An Alberta Master in Chambers has held that specific performance is

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Thursday, May 21, 2015 - Issue 324
Issues added on the 7th and 21st of every month.
** HIGHLIGHTS **
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An Alberta Master in Chambers has held that specific performance is not
available for farm land unless the party seeking specific performance could
meet the burden of establishing that the land is "unique" in the sense that it is
"irreplaceable" or "one of a kind". The Master was satisfied the Plaintiffs had
not met this burden. He granted the Defendants partial summary judgment,
dismissing their claim for specific performance and discharging their Caveat
and Lis Pendens. (Klimp v. Meinema, CALN/2015-013, [2015] A.J. No.
339, Alberta Court of Queen's Bench)
** NEW CASE LAW **
Klimp v. Meinema; CALN/2015-013, Full text: [2015] A.J. No. 339; 2015 ABQB 204,
Alberta Court of Queen's Bench, Master W.S. Schlosser (In Chambers), March 27, 2015.
Real Property -- Enforcing Agreements for Sale -- Availability of Specific Performance
to Enforce a Sale of Farm Land.
The Plaintiffs, William Rod Klimp and Joyce Jeannette Marie Hoedl-Klimp (the
"Klimps") entered into an agreement with Kevin Shawn Meinema and Gladys Ann
Meinema (the "Meinemas") pursuant to which the parties agreed to "swap" two parcels of
land valued at $90,000.00 each near Sunset House, Alberta.
The Klimps also granted the Meinemas an option to purchase a third quarter section of
land for $60,000.00.
The Klimps sued the Meinemas for specific performance of the land "swap" and filed a
Caveat and a Lis Pendens against the land.
The Meinemas applied for partial summary judgment to have a portion of the claim
dismissed and to have the Caveat and Lis Pendens discharged from their land, because it
was preventing them from selling it to someone else.
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The Klimps had initially entered into a separate concurrent agreement to sell the optioned
land for $60,000.00, with the sale to conclude at the same time as the transfer of the other
two parcels.
A revised agreement which granted the Meinemas an option to purchase this land for
$60,000.00 was subsequently signed.
Prior to the date for the exercise of the option, the Klimps sold the optioned land to third
parties.
Decision: Schlosser, Master in Chambers granted the Meinemas' application, summarily
dismissed their claim for specific performance against the Klimps and directed that the
Caveat and Lis Pendens be discharged [at para. 25 and 26].
Master Schlosser observed [at para. 16] that if the option for part of the swap agreement,
the Klimps could not "claim specific performance of an agreement that they, themselves,
are unable to perform" observing, at para. 17:
[17] A person seeking to have specific performance of an agreement must
themselves be ready, willing and able to perform. Roma Construction Ltd.
v Excel Venture Management Inc., 2007 ABQB 396 (CanLII), 2007
ABQB 396 (Macleod J): Poirier v Diamond Key Homes Ltd., 2009 ABQB
139 (CanLII) at para 21 (per Laycock, M.). If some of the land that was
part of a larger deal has been sold, the seller is neither ready, willing, nor
able to perform the whole agreement because performing his part of it has
become impossible.
Master Schlosser concluded [at para. 19]:
"...I am inclined to prefer the more natural interpretation that it [the option]
was part of a larger agreement."
Master Schlosser then considered the law with respect to whether the Meinemas could
have an interest in land if the contract was not capable of specific performance because
the farm land was not "unique". He summarized the law and concluded as follows, at
para. 22 to 25:
Caveats and an Interest in Land
[22] The law in this Province is well settled. In order for a caveat to be
sustainable, the person claiming it must have an interest in the land. In
order for there to be an interest in land, the interest has to be capable of
specific performance. Damages must not be an adequate remedy. In order
for specific performance to be awarded the land must be unique:
Semelhago v Paramadevan 1996 CanLII 209 (SCC), [1996] 2 SCR 415
SCC; 365733 Alberta Ltd. v Tiberio, 2008 ABQB 341 (CanLII); 1244034
Alberta Ltd. v Walton International Group Inc., 2007 ABCA 372 (CanLII),
para. 17; Lamont (Town) v Jabneel Development Inc., 2014 ABQB 328
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(CanLII). A damage claim cannot support a caveat or lis pendens. Dobson
v Winton and Robbins Ltd., 1959 CanLII 19 (SCC), 1959 SCR 775 at 777;
Blue Hill Capital Corporation v Daon Property Corporation, 2014 ABCA
282 (CanLII) (at para 9).
[23] Land may be unique if it is part of a development block. Balderston v
Faul, 2014 ABQB 762 (CanLII), at paras 108, 109 (per Bensler, J). An
argument might be that William Klimp is seeking to add the Meinemas
swap quarter to his holdings in order to assemable a package of land that
might be attractive to a grain farmer, sold as a block. William Klimp is 74
and it is easy to imagine that he might want to sell such a block of land to
his advantage to insure the comfort of his retirement. But this was not the
evidence.
[24] The difficulty is that while the evidence shows that the Klimps
intended to move in a direction away from cattle and towards grain, their
ultimate goal was to sell all or part of the land to members of the family.
The Meinema land might have been complimentary to the Klimps' other
holdings but that, in itself, does not make the Meinema home-quarter
unique, in the sense that it is 'irreplacable', or 'one of a kind': Tiberio
(above) and 410675 Alberta Ltd. v Trail South Development Inc., 2001
ABCA 274 (CanLII). While I acknowledge that the location of the
Meinema home-quarter would afford some economy and convenience for
the Klimps farming operation, the law does not regard it unusual enough to
sustain an award of specific performance.
[25] The burden of establishing that land is unique for the purposes of
obtaining specific performance is on the Plaintiffs: Festival City Holdings
Ltd. v Worthington Properties Ltd., 2002 ABQB 543 (CanLII), 2002
ABQB 543 (per Funduk, M.) and Balderston (above). On the current state
of summary judgment law, the threshold question is whether the applicant
has shown that the respondent won't win this remedy at trial. Pannu v
Urbia Venture Capital Ltd., 2015 ABQB 150 (CanLII) (for a review of the
law in this area). To put it in terms of numbers, the court need be satisfied
that there is an eighty percent chance (or thereabouts) that the plaintiffs
won't prove an entitlement to specific performance on the balance of
probabilities at trial. I am convinced that the Meinemas have met this
burden and, accordingly, I am content to allow their application to dismiss
the claim for specific performance. As a consequence, the Caveat and Lis
Pendens are to be discharged.
** CREDITS **
This NetLetter is prepared by Brian P. Kaliel, Q.C. of Miller Thomson LLP, Edmonton,
Alberta.
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