any of the roads in the first half-mile leading from the main highway. 5. The degree to which the statements contained at paragraph 3 of Dr. Robertson’s affidavit is accurate. 6. Where each successive mile ends on the Faribault map referred to in Dr. Robertson’s affidavit, beginning at the location of the southerly of the two Smelt Brook Bridges as indicated and travel- ing northward. 75 The expert goes on to address each question in the body of his report. Through this discussion, he offers support for the Respondents’ position that the entirety of Umlah Road should be regarded as a public road. Unfortunately, in addressing the posed questions, I find Mr. Giovannetti strayed unnecessarily into speculation and an unfounded critique of Dr. Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 303

Robertson’s research and opinions. For example, at page 6 and 8 he asserts: According to Historical Land Information at the Nova Scotia Depart- ment of Natural Resources, in 1864 Ambrose F. Church was com- missioned by Nova Scotia Legislature to create maps for each of Nova Scotia 18 Counties. The scale of these maps were not sufficient for this report however, it is common knowledge by many Nova Sco- tia Land Surveyors, that Church had used an odometer attached to the side of the horse drawn cart to provide the necessary mileage for mapping of the many residences. As such the direct read of such a device would be to the 1/10 of a mile with possible estimations to 0.05 of a mile that could be made to achieve greater accuracy. Based on the technology in and around 1908 in the production of the Return of Road Tax sheets, mileage by the Road Masters could have been achieved by pacing or by the odometer. Therefore the range of accuracy could be anywhere from 1/100, one foot in a hundred feet, 53 feet in one mile by pacing, to the nearest 1/10 of a mile or better by use of the odometer or mileage records used on a horse drawn carriage. ... The opinion of Dr. Robertson as contained in 3a appears to be an unsubstantiated opinion formed without fact or analysis of the corre- lation to reliable road section markers and quoted distances. Dis- tances in 1908 could have easily been achieved by pacing and 1 rounded to the nearest /2 mile. It is likely that the road markers cho- 1 sen to and from residents were at or near the /2 mile or 1 mile etc., as quoted in the road sections. 76 Additionally, I am of the view that Mr. Giovannetti strayed into areas of advocacy, as evidenced by his comments at p. 9: The lack of any mileage recorded on any return was considered to be randomly provided and not considered to be arbitrary. For Dr. Rob- ertson to have the opinion that the exact distances seem arbitrary in the same way the route markers were arbitrarily chosen as reference points is a poor comment that is not understanding of the manner of the intent and purpose of the method of describing the road sections. 77 Further, I found that upon review of Mr. Giovannetti’s report, he tended to over-reach so as to fit his conclusions with the Respondents’ theory. Indeed, I am of the view Mr. Giovannetti placed too much reliance on the 1908 Road Tax Report, without examining where the road work was performed. 304 REAL PROPERTY REPORTS 52 R.P.R. (5th)

78 Finally, when I considered Mr. Giovannetti’s opinion within the context of Dr. Robertson’s review of the Road Sections (discussed at paras 65 and 67, supra), I was struck by the unexplained gaps in Mr. Giovan- netti’s analysis. This was ably demonstrated by Mr. Tupper when in his closing submission he referred to an enlarged 1908 Faribault Map of the area. In my view, this map vividly showed at least three significant gaps along the Peggy’s Cove Road. These gaps represent road sections which are not accounted for in Mr. Giovannetti’s analysis. 79 In contrast, Dr. Robertson provided a very thorough review. For example, the historical context for statute labour is set out in the November 21, 2014 report. Dr. Robertson notes that statute road labour was used to expand and maintain provincial roads. 80 The Applicants’ expert reviewed the Road Returns for all of District 12 (which are included in the appendices of his report). He noted that the road section descriptions use landmarks to define the boundaries of the section in general and not on any particular road beyond the (now) 333 Highway. With respect to District 12, in 1908 the descriptions appear to reference landmarks along the old Peggy’s Cove Road. Dr. Robertson identified many of the landmarks referred to in the descriptions of the road sections within District 12. The map attached as an exhibit to his November 24, 2014, affidavit demonstrates the approximate locations of the landmarks along the road. 81 In deciding which expert to be preferred in this case I am mindful of the remarks in Canadian Civil Procedure Law, 2d edn. (LexisNexis, 2010), where Abrams and McGuiness give general guidance on how expert evidence may be evaluated: §16.238 In deciding whether to accept the evidence of one witness or another, or to draw a conclusion of its own based on the evidence of both (or all) the experts, the court’s responsibility is to consider the assumptions that each witness has made, the extent to which those assumptions appear consistent with the other evidence before the court, the source of any data on which the opinion is based, the apparent impartiality of the expert, the apparent clarity and reason of the analysis that has been applied to that data, the extent (if any) to which other pertinent data has been ignored, the question of which theory seems to be most in accord with the prevailing opinion within a given body of knowledge, and the overall apparent general rigour of each expert’s approach to the issues considered. If, after such a careful review, the opinion of one expert seems more reliable than another, then the court should rule on that basis. Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 305

82 At the end of the day, having carefully reviewed the expert opinions, I find Dr. Robertson to be more reliable than the Respondents’ experts and I thus adopt his rationale in assisting with my finding that Umlah Road is not a public road beyond 0.5 miles (or 0.8 km) from Highway 333.

Evidence of Shona Poirier 83 After reading and listening to the evidence and argument and sifting through the competing evidence, I am of the emphatic view that the Umlah Road is private after the first half a mile off the Peggy’s Cove Road. I make this finding with particular reference to the opinion of Dr. Robertson and evidence of Ms. Poirier who were both tested through cross-examination. For the reasons outlined, I prefer the expert evidence of Dr. Robertson to the three experts who gave written evidence on behalf of the Respondents. As for Ms. Poirier, I find she gave balanced affidavit and oral evidence from her vantage point as an impartial civil servant charged with overseeing the file concerning, inter alia, the road in question. 84 In particular, I find Ms. Poirier’s evidence at para 17 of her February 21, 2014, affidavit to be persuasive: The 1951 road list shows Umlah Road as owned and maintained by the DTIR with a length of 0.5 miles (0.8 km), which is roughly where the Head of Houlihan’s Cove is. A copy of this road list is attached as exhibit N. 85 Scrutiny of exhibit N reveals Ms. Poirier’s statement to be accurate and she was not shaken on cross-examination. The import of Ms. Poi- rier’s statement on my critical finding is further understood when one appreciates that after 0.8 km Umlah Road branches into CHL. Later in Ms. Poirier’s February 21, 2014, affidavit she confirms the Province does not maintain CHL. It is therefore not surprising that she deposes (para 8, March 27, 2014, affidavit) as follows: It is my opinion that Umlah Road, listed under authority 503, is a public highway for a distance of 0.8 km from Route 333, until just past the beginning of Captain Hemlock Drive. Attached as Exhibit A is the current map of the area generated for Property Online. The approximate length of the public portion of Umlah Road has been highlighted. 306 REAL PROPERTY REPORTS 52 R.P.R. (5th)

86 Ms. Poirier goes on to state the basis for her conclusion, which I find persuasive, in para 9 of her March 27, 2014, affidavit: This conclusion is based on the following sources: a) 1951 provincial road lists that was attached as Exhibit N of my Affidavit of February 21, 2014. This road list includes under authority 503, a listing for Umlah, Main Rd at Seab- right to Head Halloran’s, for 0.5 miles. This is the first road list that includes the distance that was maintained by DTIR. b) This description is consistent with the expenditures found in 1923, 1923, 1926-1929, 1931, 1932, 1934-1937 & 1941 expenditure reports, attached as Exhibit L of the February 21, 2014 affidavit. c) TIR Board Map from 1921 identifies Peggy’s Cove Road as French Village Road, and one road only at the location as what appears to be Umlah Road and is identified as Hubleys Road. A copy of this TIR Board Map is attached as Exhibit C of my February 21, 2014 affidavit. This reference to Hubley’s Road coincides with the description in the Highway Expendi- ture Report for 1921 as well, included with Exhibit G of my February 21, 2014 Affidavit. d) The road descriptions found in the expenditure reports in Ex- hibits G, H, I, J and K of my February 21, 2014 affidavit refer to the same general area, but there is insufficient evidence to identify what length exactly was being maintained. e) I reviewed the Crown Grant at the subject location. My research did not identify any road identified in the Crown Grant and therefore it does not satisfy Section 11(1)(a) of the Public Highways Act. f) My review of the material indicates that at no point since 1953 has the Department of Transportation and Infrastructure Renewal (or its predecessors) accepted (formally or otherwise) the Umlah Road as a public highway beyond the distance indicated in the 1951 road list. 87 She adds (para 11 of her March 27, 2014, affidavit) that there has never been a road closure of the highway in question. Once again, I found Ms. Poirier’s evidence to be of assistance in reaching my decision. It was without any bias and offered a balanced overview of the road in question. Shannon v. Frank George’s Island Investments Ltd. James L. Chipman J. 307

Conclusion 88 For the reasons outlined I find that the portion of Umlah Road in issue is private. For certainty I will ask Mr. Tupper to prepare an Order with, inter alia, the following terms: ...AND UPON IT APPEARING that the Right-of-Way which is the subject of this Order (“Right-of-Way”) is the Right-of-Way known as Captain Hemlock Lane and Tern Lane on Umlah Point, Nova Sco- tia, and which is granted over property owned by Joel Shannon situ- ated at 24 Lanyard Lane, Seabright, Nova Scotia, and bearing PID No. 514760 (“Shannon Property”); AND UPON IT APPEARING that the properties in this Application benefitted from the Right-of-Way (“Benefitted Properties”) are those properties with an express or implied grant of use of the Right-of- Way, and include the properties located at the following civic address: a) 280 Captain Hemlock Lane owned by David and Dina Grace bearing PID No. 512707; b) Lot B7-A1X, Lot B-2 and Lot C, Captain Hemlock Lane owned by Gower Holdings Limited, bearing PID Nos. 415075110, 40872541 and 0061453; and c) 248 Captain Hemlock Lane owned by the Respondent Seab- right Holdings Limited, bearing PID No. 00613513. IT IS HEREBY ORDERED AND DECLARED: 1. The Shannon Property is not burdened by a Right-of-Way in favour of the Respondent, Frank Georges Island Investments Limited. 2. The Right-of-Way is restricted in use to that of a private road, only for the limited purpose of access to the Benefitted Properties, and, incidentally properties beyond, and only in the private capacity of the Benefitted Properties. For greater clarity, the owners of the Benefitted Properties are expressly prohibited from using the Right-of-Way to transfer goods and/or persons to adjacent or nearby properties for the benefit of non-benefitted parties. 89 Due to my ruling on res judicata and issue estoppel I decline to hold any of the Respondents liable for trespass on the Shannon Property and/or for their past excessive use of the right-of-way. Given the within decision any future such transgressions will obviously be met with a different outcome. 308 REAL PROPERTY REPORTS 52 R.P.R. (5th)

90 If the parties are unable to agree on costs I will receive written submissions within 30 days of this decision. Application granted in part. Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. 309

[Indexed as: Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. Investments Ltd.] The Zone Bowling Centre (2002) Ltd., Petitioner and 14100 Entertainment Blvd. Investments Ltd. and 0984972 BC Ltd., Respondents British Columbia Supreme Court Docket: Vancouver 149195 2015 BCSC 524 Bowden J. Heard: March 11, 2015 Judgment: April 8, 2015 Real property –––– Landlord and tenant — Renewal of lease — Option to renew — Notice of renewal –––– Parties entered into commercial lease agreement in April 2004 for term ending in 10 years, unless renewed — Renewal should be exercised 9 months before expiry of initial term or by July 31, 2013 and notice should be given in writing — Petitioner brought petition seeking declaration that it properly exercised option to renew lease — Petition dismissed — Evidence showed that petitioner only gave notice in or about August 2013 and was in breach of its lease obligations — Petitioner failed to establish that respondents waived strict compliance with renewal conditions. Cases considered by Bowden J.: Clark Auto Body Ltd. v. Integra Custom Collision Ltd. (2007), 2007 CarswellBC 63, 2007 BCCA 24, 28 B.L.R. (4th) 17, 277 D.L.R. (4th) 201, 51 R.P.R. (4th) 163, 62 B.C.L.R. (4th) 315, 387 W.A.C. 309, 234 B.C.A.C. 309, [2007] B.C.J. No. 61 (B.C. C.A.) — referred to Delphi Management Corp. v. Dawson Properties (2014), 2014 CarswellOnt 496, 2014 ONSC 354 (Ont. S.C.J.) — referred to Directors Film Co. v. Vinifera Wine Services Inc. (1998), 38 O.R. (3d) 212, 1998 CarswellOnt 977, 17 R.P.R. (3d) 14, 57 O.T.C. 65, [1998] O.J. No. 1053 (Ont. Gen. Div.) — considered Doria v. 66 Degrees Inc. (2000), 2000 CarswellOnt 86, 30 R.P.R. (3d) 287, [2000] O.J. No. 136 (Ont. S.C.J.) — considered H.Y. Louie Co. v. Whistler Noodle House Ltd. (2002), 2002 CarswellBC 1939, 2002 BCSC 1120, [2002] B.C.J. No. 1748 (B.C. S.C.) — considered Rinaldo Hair Stylist Ltd. v. bcIMC Realty Corp. (2012), 2012 ONSC 2831, 2012 CarswellOnt 6866 (Ont. S.C.J.) — referred to 310 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Rinaldo Hair Stylist Ltd. v. bcIMC Realty Corp. (2013), 2013 ONCA 38, 2013 CarswellOnt 516 (Ont. C.A.) — considered Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co. (1994), [1994] 2 S.C.R. 490, 1994 CarswellAlta 744, [1994] 7 W.W.R. 37, 20 Alta. L.R. (3d) 296, 168 N.R. 381, (sub nom. Maritime Life Assurance Co. v. Saskatchewan River Bungalows Ltd.) [1994] I.L.R. 1-3077, 155 A.R. 321, 73 W.A.C. 321, 115 D.L.R. (4th) 478, 23 C.C.L.I. (2d) 161, 1994 Carswell- Alta 769, [1994] S.C.J. No. 59, EYB 1994-66952 (S.C.C.) — referred to Sechelt Golf & Country Club Ltd. v. Sechelt (District) (2012), 2012 CarswellBC 2273, 2012 BCSC 1105, 24 R.P.R. (5th) 237, [2012] B.C.J. No. 1559 (B.C. S.C.) — referred to Singh v. Three King’s Head Inn (1999), 19 B.C.T.C. 341, 1999 CarswellBC 1765, 26 R.P.R. (3d) 144, [1999] B.C.J. No. 1811 (B.C. S.C.) — considered 6781427 Holdings Ltd. v. Alma Mater Society of University of British Columbia (1987), 44 D.L.R. (4th) 257, 1987 CarswellBC 847 (B.C. C.A.) — referred to Statutes considered: Commercial Tenancy Act, R.S.B.C. 1996, c. 57 s. 21 — considered Rules considered: Supreme Court Civil Rules, B.C. Reg. 168/2009 App. B, s. 2(2)(b) — referred to

PETITION by petitioner seeking declaration that it properly exercised option to renew lease.

S.J. Nelligan, for Petitioner H.S. MacDonald, for Respondents

Bowden J.: I. Introduction 1 The petitioner seeks a declaration that it has properly exercised an option to renew a lease that it entered into with the respondents. The petitioner seeks ancillary relief but only in the event that I find that the option was properly exercised. 2 The petitioner currently operates its business on the leased premises consisting of a 35,450 square foot bowling facility and a 6,400 square foot sports bar and grill. 3 The respondent has also filed a petition seeking various orders on the basis that the petitioner is now an overholding tenant. Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. Bowden J. 311

II. Decision 4 For the reasons that follow I have concluded that the petitioner did not properly exercise its option to renew the lease. Based on that finding, the petitioner concedes that the lease was validly terminated by the respondents by notice to the petitioner dated October 27, 2014, and the respondent is entitled to the relief sought in its petition which is before this court.

III. Background 5 On May 1, 2004, the petitioner, as lessee, entered into a lease of commercial property located at #150 and #180, 14200 Entertainment Blvd., Richmond, British Columbia with Riverport Sports & Entertainment Park, the landlord. 6 The lease was for a term of 10 years ending on April 30, 2014, unless it was renewed. It provided for a first, second and third option to renew in each case for an additional five year term. 7 The first option is contained in paragraph 3.2 of the lease which provides: 3.2 First Option to Renew The Landlord covenants with the Tenant that if: (a) the Tenant gives notice to the Landlord that the Tenant wishes to obtain a renewal of this Lease, such notice to be given not earlier than twelve (12) months, and not later than nine (9) months, before the expiry of the initial Term herein granted; (b) at the time of giving such notice the Tenant shall not be in breach of any covenant or condition herein contained; and (c) the Tenant has duly and regularly throughout the initial Term observed and performed the covenants and conditions herein contained; then the Landlord shall grant to the Tenant at the Tenant’s expense a renewal lease of the Premises for a further term (the “First Renewal Term”) of five (5) years (as specified in section 1.1(h)) upon the same terms and conditions as are herein contained, save and except this covenant to renew and save and except the Annual Rent which shall be the Cur- rent Market Rent for the Premises with its Leasehold Im- provements (having regard to the duration of the renewal term), and save and except any tenant allowances or other in- ducements. If the Landlord and the Tenant are unable at least three (3) months before the expiry of the Term to agree upon 312 REAL PROPERTY REPORTS 52 R.P.R. (5th)

such Current Market Rent, the determination of such Current Market Rent shall be referred to a single arbitrator selected by the Landlord, acting reasonably. ... 8 The remainder of para. 3.2 deals with the arbitration process and is not relevant to these proceedings. 9 The date by which the first option had to be exercised was 9 months before the expiry of the initial term of the lease or by July 31, 2013. 10 Para. 17.1 of the lease provides that any notice required under the lease, “...shall be given in writing...”. 11 During the term of the lease the petitioner was frequently late in paying rent and on some occasions the cheque in payment of the rent was returned “NSF”. Rent was overdue on a number of occasions including July 31, 2013. 12 An officer and director of the petitioner, Charles Wills, states in his affidavit that “in or about August 2013” he met with Avtar Bains, an agent of the landlord, and advised him that the petitioner was exercising its first option to renew. 13 In his affidavit, Mr. Bains, states that he spoke with Mr. Wills by telephone on August 6 or 7, 2013, and Mr. Wills told him that he would like to exercise the renewal option but did not state that he was exercising it. It appears that the discussion was precipitated by an email from Mr. Bains to Mr. Wills dated July 4, 2013, suggesting that they get together because the lease was expiring in less than a year. 14 In light of my conclusion in this case I do not find it necessary to resolve the conflict in the evidence regarding the discussion between Mr. Bains and Mr. Wills. 15 On December 17, 2013, the ownership of the property changed and the lease was assigned to the respondents who are the current landlords. The petitioner delivered an “Estoppel Certificate” to the new landlord indicating that there were no unexercised rights to renew or extend the terms of the lease. 16 Following an exchange of emails between Mr. Wills and Mr. Bains, communications continued between Mr. Wills and Ms. Denise She, a representative of the respondents. Those communications, which were largely by email, appear to have taken place from January 9, 2014 until June 13, 2014. Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. Bowden J. 313

17 A message from Ms. She dated January 9, 2014, was forwarded to Mr. Wills. In it she says that she would like to know if Mr. Wills is interested in renewing the lease. By email to Ms. She on January 10, 2014, Mr. Wills suggested a meeting and said, “...our intention is to renew our lease term...” 18 The emails from Ms. She indicate that she was prepared to discuss either the renewal of the lease or a new lease agreement however there is no acknowledgment by her that the first option to renew had been exercised. 19 On April 17, 2014, Ms. She provided a “Renewal of Lease Agree- ment” to Mr. Wills. The draft agreement was prepared by the respondents and stated in the preamble: B. The Tenant has requested the landlord to exercise its First Option to Renew of the Lease for five (5) years commencing on the 1st day of May, 2014 and ending on the 30th day of April 2019. ... 20 The petitioner made a number of changes to the document including a change in the term from 5 years to 15 years. Mr. Wills signed a copy of the amended document and returned it to Ms. She on June 13, 2014. It was not accepted by the respondents. 21 Negotiations broke down after about July 24, 2014, when Dale Clark, a consultant assisting Mr. Wills, informed him that the respondent did not consider the option to renew had been exercised and considered the petitioner to be an over holding tenant on a month to month tenancy. 22 On October 27, 2014, the respondents gave written notice to the petitioners terminating the lease with effect on November 30, 2014.

IV. Position of the Parties 23 The petitioner argues that by continuing to accept rent when payments were late the respondents waived strict compliance with the lease and the conditions precedent to the exercise of the first option to renew. 24 The petitioner also argues that by virtue of their continuing negotiations with the petitioners, the respondents are estopped from alleging a breach of the lease as grounds for denying the renewal. 25 The respondent submits that as the petitioner failed to satisfy the three conditions precedent to exercising its renewal option and remained in possession after the expiry of the lease term it became a monthly over holding tenant under paragraph 5.10 of the lease. 314 REAL PROPERTY REPORTS 52 R.P.R. (5th)

V. Analysis 26 The evidence establishes that the conditions precedent to the exercise of the first option by the petitioner were not satisfied. 27 The petitioner has not established that it gave notice of the exercise of the first option to renew by July 31, 2013. The evidence of the petitioner’s representative, Mr. Wills, is that he gave notice in or about Au- gust, 2013. Furthermore, such notice was verbal and not in writing as required by paragraph 17.1 of the lease. 28 During the period from June 1, 2013 until September 25, 2013, the petitioner was behind in the payment of rent and was therefore in breach of its lease obligations during the time that the petitioner alleges that he gave notice of renewal. 29 As the petitioner was frequently in default of its obligation to pay rent over the term of the lease it could not be said to have duly and regularly performed its obligations throughout the 10 term of the lease. 30 Unless the petitioner establishes that the respondents have waived strict compliance with the conditions regarding the exercise of the renewal option or they are estopped from relying on those conditions, the option has not been properly exercised. 31 With regard to the argument by the petitioner that the respondent is estopped from relying on the preconditions to the exercise of the renewal option there is no evidence that the respondents made any promise to the petitioner during the period that it was open to the petitioner to exercise the renewal option which would have caused the petitioner to believe that it need not give written notice to exercise the option. Nor is there evidence to suggest that, during that period, the respondent lulled the tenant into believing that written notice to renew was not required before the deadline specified in the lease. (6781427 Holdings Ltd. v. Alma Mater Society of University of British Columbia (1987), 44 D.L.R. (4th) 257 (B.C. C.A.) and Sechelt Golf & Country Club Ltd. v. Sechelt (District), 2012 BCSC 1105 (B.C. S.C.)). By way of contrast, in Singh v. Three King’s Head Inn [1999 CarswellBC 1765 (B.C. S.C.)], 1999 CanLII 5627, the landlord provided some assurance to the tenant that it could operate its restaurant for another 20 years if he wished. With that assurance the tenant did not consider it necessary to exercise its right of renewal in writing. Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. Bowden J. 315

32 As to waiver, in my view the respondents did not waive their right to insist upon strict compliance by the petitioner with the preconditions to the exercise of the first option. 33 To find that the respondents waived those rights would require evidence that they had full knowledge of their rights and unequivocally and consciously intended to abandon them. (Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490 (S.C.C.)). Such evidence was not before me. 34 While the acceptance by the respondents of late payments of rent could amount to a waiver of the breach of the payment conditions of the lease and prevent the respondents from terminating on that basis, in my view the acceptance of late rent does not result in a waiver by the respondents of the preconditions to the exercise of the renewal option. Even if it does, it is my view that it does not amount to a waiver of the condition that notice in writing be given no later than July 31, 2013. A waiver of that condition would have had to have been express and in writing. 35 The meaning of the estoppel certificate provided by the petitioner to the respondents on December 17, 2013, is unclear. At most I consider it to show that the petitioner mistakenly believed that it had exercised the option to renew in accordance with the provisions of the lease. 36 Even though, as I have found, the petitioner did not properly exercise the option to renew, after the deadline of July 31, 2013, it was open to the respondents to negotiate a renewal of the lease or a new lease with the petitioner however, the petitioner had lost its right to renewal. 37 The tenor of the negotiations between the petitioner and the respondents suggest that a renewal was being considered by both parties. On January 10, 2014, Mr. Wills sent a message to Ms. She that “our intention is to renew our lease term...”. The petitioner and the respondents appear to have negotiated in good faith in an attempt to reach the terms of a lease. 38 By sending proposed terms of renewal to the petitioner on April 17, 2014, the respondents indicated a willingness to renew the lease and it was open to the petitioner to accept the terms of renewal offered by the respondents. The petitioner rejected the proposed terms and negotiations eventually came to an end. 39 Such negotiations after the deadline for the renewal do not amount to conduct by the respondents that could lead a tenant to infer that the landlord had waived compliance with the preconditions to exercising the re- 316 REAL PROPERTY REPORTS 52 R.P.R. (5th)

newal. (Rinaldo Hair Stylist Ltd. v. bcIMC Realty Corp., 2013 ONCA 38 (Ont. C.A.)). 40 In Rinaldo at para. 26 of the trial decision (2012 ONSC 2831 (Ont. S.C.J.)- aff’d by ONCA), Tausendfreund J., refers to comments by Low J. at para. 8 of his reasons in Doria v. 66 Degrees Inc., 2000 CarswellOnt 86 (Ont. S.C.J.): The case law is now settled that the exercise of an option must be done in a manner which is clear, explicit, unambiguous and unequiv- ocal ... It is not sufficient that the parties engage in a dance with each other; it is necessary that the optionee declare his intentions. And it is not, in my view, a sufficient exercise of an option to express a will to exercise it on conditions. Such an expression is no commitment at all and leaves the optionor without the degree of certainty that option clauses with time limitations are designed to provide. In a lease where there is a requirement for written exercise of an option on or before a stipulated date prior to the end of the lease term, there is little if any doubt that the business rationale for those requirements is to provide both landlord and tenant with certainty as to their future rights and obligations vis a vis each other. It gives the landlord certainty that if the option is not exercised in time, he is free to re-market the premises to another prospective tenant or indeed to the existing one. It give the tenant the certainty that if he exercises the option in conformity with the lease, the landlord is bound to have him, and if he does not so exercise, that he is at liberty to negotiate a new lease with the landlord without obligation if those negotiations do not lead to a concluded agreement. To hold that a course of negotiation in the absence of a clear and unambiguous exercise of the option may constitute a waiver of compliance with the requirements of the option clause would effectively destroy the certainty that the parties have bargained for... 41 Low J. is again referred to at para. 7 of Doria v. 66 Degrees Inc. where he writes: Once the time for giving notice of renewal has passed without being exercised, it is a new ball game. No longer are the landlord and tenant yoked together in privity of estate for a new term of the lease. The mere expression of interest on the part of either or both parties to continue in a landlord tenant relationship and the negotiation of terms of same do not in themselves revive the right of renewal if it has lapsed... 42 In my view that is an apt description of what happened here. The time for renewal passed without the tenant having made it clear in writing that Zone Bowling Centre (2002) Ltd. v. 14100 Entertainment Blvd. Bowden J. 317

it was exercising the first renewal option. Mr. Wills and Ms. She then engaged in protracted negotiations with a view to entering a new lease but failed to reach an agreement. 43 I also note that the lease in the case at bar contains an express non- waiver provision in paragraph 17.7. Such a clause has been held to preclude a finding of waiver by a landlord. (Delphi Management Corp. v. Dawson Properties, 2014 ONSC 354 (Ont. S.C.J.)). 44 The cases of H.Y. Louie Co. v. Whistler Noodle House Ltd., 2002 BCSC 1120 (B.C. S.C.) and Directors Film Co. v. Vinifera Wine Services Inc. [1998 CarswellOnt 977 (Ont. Gen. Div.)], 1998 CanLII 14658, are distinguishable because the court in those cases accepted that the tenant had delivered notice of renewal to the landlord within the renewal period. 45 While the failure to renew in accordance with the terms of the lease may have a significant adverse impact on the business of the petitioner, relief from forfeiture is not available when a tenant fails to comply with the conditions precedent to the exercise of an option to renew. This is because there is no compulsion on the tenant to exercise the renewal option, but if it does, it must comply with the conditions precedent. If it fails to do so it does not suffer the forfeiture of an existing tenancy, but loses its right to renew the tenancy. (Clark Auto Body Ltd. v. Integra Custom Collision Ltd., 2007 BCCA 24 (B.C. C.A.)). 46 After the end of the term of the lease on April 30, 2014, the petitioner remained as an overholding tenant on a month to month tenancy pursuant to paragraph 5.10 of the lease. 47 The respondents are entitled to the relief sought in their petition as follows: I. A declaration that The Zone Bowling Centre (2002) Ltd.: a) After April 30, 2014, was a month to month overholding tenant and such month to month tenancy has been determined by notice. b) Holds possession of the land and premises described in the lease against the right of the respondents. c) Has wrongfully refused to go out of possession of such lands and premises. II. A writ of possession is ordered in respect to the lands and premises pursuant to Section 21 of the Commercial Tenancy Act, RSBC 1996 c. 57. 318 REAL PROPERTY REPORTS 52 R.P.R. (5th)

III. Cost are awarded to the respondents under Scale B. Petition dismissed. Brownlee v. Kashin 319

[Indexed as: Brownlee v. Kashin] Kirk David Brownlee, Applicant and Ron Kashin and Goldenrod Investments Ltd., Respondents Ontario Superior Court of Justice Docket: CV-12-466123 2015 ONSC 1035 D.L. Corbett J. Judgment: February 17, 2015* Real property –––– Landlord and tenant — Agreement for lease — Reme- dies for breach — Specific performance –––– Tenant leased two adjacent properties from landlord without written agreement starting in 2006 — Tenant alleged there was oral agreement for lease-to-own — Conduct of landlord on various occasions indicated acceptance of existence of lease-to-own agreement — Landlord pursued redevelopment of properties — Tenant brought action against landlord for specific performance — Landlord brought counterclaim for vacant possession of properties — Action dismissed; counterclaim allowed — Tenant was required to arranged vacant possession of properties subject to giving any subtenants opportunity to make submissions to court — Ten- ant failed to establish lease-to-own agreement — Parties never agreed on price — Parties never agreed on payment terms, specifically what portion, if any, of rental payments applied towards purchase price — Parties never agreed on term for exercise of option to purchase properties — Parties never agreed on process or method for determining price, payment terms, or duration of alleged agreement — Since landlord had repeatedly acknowledged existence of lease-to- own agreement, equity could have intervened if tenant establish detrimental reliance — Nonetheless, tenant failed to establish any losses resulting from reliance on existence of lease-to-own agreement — Both parties actually benefited from landlord-tenant relationship, though even lease agreement was invalid due to lack of meeting of minds on material terms. Cases considered by D.L. Corbett J.: Anchorage Management Services Ltd. v. 465404 B.C. Inc. (1999), 1999 BCCA 771, 1999 CarswellBC 2947, 132 B.C.A.C. 72, 215 W.A.C. 72, 72 B.C.L.R. (3d) 389, 16 B.C.T.C. 79, 2 B.L.R. (3d) 246, [1999] B.C.J. No. 2976 (B.C. C.A.) — referred to

*A corrigendum issued by the court on March 9, 2015 has been incorporated herein. 320 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 79 D.L.R. (4th) 97, 53 O.A.C. 314, 1991 CarswellOnt 836, [1991] O.J. No. 495 (Ont. C.A.) — referred to Canada Square Corp. v. Versafood Services Ltd. (1981), 34 O.R. (2d) 250, 15 B.L.R. 89, 130 D.L.R. (3d) 205, 1981 CarswellOnt 124, [1981] O.J. No. 3125 (Ont. C.A.) — referred to Central Guaranty Trust Co. v. Dixdale Mortgage Investment Corp. (1994), 43 R.P.R. (2d) 137, 77 O.A.C. 253, 121 D.L.R. (4th) 53, 24 O.R. (3d) 506, 1994 CarswellOnt 760, [1994] O.J. No. 2949 (Ont. C.A.) — referred to Cowderoy v. Sorkos Estate (2012), 2012 ONSC 1921, 2012 CarswellOnt 6857, 77 E.T.R. (3d) 246, 23 R.P.R. (5th) 36 (Ont. S.C.J.) — referred to Crabb v. Arun District Council (1975), [1976] 1 Ch. 179, [1975] 3 All E.R. 865 (Eng. C.A.) — referred to Deglman v. Guaranty Trust Co. of Canada (1954), [1954] 3 D.L.R. 785, [1954] S.C.R. 725, 1954 CarswellOnt 140, [1954] S.C.J. No. 47 (S.C.C.) — followed Eberts v. Carleton Condominium Corp. No. 396 (2000), 2000 CarswellOnt 3750, 36 R.P.R. (3d) 104, 136 O.A.C. 317, [2000] O.J. No. 3773 (Ont. C.A.) — referred to Hughes v. Moncton (City) (2006), 2006 CarswellNB 477, 2006 CarswellNB 478, 304 N.B.R. (2d) 92, 788 A.P.R. 92, 2006 NBCA 83, [2006] N.B.J. No. 358 (N.B. C.A.) — referred to Kelly v. Watson (1921), 61 S.C.R. 482, [1921] 1 W.W.R. 958, 57 D.L.R. 363, 1921 CarswellAlta 97 (S.C.C.) — referred to Kerr v. Baranow (2011), 14 B.C.L.R. (5th) 203, [2011] 3 W.W.R. 575, 64 E.T.R. (3d) 1, 93 R.F.L. (6th) 1, 300 B.C.A.C. 1, 509 W.A.C. 1, 274 O.A.C. 1, [2011] 1 S.C.R. 269, 108 O.R. (3d) 399 (note), 2011 SCC 10, 2011 Car- swellBC 240, 2011 CarswellBC 241, 328 D.L.R. (4th) 577, 411 N.R. 200, (sub nom. Vanasse v. Seguin) 108 O.R. (3d) 399, [2011] S.C.J. No. 10, [2011] A.C.S. No. 10 (S.C.C.) — followed Klemke Mining Corp. v. Shell Canada Ltd. (2007), 2007 CarswellAlta 349, 2007 ABQB 176, 419 A.R. 1, [2007] A.J. No. 301 (Alta. Q.B.) — referred to Peel (Regional Municipality) v. Canada (1992), (sub nom. Peel (Regional Municipality) v. Ontario) 144 N.R. 1, 1992 CarswellNat 15, 55 F.T.R. 277 (note), 12 M.P.L.R. (2d) 229, 98 D.L.R. (4th) 140, [1992] 3 S.C.R. 762, 59 O.A.C. 81, 1992 CarswellNat 659, EYB 1992-67221, [1992] S.C.J. No. 101 (S.C.C.) — followed UBS Securities Canada Inc. v. Sands Brothers Canada Ltd. (2008), 45 B.L.R. (4th) 105, 2008 CarswellOnt 2503, [2008] O.J. No. 1676 (Ont. S.C.J.) — referred to 1175777 Ontario Ltd. v. Magna International Inc. (2006), 57 R.P.R. (4th) 215, 2006 CarswellOnt 7512, [2006] O.J. No. 4732 (Ont. S.C.J.) — referred to Brownlee v. Kashin D.L. Corbett J. 321

Statutes considered: Statute of Frauds, R.S.O. 1990, c. S.19 Generally — referred to

ACTION by tenant against landlord for specific performance; COUNTER- CLAIM by landlord for vacant possession of properties.

Mr. Brownlee, for himself Jason Bogle, for Respondents

D.L. Corbett J.:

1 This proceeding first came before me as a motion for security for costs in April 2014. It is a simple case involving one disputed issue. It cried out for a quick trial. At the end of June, I directed steps to ready the case for a trial, which was held in early December 2014. 2 The disputed issue is whether Mr Brownlee has a right to purchase from the respondent Goldenrod two adjacent properties zoned for commercial use on Queen Street East in the Ashbridge’s Bay area of Toronto. 3 In prior proceedings, the Landlord and Tenant Board decided that Mr Brownlee holds a commercial rather than a residential tenancy. 4 There is no written agreement between the parties. 5 Mr Brownlee claims that there was an oral agreement for a “lease-to- own” the properties. There is some evidence to support this contention: a. In February 2010, Mr Kashin, Goldenrod’s principal, wrote out and signed an acknowledgment that Mr Brownlee has a “lease-to- own, right of first refusal” and was entitled to sublet portions of the premises. b. When Mr Brownlee made his monthly payments, he did not sign Mr Kashin’s receipts. Instead, he prepared his own receipts, handwritten, which bore the phrase “lease to own” at the top of many of them. Mr Kashin signed many of these receipts. c. When Mr Brownlee sought to rent out rooms to persons receiving social assistance, government administrators sought confirmation from Mr Kashin that they were providing cheques for the last month’s rent to the correct “owner”. Mr Kashin confirmed to these administrators that Mr Brownlee had a “lease-to-own” 322 REAL PROPERTY REPORTS 52 R.P.R. (5th)

agreement and was entitled to receive the last month’s rent cheque. d. Initial negotiations took place in June or July 2006 and Mr Brownlee took possession of 1604 Queen St E shortly thereafter. Mr Brownlee says that the “lease-to-own” applied to both 1604 and to 1602 Queen St E. The monthly payment was $1200. In Jan- uary 2009, when 1604 became vacant after its commercial tenant left, Mr Brownlee took possession of that property. The monthly payments did not change: Mr Brownlee paid $1200 per month for 1604 Queen St E from July 2006 to January 2009, and $1200 per month for both 1602 and 1604 Queen St E from January 2009 to the time this dispute arose. e. Mr Brownlee took over both properties “as is” and was responsible for ongoing repairs and maintenance to two buildings in admittedly rough condition. Mr Brownlee paid frequent roof repair costs and other maintenance expenses of many thousands of dol- lars during his time in the properties. f. With one exception, discussed below, Mr Brownlee was free to rent out portions of the premises to others. Initially, he located his own retail store in part of 1604 Queen St E. Around 2009, he closed his retail store and worked full-time managing the buildings: renting them out and apparently living off the net proceeds. 6 This case was characterized by the parties at the outset as a question of the application of the Statute of Frauds.1 That Act requires that contracts for the purchase and sale of land be in writing. An exception to this requirement is made where there is “part performance” of an oral agreement. However, in the final analysis, this case does not turn on the Stat- ute of Frauds. The parties performed what they each understood to be their bargain for roughly seven years before they fell into this dispute. There is clearly “part performance” here, but of what? 7 Mr Brownlee bears the onus of establishing that there was a “lease to own” agreement. To try to do this, he testified respecting the formation of the relationship, back in 2006, and his dealings with Mr Kashin in the following seven years. He called witnesses to show that he has been in continuous possession since July 2006 (for unit #1604) and 2009 (for unit #1602), and has been solely responsible for maintaining the proper-

1R.S.O. 1990, c. S.19 Brownlee v. Kashin D.L. Corbett J. 323

ties. His witnesses testified that Mr Brownlee consistently maintained to the world that he had a right to acquire the properties. 8 On balance, for the reasons that follow, I conclude that Mr Brownlee has failed to meet his onus to establish a “lease-to-own” agreement. I base this primarily on Mr Brownlee’s own testimony about what he says was, and was not, agreed. I conclude that the parties never agreed on price. I conclude that they never agreed on payment terms (and specifically, they never agreed on what portion, if any, of Mr Brownlee’s monthly payments would apply towards the purchase price). They never agreed on a term for the exercise of an option to purchase the properties. And they never agreed on a process or method for determining price, payment terms, or the term of the alleged agreement. 9 I also conclude that Mr Brownlee was aware that Mr Kashin was seeking to redevelop the site. Mr Brownlee believed that Mr Kashin would fail in these efforts, leaving open the chance that Messrs Brownlee and Kashin would eventually come to terms on a deal for Mr Brownlee to buy the properties. This does not fit well with Mr Brownlee’s stated belief that he had some sort of right to acquire the properties, but this is not so much an inconsistency as a gulf in Mr Brownlee’s understanding of the law. 10 On the other hand, Mr Kashin has not persuaded me that the terms of his draft commercial lease govern the parties’ agreement. That draft was provided to Mr Brownlee, who expressly disagreed with it and would not sign it. The parties were then at “an impasse” (to use Mr Brownlee’s phrase), and simply carried on with Mr Brownlee in occupation paying $1200 per month. 11 Thus there is neither a “lease to own” nor a formal commercial lease. 12 I am satisfied that Mr Kashin repeatedly confirmed the existence of Mr Brownlee’s right to purchase the properties both to Mr Brownlee and to a third party (the City of Toronto). Because of these confirmations, equity could intervene on Mr Brownlee’s behalf if he could establish detrimental reliance on Mr Kashin’s assurances. This is a case not unlike the classic case of Deglman (discussed below), where a promise to convey land fails for legal insufficiency. The circumstances of this case are such that it is possible that Mr Brownlee has suffered a loss, but not as he conceives it. As in Deglman, equity could intervene, not to enforce an unenforceable bargain, or to fashion an agreement where there is none, but to relieve the losses of a person who has relied upon an unenforceable promise to his detriment and to the benefit of the promisor. 324 REAL PROPERTY REPORTS 52 R.P.R. (5th)

13 It is possible that Mr Brownlee has suffered such losses, but if so, he has not proved them. On the evidence before me, it is more likely that Mr Brownlee has benefitted from his arrangements with Mr Kashin, just not as much as he had hoped that he would. Similarly, Mr Kashin has benefitted from his arrangements with Mr Brownlee, by receiving monthly payments of $1200, and being relieved of the burden of managing and maintaining the properties. But it is not established that these benefits are without juridical justification: they are justified as a surro- gate for a straightforward commercial tenancy. And there is no evidence that the benefits conferred on Mr Kashin were greater than he would have received by way of rent under an enforceable commercial lease. 14 The alleged “lease to own” contract fails. Unjust enrichment is not proved. And so, in the result, the action must be dismissed.

Credibility 15 Mr Brownlee is a likeable and intelligent man. He was sincere in his testimony and generally told me what happened as he recalls matters. Mr Brownlee has a literary or artistic bent, and he tended to convey his evidence more as a “sweeping saga” than a rigorous account of events. Where, as here, the parties dispute their business terms, what the court needs to hear, with the greatest precision possible, is what was said and done, when, and what happened as a result. The court does not decide the case based on who is the nicer fellow, whether Mr Kashin was a responsible owner or landlord, or whether Mr Brownlee’s efforts turned almost derelict properties into properties that were not “problems” in the neighbourhood any more. The exercise to be performed by the court is confined to the dispute between the parties: to what did they agree? 16 Despite his sincerity, Mr Brownlee’s evidence proved unreliable in respect to the points most crucial to this case: what the parties said and did during their negotiations and in their dealings as time went on. In- stead of telling me what happened, as best he could recall it, he provided me with alternate arguments. The following examples will suffice to explain. 17 The parties met at a Harvey’s restaurant in around June 2006. This was the critical meeting. They agreed on monthly payments of $1200 and that Mr Brownlee would take possession immediately, with payments to start August 1st. Mr Brownlee says he had a set of terms that he wanted in the agreement — handwritten — which he gave to Mr Kashin. He did not retain a copy for himself, and there was no copy produced at trial. Mr Brownlee v. Kashin D.L. Corbett J. 325

Kashin did not seem to recall whether Mr Brownlee gave him proposed written terms. 18 Mr Brownlee testified that the parties agreed on a “lease-to-own” at this meeting. Then he testified that although Mr Kashin had never indicated his agreement to a lease to own, neither did he object to Mr Brownlee’s terms. Mr Brownlee said the initial term of the “lease-to- own” was two years. Then he amended that evidence to four years. My impression from his testimony was that the final decision on the term for the lease-to-own would not be decided until he was “in” the property and had a chance to assess what needed to be done and how long it would take him to buy. Then later he said that, given the condition of the buildings, seven years was a reasonable period. I was left with the sense that this issue was not agreed at the meeting at Harvey’s, and perhaps was not mentioned then at all. If it was mentioned at all, it was in the context of Mr Brownlee hoping to be able to present an offer to purchase the properties (something he never did do). 19 Second was the treatment to be given to the monthly payment. How much, if any, would be credited towards the purchase price of the property? Mr Brownlee said he thought 100% of his monthly payments should be credited. He said that Mr Kashin would not go higher than 15%. This is a major term of the alleged agreement, and on Mr Brownlee’s own evidence it was not agreed initially, or at any subsequent point. Mr Brownlee then argued that the credit should be 100% because the properties were in such bad shape. There would be no need to argue about what credit ought to be given if this term had been agreed. I am not satisfied that this issue was ever discussed between Messrs Kashin and Brownlee. 20 And then there was price. Mr Brownlee testified that they agreed on a price of $600,000. Then he testified that if Mr Kashin had not actually agreed to this amount, then in any event it was a fair price, and Mr Kashin had not expressly disagreed with it. Then Mr Brownlee told me that Mr Kashin’s price kept going up and was always too high. Then Mr Brownlee testified that the price would increase at 3% per year from $600,000 (this seemed to be something that changed later, when Mr Brownlee thought that seven years was a more reasonable period within which he could exercise his rights to purchase). I find that the parties never agreed on price. 21 Mr Brownlee really wanted to buy these properties. He is a bit of a dreamer, a bit of a romantic. He is earnest, and conscientious in his cho- 326 REAL PROPERTY REPORTS 52 R.P.R. (5th)

sen role as a landlord and manager of the properties. He felt he deserved to be able to buy them. He felt he could do the deal if given enough time and fair terms. I conclude that, in his heart, he feared that he did not have a deal, felt that he should have one, and thus he sought to get a commitment from Mr Kashin — hence the receipts. 22 Why did Mr Kashin let things go so far? He never promised to sell the buildings to Mr Brownlee; he never agreed to any particular sale terms. But then again, he never made this clear to Mr Brownlee when this issue was raised with him. In his own mind, I conclude that Mr Kashin was prepared to sell the properties to Mr Brownlee — but not on Mr Brownlee’s proposed terms. If Mr Kashin ever got an offer from Mr Brownlee, he would consider it. But Mr Kashin felt that the highest and best uses for Queen St. properties were in redevelopment, something Mr Brownlee could not afford to pursue. 23 Mr Brownlee knew of Mr Kashin’s efforts to redevelop the properties. He did not believe Mr Kashin would succeed in them. He did not believe Mr Kashin would receive zoning approval for his plans. But he was wrong in this — in 2011 Mr Kashin obtained approval for minor variations that would permit him to redevelop the site. Mr Brownlee’s vehement evidence on these events brings into sharper focus what was really in Mr Brownlee’s mind. He was surprised, and thought the decision from the Committee of Adjustment was wrong — that the approved variations were not minor at all and ought not to have been permitted. But he did nothing about them. He did not participate in the Committee of Adjustment process and claims not to have received notice of it (perhaps because he never registered notice of his agreement on title). Once he knew of the decision, he did not try to challenge it. And he knew that Mr Kashin obtained the variations to increase the value of the properties for Goldenrod’s benefit, not for Mr Brownlee’s benefit. This would make no sense if Mr Brownlee had a “lease to own” agreement. 24 This point leads to a brief segue. We live under the Rule of Law which has as one of its pillars due process and respect for decisions rendered in accordance with that process. The Committee of Adjustment made its decision in 2011. With the expiry of all appeal periods, it is authoritative. It is not open to Mr Brownlee to challenge that decision in these proceedings. Similar considerations apply to the proceedings before the Landlord and Tenant Board. Mr Brownlee was sharply critical of those proceedings, even though his position (that he was a commercial, not a residential, tenant) was ultimately vindicated by the Board. Brownlee v. Kashin D.L. Corbett J. 327

The entire process took some 19 months, and he argued that he was prejudiced by it because he was unable to attract tenants while his status in the properties was uncertain. He filed the transcripts from the Board. I made it clear to Mr Brownlee that this court would not conduct a judicial review of the Board proceedings in the context of this application. 25 Mr Brownlee found it abusive that the respondents conceded in this proceeding that he is a commercial tenant when they contested that very issue before the Board. He misapprehends basic values of due process here: it would have been improper for the respondents to assert that Mr Brownlee is not a commercial tenant after an authoritative final decision from the Board to the contrary. 26 Similar considerations apply to the detailed descriptions I heard of just how bad Mr Kashin was at managing his properties before Mr Brownlee became involved. I was told of piles of garbage, squatters, multiple police attendances at the properties, and an overall lack of care and attention to managing the properties. All of this may, or may not, have been true; Mr Kashin did not address most of it directly in his evidence. But none of that has anything to do with the issues in this case. Even if the respondents were irresponsible, this would not create a right in Mr Brownlee to buy the properties. 27 All of which brings me back to the events that did take place between the parties. 28 Mr Brownlee was a long-time tenant at 1598 Queen St E, where he operated a retail leather emporium. He rented his premises from a company owned by the late Steve Stavro, a principal of Knob Hill Farms. Mr Brownlee held a lease from Knob Hill, but that lease expired and Mr Brownlee stayed on as a tenant on some sort of revolving tenancy. By 2005, Mr Stavro advised Mr Brownlee that he required the property back for his own business, and Mr Brownlee should make arrangements to find new premises. In early 2006 Mr Stavro gave Mr Brownlee formal one year’s notice of the termination of his tenancy. Then Mr Stavro died suddenly and Knob Hill changed its position: Mr Brownlee was told that he would have to vacate on about 45 days’ notice. 29 Mr Brownlee felt that this was a breach of an agreement that he had with Mr Stavro (for the one year’s notice) but decided that he could not afford to take on a company the size of Knob Hill Farms. I pause here to note that what Mr Brownlee described as an agreement with Mr Stavro is not, in form, an agreement. It is a notice, a unilateral statement from 328 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Knob Hill Farms terminating the tenancy. It did not require Mr Brownlee’s agreement. 30 On the record before me it is not possible to determine whether Mr Brownlee held a month-to-month commercial lease with Knob Hill Farms or whether he held a year-to-year lease. This would have determined the amount of notice to which Mr Brownlee would have been entitled to, legally, of the termination of his tenancy. The first notice, which provided one year’s notice, could well have displaced the basic notice entitlement if Mr Brownlee had acted upon it to his detriment. Other- wise, in the absence of consideration or detrimental reliance on the first, longer notice, Knob Hill Farms may well have been on solid legal ground in terminating the tenancy on 45 days’ notice. The point, though, is this: Mr Brownlee felt treated unfairly when the notice period was shortened, and an outside observer could well sympathize with his view. In Mr Brownlee’s mind, this unfairness translates into breach of an agreement. He uses a similar analysis in the case before me: that which is fair and reasonable as between himself and Mr Kashin should be agreed between them, and should be enforced by a court, and therefore is an agreement. 31 That is not how contract law works. The court does not decide what is fair and reasonable and then characterize those terms as an agreement. Quite the reverse. The court asks what the parties agreed. The parties make their own bargain. That is the very essence of freedom of contract. 32 Following the meeting at Harvey’s, Mr Brownlee moved in and effective August 1st he started making his monthly payments of $1200. Some time in July, Mr Kashin produced a draft written commercial lease. The document does not contain a right of first refusal or terms for a “lease to own” agreement. It is a straightforward standard form commercial lease. Mr Brownlee had a number of changes and corrections. There is a version of the agreement with handwritten changes. I conclude that Mr Brownlee wanted these changes, and Mr Kashin wrote them down during one of the times that they met on the issue. Mr Kashin then produced an amended lease agreement incorporating the suggested changes. There is nothing in any of the handwritten changes or in the proposed amended draft lease that suggests a right of first refusal or “lease to own” agreement. 33 I cannot conclude that Mr Brownlee never mentioned these things in the initial negotiations or during the meeting when the draft leases were discussed. Mr Kashin denies that these were agreed. Mr Brownlee says Brownlee v. Kashin D.L. Corbett J. 329

that they were discussed, but, as noted above, that materials terms were not agreed. Even if Mr Brownlee’s version of these events is accepted, on his evidence there were negotiations but no agreement. 34 On the other hand, I am not prepared to conclude that a commercial lease was agreed, and then that Mr Brownlee would not sign a standard form agreement incorporating its terms. The parties reached an “impasse” in their discussions, and it is not clear from their evidence or the paperwork what the issues were that created the “impasse” in the sum- mer of 2006. 35 Nothing further was added to the record concerning the nature of the agreement between the parties until the second property became available in 2009 when its commercial tenant left the premises. Mr Brownlee took over that property and started renting it out, and yet there was no increase in Mr Brownlee’s monthly payment. It remained at $1200. There is no paperwork to confirm these arrangements or to explain why Mr Brownlee would now have two properties for the same monthly payment as one property. 36 Mr Bronwlee explains this development as being consistent with a “lease to own” for the two properties. It could be, I suppose, but it is hard to understand why this situation would not have been addressed in con- crete terms if it was part of an over-arching sale agreement. If the $1200 was supposed to be a monthly payment towards the purchase of two properties, then why were the respondents be entitled to keep the rent from one of the properties for over two years? If the $1200 was for only one property, why did the amount not go up when the second property came under Mr Brownlee’s control? 37 I accept Mr Kashin’s answer to this question. He just did not care, so long as the properties cost him no money. He did not want the management headache. He did not care about net rent from the properties over the short run. He had had no trouble with the properties after Mr Brownlee moved in and he got his $1200 per month on time every month. This was fine with him for what he hoped would be a relatively short time before the properties could be redeveloped. And further, the short-term tenants that Mr Brownlee found to populate the buildings fit in with Mr Kashin’s plans: they did not have long term leases, and Mr Kashin did not want his ability to deal with the properties encumbered by long term tenants. And so, from Mr Kashin’s perspective, when his commercial tenant left, he was left with the headache of finding short term tenants, or the hazard of having an empty building, while he went about 330 REAL PROPERTY REPORTS 52 R.P.R. (5th)

obtaining his variations from the Committee of the Adjustment. He was just as happy to let Mr Brownlee make what he could from it in the meantime, thereby relieving him from having to worry about the properties. 38 The next material event concerns Mr Brownlee’s efforts to rent out the premises. One of the payday loan companies indicated an interest in renting the entirety of one of the properties. This would have been an excellent arrangement for Mr Brownlee. The gross rent for the building would have been much higher than he had been obtaining for piecemeal rentals, the tenant was secure, and the tenant would be committing for a period of at least five years. There was one problem. The payday loan company would invest considerable money into its leasehold improvements, and was not willing to incur this cost without a commitment for at least five years in the premises. It required the respondents’ agreement to the term of the lease, since Mr Brownlee did not have a long-term lease or any written agreement for his “lease to own” of the property. 39 Mr Kashin demurred at this request. He was not willing to encumber the property for five years. And so Mr Brownlee’s lease to the payday loan company did not go forward. 40 This disappointed Mr Brownlee — he had lost out on an excellent prospect. But he took no action. His correspondence to Mr Kashin did not suggest that Mr Kashin had an obligation to agree to the five year lease. It did not suggest that Mr Brownlee was entitled to commit to long term tenants. It did not assert that Mr Brownlee had a “lease to own” agreement. 41 I conclude that Mr Brownlee knew that a long term lease would require the respondents’ consent, and that he knew the respondents were not obliged to consent. And I conclude that Mr Brownlee understood that Mr Kashin withheld his consent because he wanted to deal with the property himself, possibly in less than five years. In his own mind, Mr Brownlee did not see these positions as inconsistent with his claim to have a “lease to own” agreement. And I believe he held these incongru- ous positions in good faith, again because he is not versed in the law and does not think as the law thinks. But nonetheless, these facts support the conclusion that no “lease to own” agreement had been reached. Brownlee v. Kashin D.L. Corbett J. 331

Legal Principles 42 As I indicated at the outset, this is not really a case about the Statute of Frauds. There was no written agreement here, but clearly there is over seven years of part performance. But performance of what?

Contract Formation: Meeting of the Minds 43 Formation of a contract occurs when one party makes an offer that the other accepts, the parties intend to create legal relations, and there is consideration. 44 In this case there was intent to create legal relations and consideration. But was there “offer and acceptance”? Underlying “offer and acceptance” is the notion that the parties have reached a “meeting of the minds”. Thus a contract is created only where the parties “have formed a mutual intention to enter into a bargain with each other and, further, are in agreement as to the terms of that bargain”.2 45 It is settled law that “[t]he question of whether the parties entered into a binding contract must be determined objectively. What would a reasonable bystander observing the parties conclude with respect to whether a contract was concluded and on what terms?”3 46 Where possible the courts will find an enforceable contract.4 How- ever if the parties fail to agree on the essential terms of their contract, the contract will fail for lack of “sufficient [meeting of the minds] to enable the courts to enforce their agreement.”5

Considering All of the Circumstances 47 The court should look at all of the circumstances surrounding the alleged agreement to decide whether the parties came to an agreement, and if they did, in deciding the terms to which they agreed. These circum-

2John McCamus, The Law of Contracts (2d ed, 2012), p.31. 3Hughes v. Moncton (City), 2006 NBCA 83 (N.B. C.A.) at para. 6. 4Kelly v. Watson (1921), 61 S.C.R. 482 (S.C.C.); Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771 (B.C. C.A.) at para. 10. 5John McCamus, The Law of Contract (2nd ed., 2012), p.92. Professor Mc- Camus uses the Latin phrase “consensus ad idem” where I use the English language equivalent, “meeting of the minds”. 332 REAL PROPERTY REPORTS 52 R.P.R. (5th)

stances include words and conduct, future actions and representations by both parties, and reliance.6 48 This analysis applies, not just to the question of whether the parties formed a contract, but also in respect to the terms to which they agreed: The law is clear that the test in this area must be what would an objective observer take the parties to have agreed to based on what they said or did. I suppose it could fairly be said that the corollary of that is that the objective observer should be able to, with some degree of confidence, stipulate what it is that the parties have agreed to do in order to determine if the alleged contract is enforceable. In other words, what could one order the parties specifically to perform in order to effectuate the alleged bargain.7

What Contract Terms Are “Essential”? 49 Not every minor detail must be agreed for there to be a contract. But the “essential” terms must be agreed. The “determination of whether the parties have agreed to all the essential terms of a particular agreement rests on an assessment of whether, in a case where there are missing terms, the omitted terms are so important that they warrant a conclusion that the parties have not yet reached an agreement.”8 50 Each case must be looked at on the basis of its circumstances. Ordina- rily, for example, price is an essential term. However, in some cases, it may be sufficient if the parties have agreed on how price is to be determined.9 Where the parties act as if they have a confirmed deal, this may militate in favour of finding an agreement; where they conduct themselves on the basis that the terms have never been settled, this may point to the opposite conclusion.10

6UBS Securities Canada Inc. v. Sands Brothers Canada Ltd., [2008] O.J. No. 1676 (Ont. S.C.J.) at para. 41, per Pepall J. (as she then was). 7Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771 (B.C. C.A.) at para. 10. 8John McCamus, The Law of Contract (2nd ed., 2012), p.94. 9Klemke Mining Corp. v. Shell Canada Ltd., 2007 ABQB 176 (Alta. Q.B.), at para. 207. 10Contrast Klemke Mining, ibid., at p.187, and Bawitko Investments Ltd. v. Kernels Popcorn Ltd., [1991] O.J. No. 495 (Ont. C.A.), at para. 26. Brownlee v. Kashin D.L. Corbett J. 333

51 Justice Horkins has followed established authority in finding that the following essential terms are required for a valid lease: (a) the parties; (b) a description of the leased premises; (c) commencement; (d) duration of the term; (e) rent; (f) “all the material terms of the contract not being matters incident to the relation of landlord and tenant, including any covenants or conditions, exceptions or reservations.”11 52 Even these essential terms may not be required to be agreed in detail in all cases.12 However, the court must be able to decide what the terms were in order to be able to enforce the bargain. 53 In the case before me, I conclude that there was no agreement on most of the terms of the alleged “lease-to-buy” agreement. The purchase price for the properties was not agreed. The time within which Mr Brownlee would have the right to purchase the properties was not agreed. The extent, if any, that periodic payments by Mr Brownlee would be credited towards the purchase price was not agreed. The escalation of the purchase price over time was not agreed. These are all essential terms in this case, without which it is impossible to order specific performance. 54 It follows from these conclusions that the court could not order specific performance of the alleged lease-to-own agreement. The essential terms were not agreed; there is no contract for a lease-to-own these premises.

111175777 Ontario Ltd. v. Magna International Inc., [2006] O.J. No. 4732 (Ont. S.C.J.) at para. 258, citing with approval Canada Square Corp. v. Versafood Services Ltd. (1981), 34 O.R. (2d) 250 (Ont. C.A.), quoting Williams, Canadian Law of Landlord and Tenant (4th ed., 1973), p.75. 12See Canada Square, ibid., where specific description of the property, the precise commencement date, and the specific date for rent payments, were considered “minor” terms. See also UBS Securities, supra., where some essential terms could be determined by considering evidence of common custom or practice withint the securities industry. 334 REAL PROPERTY REPORTS 52 R.P.R. (5th)

What To Do? 55 Mr Brownlee has been in possession for over seven years. He has made his monthly payments of $1200. He has paid considerable costs maintaining the properties. The Landlord & Tenant Board has determined that Mr Brownlee holds a commercial lease. Does that lease fail because an essential term of the parties’ bargain was never agreed? 56 In my view this case can be seen in two ways, either of which leads to the same result. Either the parties agreed to a commercial lease that does not include a “lease to own” provision, in which case that lease remains the contract between the parties, enforceable in accordance with applicable landlord and tenant law. Alternatively, even though the parties have performed as if they had a bargain for over seven years, the agreement fails entirely because there was never a meeting of the minds. On balance, I conclude this case falls into the latter category, but even if it was thought that it falls into the former, the result of the case would be the same: there is no enforceable “lease to own” agreement and the application must be dismissed. 57 I find that there is no enforceable commercial lease, and that there was no agreement on essential terms, going back to the inception of the bargain. Mr Brownlee consistently took the position that there was a lease-to-own agreement, and conducted himself as such. Not only did Mr Kashin not repudiate Mr Brownlee’s suggestion, but also he confirmed it in writing, twice, in circumstances where that confirmation was intended to be relied upon by third parties, and numerous other times by signing Mr Brownlee’s receipts. 58 Why did Mr Kashin do this? I find he did so because it was the path of least resistance for him. I find that the $1200 rent for the premises was low, especially when considering that Mr Kashin paid the property taxes. I have no evidence on which to determine what Mr Brownlee earned from operating these premises over the past seven years. I do know that Mr Brownlee stopped carrying on business as a retailer of leather goods and became, in effect, a full-time landlord. There is no evidence that Mr Brownlee lost money in this venture. It seems that he was able to earn enough managing these properties and renting them out to cover his own living expenses for many years, and this without incurring the capital cost to acquire the properties. It is true that Mr Brownlee paid some maintenance expenses over the years, but there is no evidence that, even taking these into account, Mr Brownlee lost money, or failed to earn a Brownlee v. Kashin D.L. Corbett J. 335

reasonable return, on his business of managing and letting out space in these properties.

No Unjust Enrichment 59 This case is similar in some respects to Deglman v. Guaranty Trust Co. of Canada, a leading case for restitution based on unjust enrichment.13 In Deglman, a nephew performed substantial services for his aunt because she had promised him that she would leave him her house upon her death. When she died, it turned out that she had not made the promised gift in her will. 60 The oral contract for transfer of the house was not enforceable because of the Statute of Frauds. Despite finding that the contract for transfer of the house was void, the Supreme Court found that the nephew could recover damages for the value of the services he had performed. Rand J. held: There remains the question of recovery for the services rendered on the basis of quantum meruit. On the findings of both courts below, the services were not given gratuitously but on the footing of a contractual relation: they were to be paid for. The statute in such a case does not touch the principle of restitution against what would otherwise be an unjust enrichment of the defendant at the expense of the plaintiff.14 61 The principles in Deglman can be traced through to the modern summary of the “principled approach” to restitutionary claims, as described by McLachlin J. (as she then was) in Peel (Regional Municipality) v. Canada, and confirmed recently in Kerr v. Baranow: (1) benefit to the defendant (2) corresponding detriment to the plaintiff; (3) absence of any juridical reason for the defendant’s retention of the benefit.15

13[1954] S.C.R. 725 (S.C.C.). 14Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725 (S.C.C.), per Rand J. (for the dissent, but with the concurrence of the majority on this point). 15Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762 (S.C.C.); Kerr v. Baranow, 2011 SCC 10 (S.C.C.). See also Central Guaranty Trust Co. v. Dixdale Mortgage Investment Corp. (1994), 24 O.R. (3d) 506 (Ont. C.A.) at para. 20. 336 REAL PROPERTY REPORTS 52 R.P.R. (5th)

62 Where this case parts from Deglman is on the issue of detrimental reliance and unjustified benefit to the promisor. I am not persuaded that Mr Brownlee changed his position to his detriment on the strength of Mr Kashin’s confirmations of a “lease to own” agreement. Mr Brownlee made the monthly payments of $1200, but that enabled him to collect rent from his tenants and, until 2009, occupy space with his own retail business. I am satisfied that Mr Brownlee earned a net profit from his occupancy of the properties, which is why he continued to occupy them for more than seven years. Mr Brownlee did not provide evidence of his gross rental income, his total expenses, and his resulting net position from his business operating these properties. I infer from this absence of evidence that Mr Brownlee did not suffer a detriment from the overall arrangements. Rather I am satisfied that Mr Brownlee earned a net profit from his occupancy of the properties, which is why he continued to occupy them for more than seven years. 63 Further, I heard no evidence that Mr Brownlee made other decisions to his detriment in reliance on the confirmations he received from Mr Kashin. For example, there was no evidence that Mr Kashin had other business opportunities that he declined in reliance on the one he was pursuing at the subject properties. Mr Kashin closed his retail business in 2009, but this was never described as something incidental to his expectations that he would one day own the properties. 64 Similar considerations apply to the respondents. They have been relieved of the expense of maintaining the properties, of managing them and/or of finding someone else to manage them. They have received monthly payments of $1200. They, in turn, have paid taxes. I have no evidence of the market rate for rent of commercial businesses in this area of Toronto, so I do not have a basis to find that the respondents benefitted more from Mr Brownlee than they would have if they had a straightforward commercial lease with other tenants. 65 What I conclude from the evidence is that Mr Kashin was not interested in being a commercial landlord. He wanted to hold the properties until he could sell them for a reasonable return. He did not want to put any money into them. He did not want to be bothered with managing them. He did not much care if he made a net return off the rent — he viewed the properties as a headache, as operational responsibilities. He was happy to have Mr Brownlee in the properties, managing them, and content if Mr Brownlee could make a profit doing so, so long as there was no expense for the respondents. I accept Mr Kashin’s evidence that Brownlee v. Kashin D.L. Corbett J. 337

he believed the $1200 was well below market rent, in acknowledgment that the properties were in rough shape and that Mr Brownlee would incur expense keeping them in a rentable state. Mr Kashin was content that this state of affairs continue until he was in a position to redevelop the site or sell it to someone who would pay a price based on its redevelopment value. 66 This interpretation explains Mr Kashin’s approach to Mr Brownlee’s tenants throughout. He was happy to give assurances to the City that rent cheques should go to Mr Brownlee, and for Mr Brownlee to populate the buildings with tenants, so long as this did not impede his long-term redevelopment plans. When Mr Brownlee proposed a tenant that wanted a long-term lease, Mr Kashin refused, because a long-term lease would impede his ability to redevelop the site or sell the site to a redeveloper. 67 I find that Mr Brownlee has not shown that he suffered a detriment as a result of his reliance on Mr Kashin’s confirmations of the alleged “lease to own” agreement. I find that the benefits received by the respondents were equal to or less than the value of the benefit they conferred on Mr Brownlee: the use and occupation of the properties. Thus I find that there is no basis for awarding damages to Mr Brownlee on the equitable principles in Deglman or on the modern statement of those principles under the rubric of unjust enrichment.

Equitable or Proprietary Estoppel 68 There is one last point to consider. I have concluded that there was no meeting of the minds and thus no enforceable agreement. This puts Mr Brownlee in the position of being a “squatter” in the premises, without even the rights a commercial tenant would have to reasonable notice of termination of his tenancy. In the circumstances of this case, it would not be fair to Mr Brownlee, or to his tenants, for the respondents to take possession of the premises summarily. 69 The modern doctrine of proprietary estoppel can be used as either a cause of action or as a defence.16 The fundamental elements are (1) en- couragement or acquiescence; (2) detrimental reliance; and (3) uncon- scionability. Each is made out in respect to Mr Brownlee’s use and occu-

16Eberts v. Carleton Condominium Corp. No. 396, [2000] O.J. No. 3773 (Ont. C.A.) at para. 23; Cowderoy v. Sorkos Estate, 2012 ONSC 1921 (Ont. S.C.J.) at para. 68; Crabb v. Arun District Council (1975), [1976] 1 Ch. 179 (Eng. C.A.), at 187-8. 338 REAL PROPERTY REPORTS 52 R.P.R. (5th)

pation of the premises when it comes to the issue of reasonable notice of termination of occupancy. 70 The respondents repeatedly confirmed that Mr Brownlee was entitled to possession of the properties and to let out portions of them to his own tenants. Mr Brownlee and his tenants relied upon these confirmations in ordering their affairs to occupy and use the premises. It would be uncon- scionable to both Mr Brownlee and to his tenants if these arrangements were unilaterally ended by the respondents without reasonable notice. 71 In the circumstances, even though the agreement between the parties has failed because there was no meeting of the minds, equity will intervene to accord Mr Brownlee an entitlement to reasonable notice of termination of his occupancy and use of the properties. If the parties cannot agree upon terms upon which Mr Brownlee will provide vacant possession to the respondents, then any interested party (including any of Mr Brownlee’s renters) may seek directions on this point from this court.

The Rejected Alternative Theory of the Case 72 As I note above, it would also have been possible for this court to have concluded that there was a valid commercial tenancy, in which event the respondents would be at liberty to bring that tenancy to a conclusion in accordance with the law of landlord and tenant. It may be that I decide that reasonable notice as a result of the operation of equitable estoppel is some different period than would result from the application of commercial landlord and tenant law. But aside from that potential difference, the result of the case is the same, whichever of the two ap- proaches is taken. The applicant’s central contention is not established either way, and the respondents are entitled to bring the applicant’s occupancy and use of the premises to an end on reasonable notice. 73 Finally, I note that this decision does not conflict with the decision of the Landlord and Tenant Board. The question before the Board was whether Mr Brownlee is a residential tenant. It decided that he was not, but rather, that he is a commercial tenant. The Board was not asked to decide if there was no agreement at all because the parties had not had a meeting of the minds. Nor was it asked to decide whether there was a “lease to own” agreement. In the result, the parties have a decision from the Landlord and Tenant Board that the relationship was a commercial tenancy, and a decision from this court that the lease fails because there was no meeting of the minds on the material terms of the agreement. Brownlee v. Kashin D.L. Corbett J. 339

Financial Details 74 Mr Brownlee has occupied the premises on the basis that he paid $1200 per month, paid maintenance expenses, and that the respondents paid municipal taxes. Mr Brownlee did make one payment on account of taxes, for which he is entitled to credit against his $1200 monthly payments. 75 Mr Brownlee stopped making his monthly payments during these proceedings, and then was ordered to make payments into court. 76 I do not believe there is any material disagreement about how much has been paid, when, or on what basis. As a condition of continued occupation during a period of reasonable notice, Mr Brownlee must pay any arrears owing and make the monthly payments required, and the respondents must pay municipal taxes as they fall due. The following principles shall apply in calculating these amounts: (a) Mr Brownlee is required to pay $1200 per month to and including his final month of occupation; (b) Mr Brownlee is entitled to credit towards his monthly payment obligations for any money he has paid to the City of Toronto for taxes for the properties; and (c) Mr Brownlee is not entitled to any credit for amounts he has spent on maintenance and repairs of the properties.

Order and Costs 77 The application is dismissed, subject to the following terms: 1. Notice of Vacant Possession: a. Effective immediately, Mr Brownlee shall not rent out space in the properties to any person. b. Mr Brownlee shall provide a copy of this decision and the court’s email address, to each person to whom he currently rents space in the properties. c. Mr Brownlee shall provide the names and contact information for every person to whom he currently rents space in the properties to counsel for the respondents by March 6, 2015. d. The parties shall, by March 6, 2015, agree on a date by which Mr Brownlee shall provide the respondents with vacant possession of the properties, failing which the parties 340 REAL PROPERTY REPORTS 52 R.P.R. (5th)

shall provide their respective positions on the appropriate date to this court, in writing, by March 13, 2015. The parties shall provide a copy of their written submissions to each other and to each person who currently rents space in the properties, based on the list provided by Mr Brownlee in para. c. e. Any person who currently rents space in the properties may provide any of their own submissions to the court by March 20, 2015. f. Submissions may be provided to the court either by delivery to Judges’ Administration at 361 University Avenue in Toronto, or by email. 2. Costs: if costs cannot be agreed between the parties then the respondents shall deliver their costs submissions by March 13, 2015, and the applicant shall deliver his responding submissions by March 20, 2015. Submissions are, in each case, limited to five pages, plus a bill of costs, plus copies of any pertinent offers to settle. The parties are reminded that they must serve each other before providing a copy of their submissions to the court. 3. Monthly Payments: the money paid into court by Mr Brownlee pending determination of this application shall be paid to the respondents. Mr Brownlee shall continue to pay $1200 per month for each month he continues to occupy the premises, payable on the first of every month in advance. Any failure to make this payment will be a basis for the respondents to move before this court, on short notice to Mr Brownlee, for immediate termination of his occupancy of the properties. 4. Further Directions: any interested party may request an attend- ance to seek directions concerning implementation of this order by request in writing to the court by March 20, 2015. Action dismissed; counterclaim allowed. 1739061 Ont. Inc. v. Hamilton-Wentworth 341

[Indexed as: 1739061 Ontario Inc. v. Hamilton-Wentworth District School Board] 1739061 Ontario Inc., Applicant and Hamilton-Wentworth District School Board, Respondent Ontario Superior Court of Justice Docket: CV-14-514477 2015 ONSC 1442 Whitaker J. Heard: December 15, 2014 Judgment: March 9, 2015 Real property –––– Expropriation — Expropriation abandoned or not proceeding — Miscellaneous –––– In 2013, respondent school board expropriated applicant’s land for purposes of construction and operation of school and related amenities — Issue of compensation was subject of another proceeding — Re- spondent had now taken action to transfer subject property to third party city — Applicant sought order, arguing that s. 41(1) of Expropriations Act should be interpreted so that if land was no longer needed for original purpose by expropriating authority and compensation had not been paid in full, authority must provide notice to previous owner permitting it to take back land — Application dismissed — School board intended to construct new school on at least part of lands and city intended to build recreation centre facility on part of land — Fa- cilities were to be used by citizens of city, staff and students of school — There was no doubt that school board had power to expropriate site within its area of jurisdiction — Education Act in s. 1(1) defined site to include lands and premises for any other school purposes — That formulation was broad enough to include swimming pool, recreational facilities and parking lots which may be built by city — Board had met its obligations under Education Act and applicant did not make its claim. Cases considered by Whitaker J.: Grauer Estate v. R. (1986), 1 F.T.R. 51, 1986 CarswellNat 126, 34 L.C.R. 225, [1986] F.C.J. No. 946 (Fed. T.D.) — considered Marisa Construction Ltd. v. Toronto (City) (1998), 65 L.C.R. 81, 114 O.A.C. 314, 1998 CarswellOnt 5782, 4 M.P.L.R. (3d) 267, [1998] O.J. No. 4069, [1998] O.J. No. 406 (Ont. Div. Ct.) — considered Progressive Developments (1978) Ltd. v. Winnipeg (City) (1982), 1982 Car- swellMan 139, [1983] 2 W.W.R. 258, 27 L.C.R. 142, 20 Man. R. (2d) 60, 145 D.L.R. (3d) 405 (Man. C.A.) — considered 342 REAL PROPERTY REPORTS 52 R.P.R. (5th)

Progressive Developments (1978) Ltd. v. Winnipeg (City) (1983), 27 L.C.R. 142n, 50 N.R. 396, 21 Man. R. (2d) 80 (S.C.C.) — referred to Young v. Cape Breton (County) (1987), 43 R.P.R. 1, 36 L.C.R. 289, 77 N.S.R. (2d) 389, (sub nom. Young v. Cape Breton County (Mun.)) 191 A.P.R. 389, 1987 CarswellNS 92, [1987] N.S.J. No. 42 (N.S. T.D.) — considered Statutes considered: Education Act, R.S.O. 1990, c. E.2 Generally — referred to s. 1(1) “school site” — considered s. 183 — considered Expropriation Act, R.S.M. 1987, c. E190 s. 50(1) — considered Expropriations Act, R.S.O. 1990, c. E.26 Generally — referred to s. 41(1) — considered s. 42 — considered Rules considered: Rules of Civil Procedure, R.R.O. 1990, Reg. 194 R. 57 — referred to

APPLICATION by previous owner of land to compel expropriating authority to meet statutory obligations as interpreted by applicant.

Frank Sperduti, Christel Higgs, for Applicant Paul R. Henry, for Respondent

Whitaker J.:

1 The Applicant seeks an order to compel the Respondent to meet its obligations under s. 41(1) of the Expropriations Act, R.S.O. 1990 c.E.26 (“Act”). 2 In 2013 the Respondent school board expropriated the Applicant’s land for purposes of the construction and operation of A school and related amenities. In another proceeding, the parties are before the Ontario Municipal Board to determine the appropriate compensation for the expropriation. What has triggered this application is that the Respondent has now taken action to transfer the subject property to a third party, the City of Hamilton. The Applicant argues that s. 41(1) of the Act should be interpreted to mean that if expropriated land is no longer needed for its original purpose by the expropriating authority, and compensation to the 1739061 Ont. Inc. v. Hamilton-Wentworth Whitaker J. 343

expropriated owner has not been paid in full, that authority must provide notice to the previous owner permitting it to take back the land. The Ap- plicant argues that this obligation is mandatory and there is no discretion which would in any way permit the responding party to sell the expropriated land to a third party. 3 From 1968 to 2001, the Respondent school board used the property as a school, housing a 194,500 square foot building known as the Scott Park Secondary School. In December of 2011, for purposes of redeveloping the existing building as a seniors’ centre, the Applicant purchased the property. In January, 2013, the Applicant applied to the City of Hamilton to rezone the subject property as the next step in the redevelopment of the site as a seniors’ residence. The expropriation of the property precluded the Applicant’s development plans. In the Spring of 2013, the Re- spondent advised the Applicant that the subject lands would be expropriated for the purposes of the construction and operation of a high school and related amenities. Upon receiving this advice, the Applicant requested an inquiry into the reasons and purposes behind the expropriation. Given the clear language of the statute however, the Applicant withdrew the request in the face of advice that the property would be used to serve as a new school. The subject property was expropriated on Decem- ber 12, 2013. 4 The Respondent now proposes to convey the subject property to the City of Hamilton for purposes of the City operating a seniors’ centre similar to the one that was part of the Applicant’s plans in the rezoning application. The Applicant has asked the Respondent to provide notice confirming that the subject property is no longer necessary for the Respondent’s purposes, that being the operation of a school and its amenities. The property is to be conveyed to the City without offering the Applicant the right of first refusal. It would seem from the materials filed by the Respondent that it continues to take the position that it has met the obligations of the Education Act, R.S.O. 1990, c. E.2. 5 The Applicant argues that there are two questions that must be resolved in this adjudication. The first question is whether the property is necessary for the purpose stated by the Respondent expropriator to trig- ger the application under s. 41(1) of the Act, and secondly, is the Respon- dent obligated the give the Applicant the right to elect, pursuant to s. 41(1) of the Act to take the subject property back or continue with its claim for compensation. 344 REAL PROPERTY REPORTS 52 R.P.R. (5th)

6 The Applicant relies on the decision of the Manitoba Court of Appeal in Progressive Developments (1978) Ltd. v. Winnipeg (City) (1982), 145 D.L.R. (3d) 405 (Man. C.A.), lv to appl. denied (1983), 27 L.C.R. 142n (S.C.C.) interpreting s. 50(1) of the Manitoba Expropriation Act which mirrors the language in s. 41(1) of the Ontario Act. The Court of Appeal for Manitoba indicated that the reasoning in Progressive Developments was simple and persuasive: unless the expropriating authority’s purpose for the interpretation of s. 50(1) is that which formed the basis of the expropriation to begin with, the owner’s statutory right to challenge the expropriation at the outset is defeated. The Respondent argues further that the scheme of the Manitoba legislation is similar to that of Ontario which essentially allows the owner of the land to be expropriated to force an inquiry into whether the intended expropriation is fair and reasonably necessary for the achievement of the objectives of the expropriating authority. It is argued by the Respondents, and I accept that it is not open to an expropriating authority to redefine the purposes after the fact so as to avoid an inquiry on the true purpose of the expropriation. 7 In the case of Young v. Cape Breton (County), [1987] N.S.J. No. 42 (N.S. T.D.) the Nova Scotia Supreme Court dealt with a similar dispute where not all the land expropriated from an owner for purposes of a road extension was required for this purpose. The court in that case determined that it was “settled law” that there was no implied general statutory power to appropriate ab initio. 8 In the case of Grauer Estate v. R., [1986] F.C.J. No. 946 (Fed. T.D.) the Ontario Superior Court stated that the scheme of the Act properly construed would provide the taking of lands that are “necessary” and this provided a safe guard to land owners against unnecessary taking. 9 In Ontario, this reasoning has been followed in Marisa Construction Ltd. v. Toronto (City), [1998] O.J. No. 4069 (Ont. Div. Ct.). The Respon- dents suggest that there are four issues to be decided. Firstly, are all or part of the lands expropriated by the Board no longer necessary for the purposes of the Board. Secondly, must the Board serve notice on the Ap- plicant advising the Applicant of its options to take the subject lands back; thirdly, should this Court restrain the Board from conveying all or part of the expropriated lands to the City; and fourthly, should the Court exercise this discretion to restrain the Board from dealing with the building. 10 The Board takes the position that it is not abandoning the subject property, nor has it found the expropriated lands to be unnecessary. The 1739061 Ont. Inc. v. Hamilton-Wentworth Whitaker J. 345

Board intends to construct a new school on at least part of the lands and the City intends to build a recreation centre facility on the south part of the property. The facilities are to be used by citizens of the City, staff and students of the school. In other words, greater numbers of persons will be able to access the facilities. The Notice of Expropriation indicated that the purpose of the construction was the operation of a school and related amenities. The Respondent takes the position that the recreational facilities and the pool fall into the category of “related amenities” for the construction and operation of the school. The Respondent argues that the subject property is critical to the Board’s plans to construct a new secondary school and that this school as indicated, is to be contiguous with the City so that the sharing of Board and City facilities can be encouraged consistent with policy statements by the Ministry of Education and in particular, consistent with the provisions of s. 183 of the Education Act. 11 The Applicant has not demonstrated that it will suffer irreparable harm that cannot be compensated by damages. The Applicant has already commenced an expropriation proceeding before the Ontario Municipal Board which will determine the fair market value of the subject property. 12 There has been an elaborate consultation process engaged in by both the City and the school board concerning the purposes for which the land will be used in the future. In my view, the courts should be reluctant to interfere with school board policy choices regarding whether or not facilities such as parking lots, pools, and recreation centres are referable to the term “related amenities” as that was used in the Notice of Expropriation. 13 There is no doubt that the Board has the power to expropriate a site within its area of jurisdiction. The Education Act in s. 1(1) defines site to include lands and premises for any other school purposes. In my view, this formulation is broad enough to include swimming pool, recreational facilities and parking lots which may be built by the City. 14 The Board and the City take the position that it is essential and fundamental to the creation of shared services that amenities be interpreted broadly enough to include the grounds which will be improved by the City. The Board suggests that s. 42 of the Act does not apply to the facts in this case because the subject lands have not been found to be no longer required for the Board’s purposes, again, the Board’s purposes include a pool and recreational facility. If s. 42 is to apply as argued in this case, there is no obligation on the part of the Board to give the Applicant the first chance to repurchase the lands. 346 REAL PROPERTY REPORTS 52 R.P.R. (5th)

15 In my view, the Board has met its obligations under the Education Act and the Applicants have not made their claim. 16 This application is dismissed including the application for a tempo- rary injunction. 17 With respect to costs, I have considered the factors that should guide the exercise of my discretion to award costs under Rule 57. I am particularly aware of the Court’s obligation to award costs that are proportionate to the circumstances of the dispute and also within the reasonable expectation of the losing party. With these considerations in mind, the Respon- dent is entitled to its costs, including disbursements and taxes fixed at $58,815.46. Given the proceedings before the Ontario Municipal Board to arbitrate the value of the expropriated lands, there is no need for the Court to make any order in that regard. The claim in its entirety is dismissed. Application dismissed.