ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 14-60397
DATE: 2015-07-24

BETWEEN:

RICHCRAFT HOMES LTD.

Applicant

– and –

URBANDALE CORPORATION, URBANDALE CONSTRUCTION LIMITED and RIVERSIDE SOUTH DEVELOPMENT CORP.

Respondents

Scott McLean and David Elliott, for the Applicant

Donald Rasmussen, for the Respondents

HEARD: June 16 –19, 2015

T.D.RAY, J

Introduction

[1] The parties seek a declaration concerning the interpretation of written agreements they (Richcraft Homes Ltd “Richcraft” and Urbandale Corporation “Urbandale”) entered into for the purpose of developing and selling significant properties they owned in Ottawa South under a Limited Partnership Agreement (“LPA”).

[2] This proceeding was started by Richcraft by way of Application. The Application Records of the parties, which are quite comprehensive, include affidavits and transcripts of the cross-examinations of many of the affiants. At the hearing of the Application, several witnesses gave viva voce evidence and were cross-examined. Counsel described it as a ‘hybrid’ since it had many of the features of a trial, but yet proceeded in a very efficient manner on a written record.

Issues and Positions of the Parties

[3] While a number of questions have been posed for the court to answer, there are essentially two issues: firstly what is the respective voting weight for each party regarding decisions that are to be taken under the limited partnership agreement; and secondly, what is the enforceability of a subsequent agreement (the “2005 agreement”) that purports to require that Richcraft be entitled to 50% of the lots when they are sold or available for sale under the LPA.

[4] The witnesses called by Richcraft and its affiants are unanimous that the LPA was intended to be governed on a consensus basis, that it only became an issue after Mr. Nadolny’s death in 2005, and finally came to a head in 2013. Urbandale’s witnesses and its affiants are similarly unanimous that decisions were never intended to be consensual, that Richcraft have confused cooperation and consultation with consensus, and that the clear wording of the LPA means that Urbandale with the majority interest is entitled to make the decisions for the LPA.

[5] On the issue of the division of the LPA lots as they became available, the Richcraft witnesses are unanimous that it was always understood that the lots would be made available on a 50-50 basis as between Richcraft and Urbandale. They point to an agreement signed by Mr Nadolny and Mr. Singhal in May 2005 to support their position. The witnesses for Urbandale deny that was the case, and say that the 2005 agreement is unenforceable because Mr. Nadolny was not competent at the time. The implication from Urbandale is that as the majority partner it is entitled to decide on the allocation of lots while recognizing that Richcraft is entitled to sufficient lots for its own building purposes – but not necessarily 50-50.

Background

[6] Richcraft is a home builder and developer in the Ottawa area. Urbandale is a property developer. Urbandale Construction is a party to this application but not a party to the Limited Partnership Agreement which is at the heart of the dispute. It is a home builder, not a developer.

[7] Mr. Singhal and Mr. Nadolny have been major figures in the land development and house building industry in the Ottawa area for many years. Mr. Singhal is the principal of Richcraft, and Mr. Nadolny was one of the principals of Urbandale, and more importantly, Mr Singhal’s point of contact with Urbandale. He died in 2005.

[8] In the 1990’s, they had owned adjoining properties and had cooperated together in the development process of their respective properties since their interests were similar. They first entered into a written agreement in 2001 for the development of lands that each owned in Kanata North. Mr. Singhal had wanted to buy land for housing and had an agreement with Cardel Homes to buy certain lands. When Cardel backed out, Mr. Singhal approached Mr. Nadolny who owned land in the same area. Mr. Nadolny agreed to lend Mr. Singhal $2 million to buy the property. It was agreed that Urbandale would own 80% of the property and Richcraft would own 20%. After several discussions, they settled on a co-tenancy agreement. The agreement provided that Urbandale as the majority owner had control over the development and all major decisions. The lots were to be distributed 80% to Urbandale and 20% to Richcraft.

[9] Richcraft had owned property in Ottawa south, and had been looking for a partner to replace an existing partner who had wanted to sell its interest to Richcraft. Mr. Singhal was faced with some $23 million in debt as a result of the land purchase. Mr. Nadolny had not wanted to be involved with debt, so he agreed to pay off the $23 million debt as part of the deal. The total land for development amounted to some 3000 acres, of which Urbandale had contributed 2400 acres. Urbandale’s financial interest in the limited Partnership was acknowledged to be 66%, and Richcraft’s was 33%. The Limited Partnership Agreement (“LPA”) provided that Richcraft could purchase lots as they became available on the same terms as the lots purchased by Urbandale from the limited partnership.

Relevant Terms of the Various Agreements

[10] The KNL Development Inc. agreement was a co-tenancy agreement dated September 20, 2000 with Urbandale and Richcraft as the co-tenants or shareholders. Urbandale owned 80 shares and Richcraft, 20 shares.[^1] The lots were to be distributed 80% to Urbandale and 20% to Richcraft. “Lots transferred to each party shall approximate equal average lot value”. [^2] Board resolutions required a majority vote of the directors. Urbandale had three directors and Richcraft had one.[^3] The agreement was drafted by Mr. Weinstein, Mr Nadolny’s son-in-law who is now the principal of HN Homes.

[11] A Memorandum of Understanding dated October 10th, 2001 preceded the LPA and consisted of 7 concise points entitled ‘RE: Riverside South. The terms dealt with which lands were to be contributed to ‘the deal’, and included a provision that Richcraft would pay Urbandale “$400,000 per year for five years as a management fee”. It was signed by Mr. Sachs and Mr. Nadolny for Urbandale; and by Mr. Singhal for Richcraft.

[12] LPA: Mr. Nadolny with Mr. Singhal’s agreement asked Stephen Victor to draft the agreement. It is dated October 23, 2001. It provides that the sole limited partners are Richcraft and Urbandale, and the partnership means the Riverside South Development Corp (“RSDC”).[^4] It is also known by the parties as the Riverside South Limited Partnership (“RSLP”).[^5] Regular meetings of the limited partners are anticipated. Agreements for the sale of residential building lots, acquisition of additional lands, contracts for the development of lands, municipal approvals, advancement of funds to the partners, and “all other issues relating to the development and sale of residential building lots are to be dealt with by way of ‘ordinary resolution’ at a meeting.[^6] An ordinary resolution is defined as

“Ordinary Resolution” means a resolution passed by more than 50% of the votes cast at a duly constituted meeting of Limited Partners or a written resolution signed in one or more counterparts by Limited Partners holding more than 50% of the outstanding Units entitled to vote at a meeting;

[13] The respective partnership interests are defined to be: Urbandale – 66.66%, and Richcraft- 33.33%.[^7] An amendment to the agreement requires the “written consent of both of the Limited Partners given by Ordinary Resolution.”[^8] There was one other amendment to the LPA dated April 17, 2002. It did not alter the relevant provisions noted here.

[14] The 2005 Agreement dated May 9, 2005 acknowledges the KNL and LPA agreements, signed by Mr. Nadolny for Urbandale and by Mr. Singhal for Richcraft, and provides as follows:

• Richcraft and Urbandale will have first right to purchase available lots in the above projects and will be divided equally at the same price.

• In the event that lots in the above two projects are sold to other builders and in return Urbandale and/or Richcraft have the right to purchase lots in other projects belonging to the other builders then any lot(s) acquired by either Urbandale or Richcraft will be shared equally between them if agreeable to both parties.

Applicant’s evidence

[15] Mr. Singhal, President of Richcraft gave evidence. He said that Richcraft is involved with home construction and development. He described the arrangement with Urbandale with respect to the Riverside South Development, and that of 3000 acres, some 600 acres has been developed. He said that the two main issues over the past two years were the division of lots between Richcraft and Urbandale on a 50-50 basis; and that except for day to day decisions. Richcraft must be part of the decision making process with Urbandale. He said the major decisions include what lots are to be released, and are to be on a 50-50 basis. Also they need to make decisions together concerning the price each is to pay for the lots.

[16] Mr. Singhal said they came together because Richcraft and Urbandale owned adjacent parcels of land in Ottawa South and found it was easier to cooperate on various development issues that arose because of their common interests. He said that originally in 1990 Richcraft had acquired lands and had partnered with a company. This company was hard pressed financially and had sold its partnership interest to Richcraft before going bankrupt. In order to purchase the property, Richcraft had incurred some $23 million in debt. He said he was looking for a new partner and spoke to Mr. Nadolny of Urbandale. Mr. Nadolny told him he had 800 acres to contribute to a joint venture and would pay off Richcraft’s debt. They agreed that Urbandale would have a 2/3 interest and Richcraft a 1/3 interest. He said they also agreed on a 50-50 division of the lots. He said that up until Mr. Nadolny’s death in 2005, there had been no disagreements. They had always agreed on major decisions and the lots were 50-50 as between Urbandale and Richcraft. He said on one occasion that Urbandale had agreed arbitrarily with the City to give it property for a road widening; and when Mr. Singhal raised the issue with Mr. Nadolny, he stopped and sought his involvement.

[17] Mr. Singhal said that when he first met with Mr. Nadolny to discuss partnering, they drafted a Memorandum of Agreement in Mr. Nadolny’s office which they both signed. It was a brief document. There was no reference in the agreement to the manner of control of the proposed Limited Partnership. He said that he agreed with Mr. Nadolny to have lawyer Stephen Victor ‘paper the deal’. He was shown Mr. Victor’s notes of a meeting which included Mr. Singhal and Mr. Nadolny. He said he had no recollection of the meeting or the matters contained in the notes. In fact he had no recollection of meeting with Mr. Victor at all. However he said that if Mr. Victor had asked him about control by Urbandale, he would have said ‘no’. He said he had no recollection of receiving and reviewing a draft of the agreement. But he agreed he had read the final draft before signing it.

[18] He identified the LPA, and several of its terms including paragraph 5.2 h, which required that all transfer documents be signed by a nominee of each of Richcraft and Urbandale. He said that this was only breached once when a deed was signed only by Urbandale; but it was later corrected. He said he “didn’t remember” any unilateral decisions taken by Urbandale that had not later been corrected. Mr. Singhal identified the 2005 agreement signed by Mr. Nadolny and Mr. Singhal which stated that Richcraft would be entitled to 50% of the building lots. He said he met with Mr. Nadolny because he wanted to clarify the lots to go to Richcraft.

[19] Under cross-examination, he agreed that because of the time required for the approval processes that in fact no lots had actually been released under the LPA until November, 2011.

[20] After Mr. Nadolny’s death in 2005, Mr. Sachs made the decisions on behalf of Urbandale. He said that he had to remind Mr. Sachs of the need to consult with Richcraft. In 2013, Mr. Weinstein, Mr. Nadolny’s son-in-law asked Mr. Singhal for lots to be sold to his company HN Homes. Mr. Singhal said he told Mr. Weinstein to look to Urbandale’s share not his. It seems that was the triggering point for this application. Urbandale has since taken the position that it can make the decisions itself under the agreement without the need for Richcraft’s agreement.

[21] Edward Phillips was employed with Richcraft from 1996 to 2002 and was involved with acquisitions, development, and political negotiations on behalf of Richcraft. In evidence he said he had a close relationship at the time with Mr. Singhal. He recalled that in 1996, Mr. Singhal owned 2300 acres and Mr. Nadolny, 900 acres adjacent to each other in Riverside South. They cooperated closely on development issues. Mr. Singhal had enormous respect for Mr. Nadolny. In light of the fact that Mr. Singhal through Richcraft and Mr Nadolny through Urbandale had significant lands in the Kanata North area, he said he came upon the idea of the formation of a partnership between them. Messrs. Nadolny and Singhal came to an agreement in principle on a handshake that Mr. Nadolny would put up $22 million for an offer to a third party for their land which combined with Richcraft’s and Urbandale’s property would be held by a co-tenancy agreement (KNL). It was agreed that Urbandale would be the managing partner; and with 17% of the lots going to Cardel Homes, Richcraft and Urbandale would divide the balance of the lots on a 50-50 basis. He agreed, however, that was not required by a term of the KNL; although he said he thought it could be interpreted that way. Ownership within the agreement was 80-20 in favour of Urbandale

[22] Mr. Phillips recalled a meeting with Mr. Nadolny and Mr. Singhal that he attended at Urbandale’s offices that gave rise to a Memorandum of Understanding concerning their properties in Ottawa or Riverside South. He said that the agreement between Mr. Nadolny and Mr. Singhal was to form a partnership in which Urbandale would have a 2/3 ownership and Richcraft a 1/3 ownership. The ownership interests were purely financial and included cash contributions by Mr. Nadolny, 900 acres by Urbandale, and 2000 acres by Richcraft. He said the agreement between them was that Urbandale would make the day to day decisions and there would be a 50-50 allocation of building lots to Urbandale and Richcraft. He agreed that the memorandum did not mention any of those issues concerning the allocation of lots or decision making. He noted that Mr. Singhal and Mr. Nadolny were ‘big picture’ thinkers, while Mr. Sachs was a nuts-and–bolts guy.

[23] He recalled that Mr. Nadolny suggested and Mr. Singhal agreed that Stephen Victor be retained jointly by Urbandale and Richcraft to draft the formal agreement. His first contact with Mr. Victor was by telephone when he explained the general principles of the agreement. A few days later he met with Mr. Victor, and on October 16, 2001, had a telephone meeting with Mr. Victor from the Urbandale boardroom. A number of others were present. He said that he had many discussions with Mr. Victor. The key principles were always that the lots were to be allocated by the partnership on a 50-50 basis as between Richcraft and Urbandale; and Urbandale was to run the partnership on a day to day basis. He said he recalled reviewing drafts, and approximately two weeks later the agreement (LPA) was signed. He agreed that Richcraft’s goals of getting rid of its debt, preserving a trust relationship with Mr. Nadolny, and developing the land, were met with the LPA. He agreed that there was nothing in the LPA that required a 50-50 allocation of lots between them. He did agree that the agreement allowed for sales of land to others. He said he had no memory of a later proposed amendment to paragraph 1.1(g) the definition section of ‘ordinary resolution.’

[24] Stephen Victor gave evidence as to his involvement in the drafting of the LPA, and discussions with the parties. He acknowledged that he had acted for Mr. Nadolny previously. He said that he had retained a solicitor at Soloways to draft the agreement since he was himself a litigator. He reviewed the draft LPA at a meeting with Messrs. Nadolny, Singhal, and others on October 16, 2001. He identified a handwritten note made at that meeting that reads in part “U makes decisions”. He explained that that note was very early in the meeting and followed his understanding that Urbandale would have a 66% interest and Richcraft a 33% interest. He brought up the issue of whether that would apply to decision making. He said that both Mr. Singhal and Mr. Nadolny said –yes. He then said – you understand that means Urbandale would be making the decisions, “and in particular (Mr. Singhal) agreed to that.”

Respondents’ evidence

[25] Lyon Sachs is President of Urbandale. He has no role in the Respondent, Urbandale Construction which is controlled by his son. He said that Urbandale had been patient with Richcraft up until now because Richcraft has not disturbed the development of the project or the functioning of RSLP. However, now that they are about to get into serious development, they need to settle the ‘lots’ and ‘control’ issues. He did note that in his view the overall success of the RSLP is best served when the owners work collaboratively and cooperate together. He said he interprets the LPA to permit the sale of lots to others because it uses the language “inter alia”. He also thought that the “needs” of Richcraft for lots as per the LPA should be given a flexible definition; not necessarily 50-50. He admitted that to date there had been a 50-50 distribution but was of the view that market conditions would soon require sales to others. He thought that at the time of the 2005 agreement, Mr. Nadolny was in failing health and was unable to clearly express his intentions.

[26] Mr. Sachs said that he attended all meetings with Mr. Nadolny and no one ever suggested that Richcraft and Urbandale would have an equal say or that the lots be divided equally. He said that if the development process, which Urbandale specializes in, had to seek Richcraft’s agreement with everything, the whole process would be slowed. He said development requires that one person make the decisions. Mr. Sachs said that he discussed all major deals with Mr. Singhal and kept him informed. He said he never considered he was required to obtain Mr. Singhal’s permission.

[27] Mr. Weinstein is Mr. Nadolny’s son-in-law and a director of Urbandale since 2005. He was very aware of Mr. Nadolny’s health issues which were affecting him; and said that at the time of the May 2005 agreement, he was struggling in his business affairs. Mr. Weinstein said that he is also an officer of HN Homes, a residential home builder in Ottawa, who first raised purchasing lots from RSLP in the summer of 2013. However, he raised the issue by telling Mr. Singhal that Urbandale was considering selling lots to HN Homes. He denied telling Mr. Singhal that Urbandale could make the decision without Richcraft’s agreement because it had the majority of the votes. He also denied that selling lots to other builders was a new idea for the RSLP. He recounted conversations with Mr. Gumbs of Richcraft back to July 2007 concerning the need to sell lots to others.

[28] Mary Jarvis is Vice-president of Urbandale. She is a land use planner and involved with the KNL and LPA since 2003. She described the planning a development process undertaken by her department, and that Richcraft neither had the expertise nor the interest to do the necessary planning. Again she says she was never told by Mr. Sachs that she required the agreement of Richcraft to the work she was doing.

[29] Terry Nichols is Vice President of finance for Urbandale. He says that he managed the financial affairs of RSLP, and that Richcraft has never been involved in decisions concerning manner of the sale of lots. He oversees the budget of the RSLP and from time to time seeks contributions from the limited partners, Richcraft and Urbandale in proportion to their financial interest towards the expenses of the limited partnership, in a 1/3 – 2/3 proportion. Similarly, cash distributions have been made to the limited partners in the same manner. He also explained that in accordance with the terms of the agreement, he would ensure that each of Richcraft and Urbandale would sign the cheques. However, by the time the cheque was drawn the decision had already been made by RSLP. He also claimed to be in charge of the sale of all building lots of RSLP, and the price, and type of lots was made by Urbandale. He says the only reason the distribution of lots to date has been on a 50-50 basis is because that demand has been low, and Urbandale has been content with a 50-50 distribution. He explained the process and the manner in which the lots have been distributed between Richcraft and Urbandale. Similarly he takes issue with Mr. Gumb’s conclusions as to the workings between Richcraft and Urbandale.

Analysis

[30] The interpretation of the terms of a contract requires that the whole of the contract be considered; and to find the interpretation that best advances the true intent of the parties at the time the contract was entered into. It is not for the courts to write or re-write terms for the parties.[^9] However where there are two or more interpretations possible, then the most reasonable interpretation that promotes a sensible commercial result should be adopted.[^10] Where there is no ambiguity in the language of the contract, then it is presumed that the parties “intended the legal consequences of their words”. [^11] In these circumstances, the subjective intent has no place in the analysis process.[^12]

2005 Agreement (50-50)

[31] Urbandale led no evidence concerning the lack of competence of Mr. Nadolny to sign the 2005 agreement beyond saying that he was not well and in failing health. Had Urbandale been seriously advancing that argument I would have expected medical evidence and other evidence as to his lack of competence; or at the least an explanation why no such evidence was being led. Mr Singhal’s evidence was that Mr. Nadolny discussed the points with him, and had the agreement drafted at his office during the meeting between the two of them. I have no reason to believe that the agreement was not intended by both parties to be binding. I don’t accept Urbandale’s argument that it is impossible to understand. It is sufficiently clear to understand the intention of the parties. I note the reference to the KNL agreement which contains a provision that in dividing the lots, average value is to be used. Mr. Singhal was clear that throughout, he had been looking for a 50-50 division of lots.

[32] It also makes sense that his anxiety over needing an agreement to divide the lots on a 50-50 basis existed because the provision in the LPA stipulated only that Richcraft would be entitled to lots to “meet Richcraft’s needs”.[^13] There was nothing in the LPA concerning the division of lots, other than the stipulation that in developing lots for home builders the supply would be limited to “500 serviced residential lots”.[^14] In other words, if Urbandale had a majority vote in the affairs of the RSDC, then Richcraft would need a separate agreement amending the provisions of the LPA if it wanted to have the lots divided equally on an ongoing basis; and differently than provided in the LPA. I am satisfied that the 2005 agreement was entered into by Messrs. Nadolny and Singhal, and that it is binding on Urbandale and Richcraft. While not explicitly stated, I take the 2005 agreement to only refer to residential lots since that is the context in the LPA.

Voting Weights for Decision making under the LPA

[33] I accept that Mr. Singhal and Mr. Nadolny had enormous respect for each other. They were described as big picture thinkers. Mr. Nadolny has been described as a dealmaker who was always looking for solutions to any problems. The evidence suggests that up until Mr. Nadolny’s death in 2005, any issues that arose between them were discussed and resolved. While the LPA stipulated regular meetings and weighted voting, that was not the way that they did business. Specifically, Mr. Nadolny was described as someone who had an aversion to written documents, and did business with a handshake. The evidence concerning their working relationship and decision making in no way detracts from the language of the LPA. They were both good businessmen.

[34] I am satisfied that the wording of paragraph 1.1 (g of the LPA requires that an ordinary resolution for the conduct of the LPA be decided by a majority of the votes, that the votes of the parties were intended to be in proportion to their financial interest, and that Urbandale had a 66% interest, with Richcraft at 33%. If the parties had an equal vote then unanimity would be required. Since there are only two limited partners, I would not have expected reference to “more than 50% of the votes”; particularly, when the LPA stipulates there “shall” be no more than the two limited partners. Mr. Victor’s note made while meeting with the parties is consistent with that language. I note that an amendment to the LPA requires the consent of both parties passed by resolution.[^15] A similar requirement appears in Article 8.2. The requirement for consent would be redundant if an ordinary resolution required unanimity. While there are other provisions in the LPA that might be interpreted differently, I do not find there to be an ambiguity in the language of the agreement on the question of decision making. It is clear.

[35] I do not find it necessary to consider the conduct of the parties to interpret the LPA. However, if I were to consider the conduct of the parties, I would rely heavily on Mr. Nadolny’s reputed problem solving skills rather than his legal entitlement to a majority vote. It is safe to infer that he found it more expeditious for his business model to find a solution agreeable to everyone rather than asserting his majority vote to impose decisions. Mr. Sachs echoed that sentiment as being important for the functioning of the limited partnership.

[36] The agreement of May, 2005 explicitly provides the parties will divide the lots equally. There is no evidence that Mr. Nadolny was not competent to sign the agreement. In addition the distribution of lots to date has been consistent with that agreement.

[37] I find the conduct of the parties to date to be consistent with the language of the various agreements.

Conclusion

[38] I find that an ordinary resolution of the SLRP may be passed in accordance with the weighting of the ownership shares, 1/3 – 2/3: Richcraft – Urbandale, unless otherwise provided in the LPA. I further find the agreement of May, 2005 concerning the equal distribution of residential lots as between Urbandale and Richcraft to be enforceable and binding on the parties.

Questions Posed for the Court

[39] Does an “Ordinary Resolution”, as referred to in the LPA require a unanimous decision of the limited partners, Richcraft and Urbandale Corporation?

Answer: No, except where otherwise provided in the LPA.

[40] In that regard, what is the meaning or relevance, if any, of the phrase “more than 50% of the outstanding Units entitled to vote at a meeting”?

Answer: The language is consistent with the intention of the parties to weight their votes in accordance with their respective financial interest. (1/3–2/3)

[41] Pursuant to Article 3.4 of the LPA can the partnership take a decision to sell residential building lots to entities other than Urbandale Construction Limited (“Urbandale Construction”) and/or Richcraft and if so under what conditions or circumstances?

Answer: Yes, but Richcraft is entitled to 50% of residential lots made available. It may decline to exercise its option to purchase those lots however. In other words if residential lots are to be sold to HN Homes, then in accordance with the 2005 agreement, those lots would come from Urbandale’s share and from Richcraft’s share to the extent that it declined to exercise its option; unless the parties agree otherwise. Sales to third parties, including HN Homes would be at the prevailing market value.

[42] Is the agreement between Richcraft Homes Ltd. and Urbandale Corporation dated the 9th day of May 2005 (the “May 9, 2005 Agreement”) enforceable and, if so, what is its impact if any on the LPA and in particular on the provisions of Article 3.4 of the LPA?

Answer: Yes. See above.

[43] If the May 9, 2005 Agreement is enforceable what is the meaning to be given to the following phrases: “available lots in the above projects” and “be divided equally at the same price”?

Answer: “available lots” means, subject to paragraph 3.3 of the LPA, lots ready for sale.

“divided equally at the same price” – see paragraph 3.4.

[44] Do the provisions in the LPA place any restriction upon the sale of land registered in the name of the general partner that does not comprise a residential building lot?

Answer: No. The 2005 agreement and paragraphs 3.3 and 3.4 only reference residential lots.

[45] Is the sale of residential building lots within the ordinary course of the partnership’s business? If so, what is the effect if any of that finding?

Answer: Subject to being bound by the terms of the 2005 Agreement, yes.

[46] What is the meaning and application of Article 8 of the LPA?

Answer: The provision speaks for itself. Neither party has taken the position that there are or have been irreconcilable differences between the parties. In the event either party takes the position that the facts or factual matrix exists such as to come within Article 8, the provision sets out a procedure to follow. If necessary at that time, then judicial intervention may be sought on the facts as they may exist at that time; and after the parties have complied with the provision in Article 8 so there is a Record for the court to consider. I do note however, that article 8.2 contemplates that the parties agree by ordinary resolution. (emphasis added). That is a departure from an ordinary resolution that does not require the agreement of the parties, and is similar to Article 9.1.

[47] In particular, does the May 9, 2005 Agreement, if it is enforceable, impact or in any way modify the rights of the parties pursuant to Article 8 of the LPA?

Answer: No. Article 8 contemplates a winding-up, and the LPA seems clear on the process and the consequences.

[48] What is meant by the phrase “to meet Richcraft’s needs” from clause 3.4?

Answer: This phrase has been superseded by the 2005 Agreement.

[49] How does the May 9 2005 Agreement impact the ability of the RSDC to sell lots to other builders (assuming the document is found to be enforceable).

Answer: See above.

Costs

[50] The parties may each make written submissions within 45 days with a further 15 days for reply each if necessary.

Honourable Justice Timothy Ray

Released: July 24, 2015

COURT FILE NO.: 14-60397
DATE: 2015-07-24

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

RICHCRAFT HOMES LTD.

Applicant

– and –

URBANDALE CORPORATION, URBANDALE CONSTRUCTION LIMITED and RIVERSIDE SOUTH DEVELOPMENT CORP.

Respondents

REASONS FOR JUDGEMENT

Honourable Justice Timothy Ray

Released: July 24, 2015

[^1]: Paragraph 1.02, KNL
[^2]: Paragraph 5.01, KNL
[^3]: Paragraph 11.05 and 11.02, KNL
[^4]: Paragraph 2.1 and 1.1 (j, LPA
[^5]: Paragraph 1.1 (I, LPA
[^6]: Paragraph 7.2 (a through (f, LPA
[^7]: Paragraph 2.2, LPA
[^8]: Paragraph 9.1, LPA
[^9]: G.H.L. Fridman, The law of Contracts in Canada, 6th Edition, Carswell. Page 17.
[^10]: Eli Lilly & Co. v. Novopharm Ltd. 1998 791 (SCC), 1998 CarswellNat 1061,227 N.R. 201, 161 D.L.R. (4th) 1, [1998] 2 S.C.R. 129, 152 F.T.R. 160 (note), 80 C.P.R. (3d) 321, 1998 CarswellNat 1062, [1998] S.C.J. No. 59 at paragraph 52 (SCC)
[^11]: Note 10, paragraph 56.
[^12]: Dumbrell v. Regional Group of Cos. 2007 ONCA 59, 2007 CarswellOnt 407, 55 C.C.E.L. (3d) 155,25 B.L.R. (4th) 171,220 O.A.C. 64,279 D.L.R. (4th) 201, 85 O.R. (3d) 616 at paragraph 49 to 52 (OCA)
[^13]: Paragraph 3.4 LPA
[^14]: Paragraph 3.3 LPA
[^15]: Note 8.