Category Archives: Contracts

Contractual Interpretation and Context

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Case commented on: Ziegler v Green Acres (Pine Lake) Ltd, 2013 ABQB 349.

Ziegler v Green Acres (Pine Lake) Ltd is a case that revolves around one provision in a unanimous shareholder agreement (USA). Due to tragic circumstances, the Applicants/Defendants (referred to as Defendants) ended up in court, in disagreement over the interpretation of the USA, and specifically, over whether the shares of a deceased shareholder had to be sold to the remaining shareholders, or could remain with the deceased’s wife.

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Species at risk and an adjustment clause

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Case considered: Matichuk v Quattro Holdings Ltd, 2013 ABQB 164.

The case of Matichuk v Quattro Holdings Ltd involves a contractual dispute over the sale of a parcel of agricultural land in St. Albert. The parties entered into a purchase and sale agreement in June 2012. The facts set out by Mr. Justice G.A. Verville suggest the Vendor was keen to sell and the Purchaser was keen to purchase in order to develop the land (I presume residential). Time was of the essence. The closing date was set for early October 2012. But the deal began to go sideways just a couple weeks before closing. The Purchaser sought an adjustment (reduction) on the purchase price to account for the facts that there are five wetlands on the property, some which may be Crown owned under section 3 of the Public Lands Act, RSA 2000, c P-30, and that a bird species listed as “special concern” under the Species at Risk Act, SC 2002, c 29 – was known to nest on the lands. The Vendor was not agreeable, and insisted on closing for the full purchase price. The parties filed counter claims and Mr. Justice G.A. Verville heard arguments in late February at the Court of Queen’s Bench. Justice Verville decided in favour of the Vendor, ruling the environment adjustments provision in the contract being relied upon by the Purchaser was so vague as to be meaningless and thus the Purchaser could not rely on it. Accordingly, Justice Verville found that the Purchaser had repudiated the contract by refusing to close the deal.

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When Does the Purchaser of an Interest in a Natural Gas Processing Plant also Purchase an Interest in the Sulphur Block Associated with the Plant? Answer: Only when the Agreement (or perhaps ‘the Elephant in the Room’) says so!

PDF version: When does the purchaser of an interest in a natural gas processing plant also purchase an interest in the sulphur block associated with the plant? Answer: only when the agreement (or perhaps ‘the elephant in the room’) says so!

Case commented on: Talisman Energy Inc v Esprit Exploration Ltd, 2013 ABQB 132

Talisman purchased Canadian 88’s interest in the East Crossfield Conditioning Plant in 2000. Did it also purchase the sulphur block and the liabilities associated with ownership of the block? In this case, and after undertaking an extensive and detailed contractual paper trail, Justice Sal LoVecchio concluded that the answer was no. The ‘elephant in the room’ was C88’s draft purchase and sale agreement (PSA) (which Talisman elected not to use) which, had it been executed, would have dictated the opposite result.

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Who Bears the Loss for Converted Security Deposits?

PDF version: Who Bears the Loss for Converted Security Deposits? 

Case considered: Equitable Trust Company v Lougheed Block Inc., 2012 ABCA 87

This judgment is one of several arising as a result of foreclosure proceedings taken with respect to the historic Lougheed Building at 604 – 1 Street S.W. in Calgary. In this March 2012 decision by the Court of Appeal the focus is on the security deposits that the former owner of the building had converted to its own use. Because neither the foreclosing mortgage company – Equitable Trust Company – nor the court-approved purchaser of the building – the aptly named 604 – 1 Street S.W. Inc. – received the tenants’ security deposits from the former owner/landlord, the issue was a classic in commercial law, a “battle of innocents.” Who would be out the more than $340,000 in security deposits, the mortgagee or the purchaser? The Chambers judge, R.G. Stevens, had let the loss lie where it fell, on the purchaser who would become the landlord to whom the tenants would look for their security deposits. A unanimous Court of Appeal – Madam Justice Marina Paperny, Mr. Justice J.D. Bruce McDonald and Mr. Justice Brian O’Ferrall – allowed the purchaser’s appeal and shifted the loss to the foreclosing mortgagee. While many of the grounds for allowing the appeal were based on the particular terms of the specific contract of purchase and sale between these individual parties, some of the grounds are more generalizable and therefore of broader interest.

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