Fram Elgin Mills 90 Inc. v. Romandale Farms Limited et al

COURT FILE NO.: 07-CV-336058PD3

DATE: 20151124

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Fram Elgin Mills 90 Inc., Plaintiff/Respondent

AND:

Romandale Farms Limited et al, Defendant/Moving Party

BEFORE: S.F. Dunphy J.

COUNSEL: Sarit E. Batner and Kosta Kalogiros, for the Defendant Moving Party Romandale Farms Limited

Sara J. Erskine and Janet Lunau, for the Plaintiff/Respondent

Martin Henderson and Miranda Spence, for the Respondents 2001251 Ontario Inc., First Elgin Developments Inc. and Jeffrey Kerbel.

HEARD: November 10, 2015

ENDORSEMENT

[1] Two overriding principles enshrined in our Rules of Civil Procedure are that they are to be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding” (R. 1.04(1)) and that, to secure justice, the court “may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute” (R. 2.01(1)(a)) (emphasis added).

[2] The defendant seeks to plead what, if proved, would be potentially valid and meritorious answers to one of the remedies the plaintiff seeks to impose upon it. The allegations are neither frivolous nor incapable of proof. Neither the plaintiff’s case nor the defendant’s defences have yet been subjected to a hearing on the merits. The defendant attempted unsuccessfully on one occasion to articulate its opposition to amendments made by the plaintiff. The defendant’s first attempt was dismissed in 2014 for failing to meet the low threshold of stating even a tenable case. The proposed revised pleading clears that hurdle. If proved, the theories advanced by the defendant would be relevant and material to resolving the claim the plaintiff has placed before the court. Ought I nevertheless to refuse to hear the defendant on these because their first attempt to amend failed or should I ensure that the real issues between the parties are actually heard and decided?

[3] The Rules of Civil Procedure are not to be construed so as to deprive a party of potentially valid and meritorious defences to claims made against it before those claims have been examined on their merits. Failure to advance theories of defence at a prior pleadings motion does not operate to deprive a party of the ability to make a full answer and defence when the claim against it is ultimately heard. No party will be compelled to attend trial with its hands tied behind its back by reason of prior errors that can yet be corrected without injustice. The abuse of process would consist in failing to hear such defences and risking a miscarriage of justice.

[4] There is no question here of abandoning the principles of res judicata. There has been no examination of any of these issues on the merits. There has been no motion for summary judgment where the parties would have been held to place their best foot forward as at trial. There has been no default judgment obtained on proper notice. This was a case of a failed pleadings amendment dismissed due to its evident deficiencies without examination of the merits. The court has to hand all the tools it requires to prevent an abuse of its process by litigants unable to take no for an answer without closing its ears to a potentially meritorious theory of defence. This is not such a case.

[5] This is a motion brought by the defendant Romandale for four primary heads of relief:

a. An order granting Romandale leave to amend its Amended Statement of Defence in the form suggested in consequence of certain amendments to the Statement of Claim made by the plaintiff;

b. An order adding Jeffrey Kerbel, 2001251 Ontario Inc. and First Elgin Developments Inc. as necessary parties to this action;

c. An order consolidating the present proceeding with action CV-14-501314 where Romandale as plaintiff has brought certain claims against 2001251; and

d. An order setting aside an interlocutory injunction granted in this action on July 26, 2007.

[6] The motion arises from an attempt by the plaintiff and Romandale’s original co-defendants in this action to settle this litigation when it was on the eve of trial with neither the consent nor co-operation of Romandale. The plaintiff and co-defendants claim their partial settlement is nevertheless to Romandale’s benefit and seek to bind Romandale to it.

[7] Romandale begs to differ. On the plaintiff’s pleaded view of the documents at least, the new arrangement would potentially leave Romandale worse off than if it had consented to judgment in the first place.

[8] Romandale wishes to plead an alternative construction of those agreements and the application of the facts to them that would secure a very different outcome. In my view it should be permitted to do so in the interests of justice. It will be for the trial judge to choose between the competing versions on a properly-developed evidentiary record. It will be my task as designated case-management judge to ensure the parties get this matter back on to the trial list ready for a hearing in the soonest possible time.

Overview of Facts

[9] If the partial settlement was intended to simplify issues and pave the way to a speedier outcome, it has missed the mark. We are approaching the fifth anniversary of a partial settlement negotiated on the eve of trial with definitive resolution of the central issues as distant a prospect as ever. In hindsight, this shortcut proved to be a considerable detour.

[10] Understanding the nature of the motion and the issues that require resolution will require at least a moderately deep dive into the history of this proceeding as well as an understanding of the issues that divide the parties on the litigation.

[11] This action (07-CV-336058PD3) has previously been consolidated with a related claim brought by the plaintiff against the parties (08-CV-352218PD3). However, no specific relief is sought in respect of the 2008 proceeding in the present motion and it will accordingly be described only briefly as required to understand the background.

[12] This tangle of litigation pits three protagonist groups with an interest in the development of certain farm land in Markham against each other in shifting alliances. The protagonists are: (i) the plaintiff in the 2007 action (Fram Elgin Mills 90 Inc., formerly “Frambordeaux Developments Inc.”) and the plaintiffs in the 2008 action (Fram 405 Construction Ltd. and Bordeaux Homes Inc.) (collectively referred to as “Fram” and named separately only where necessary to avoid confusion); (ii) Romandale Farms Limited (“Romandale”) a defendant in both actions and (iii) 2001251 Ontario Inc., Jeffrey Kerbel and First Elgin Developments Inc. (the “Kerbel Parties” collectively), formerly party to both actions but now party to neither.

[13] Romandale has owned two parcels of land in the Highway 404-Elgin Mills area of Markham for the past 50 years or so known as the “McGriskin Farm” and the “Snider Farm” collectively comprising approximately 275 acres of land. These two parcels of land (referred to as the “Land” hereafter) are the main object of the dispute in the litigation before me.

[14] The Land is near another development in which Romandale held a very significant interest being that of the Byzantine Rite Cathedral of the Transfiguration and the adjacent “Cathedraltown” lands.

[15] Romandale by its own admission is not a developer. Romandale needed the assistance of a developer to ensure that the lands adjacent to the Cathedral were developed in a manner it viewed as appropriate to the setting and its vision. In that connection, it entered into a variety of agreements with Fram and parties related to it to acquire access to that development and construction expertise. It appears that at least some of those agreements have come to grief and resulted in litigation none of which is material to this case beyond noting the deterioration in the relationship between the two groups that ensued.

[16] What is material is that Romandale and Fram entered into a series of three sets of agreements in 2003 in connection with the Land while their relationship was on good terms. The general intent of these agreements was: (i) to provide for the acquisition by Fram of an undivided 5% interest in the Land to be owned under the auspices of two Co-Owners Agreements dated May 29, 2003 described below; (ii) the shepherding by Fram of the Land through the development approval process under the aegis of two Development Management Agreements also dated May 29, 2003; and (iii) the eventual construction of the intended housing units on the Land under the Construction Management Agreements dated June 2, 2003. A separate but materially identical set of these three agreements was executed for each of the two parcels of land which together comprise the Land.

[17] The Co-Owners Agreements (or “COA”) are each dated May 29, 2003 with the plaintiff and Romandale as parties. As some of the terms of the Co-Owners Agreements are material both to the action and the motion before me, I shall set out these out in some detail below.

[18] Article 5 of the COA provides detailed rules governing the dispositions by parties of all or part of their interest in the Land. Section 5.03 provides that “[s]ave for those Dispositions expressly permitted in this Agreement neither Co-Owner shall make or permit a Disposition without the consent of the other Co-Owner (which consent may be unreasonably or arbitrarily withheld)”. The term “Disposition” is broadly defined to include any sale, assignment, transfer or other disposition or agreement “or agreement for such” by a Co-Owner.

[19] A critical issue between the parties is whether s. 5.03, when read in conjunction with this definition of “Disposition” prohibits conditional agreements from being entered into where the conditions precedent are the obtaining of consent or actual compliance with the other disposition provisions of the COA.

[20] Section 5.03 also provides for the consequences of a breach or attempted breach of its prohibition of dispositions by providing that “any attempt to do so shall be void”. A second issue in this litigation is whether nullity is the sole remedy or whether reference may also be had to the other remedies for a default that has not been cured after notice (s. 6.02).

[21] Two avenues provided in the COA for dispositions without consent are relevant here. These are the “shotgun” buy-sell provisions in s. 5.07 and the basket provision in s. 5.10 providing Romandale with a unilateral right to sell up to an aggregate 39% undivided interest in the Land.

[22] The pre-condition to the exercise of the shotgun buy-sell right in s. 5.07 is described in paragraph 5.07(a) as follows:

“(a) Provided that Secondary Plan Approval[^1]…has been obtained for the Lands, or if the Management Agreement has been terminated, then a Co-Owner who is not then a Defaulting Party (the “Initiating Party”) may, at any time thereafter tender on the other party…”(emphasis added).

[23] Section 5.10 also authorizes Romandale to sell up to a 39% interest aggregate interest in the Land providing only that it is not a “Defaulting Party”, which term is defined in s. 6.01 to be the “Co-Owner in respect of whom an Event of Default has occurred and is continuing” (emphasis added).

[24] Section 6.01(b) defines an Event of Default to include a circumstance with respect to a Co-Owner “if it shall be in default in any material respect under any of the provisions of this Agreement and such default shall continue for a period of 30 days after written notice thereof has been given”.

[25] Section 6.02 provides for various contractual remedies available to a Non-defaulting Party in the case where “an Event of Default has occurred and is continuing”. Such remedies include the right to remedy the default and charge back the cost thereof to the defaulting party ((s. 6.02(a)); the right to “bring any proceedings in the nature of specific performance, injunction or equitable remedy” (s. 6.02(b)); the right to “bring any action at law as may be necessary or advisable in order to recover damages (s. 6.02(c)); and/or the right to “give written notice (“Notice of Exercise”) to the Defaulting Party that such Non-Defaulting Party elects to purchase the Defaulting Party’s Co-Owner’s Interest at a price equal to ninety-five (95%) per cent of the Fair Market Value thereof payable only in cash and by the assumption of assumable Permitted Encumbrances…on the terms set forth in Subsections 6.03 and 6.04 hereof”. Section 6.03 prescribes that Fair Market Value (or “FMV”) is to be calculated as the average value determined by the closest two of three appraisers based upon the value of all of the Lands without regard to the rights and obligations under the COA. One appraiser “shall be appointed by each” of the parties with the third appraiser being selected by the two appointed. Section 6.04 requires closing to occur within thirty days of such determination.

[26] A third issue in this litigation is whether the contractual forcible acquisition remedy (s. 6.02(d)) can be claimed by a party who is not ready, willing and able to complete such acquisition but seeks instead to claim the value such remedy might have had to it without reference to the quantum of damages, if any, arising from the actual breach alleged to give rise to the contractual remedy in the first place.

[27] By early 2005 it is clear that a level of disaffection had arisen in the relationship between Fram and Romandale. The sources of that dissatisfaction are not material to this litigation. For reasons it judged sufficient, Romandale had lost confidence in the ability of Fram to act as development manager not only of the Land but also the other developments mentioned (i.e. Cathedraltown and the Cathedral Foundation lands). A Notice of Complaint and Termination effective February 28, 2005 was delivered by Romandale to Fram terminating each of the related Development Management Agreements including the two governing the Land.

[28] There is no dispute between the parties as to the fact of termination of the Development Management Agreements. Some litigation arose between the parties as to the consequences of termination, but Fram has not disputed the fact that the two Development Management Agreements in relation to the Land were terminated in February 2005.

[29] For reasons that no party was able satisfactorily to explain at the hearing of this motion, it appears to have entirely escaped the attention of the legions of lawyers and other professionals involved with this three-part litigation tango until quite recently that the right to pull the trigger on a shotgun buy-sell transaction under s. 5.07 has been open since February, 2005 given the termination of the Development Management Agreements (the term “Management Agreement” in the COA refers to the Development Management Agreements).

[30] A fourth issue in this litigation is whether Romandale is hereafter estopped from relying on the termination of the Management Agreement to invoke the shotgun remedy of s. 5.07 by reason of having failed specifically to reserve that right in prior versions of its statement of defence when no issue had yet arisen to make it relevant.

[31] On August 29, 2005, Romandale and 2001251 entered into the agreement (the “August Agreement”) that has given rise to this litigation. It appears to be undisputed with regards to the August Agreement that Romandale gave oral notice of its intentions to enter into some form of sale arrangement with Kerbel in June, 2005 that also involved the assumption of the existing Bank of Nova Scotia mortgage but did not, prior to the commencement of this litigation, provide the plaintiff with a complete copy of the August Agreement (which of course had not yet been entered into). How much notice the plaintiff had and the legal effect if any of such notice is a matter for the trial judge.

[32] The August Agreement was essentially a framework agreement providing for a number of distinct transactions between Romandale and 2001251 that are not directly relevant to the claims between the parties. These other transactions included:

a. The acquisition by 2001251 of the Bank of Nova Scotia mortgage on the Land;

b. The sale of the “Triple R Property” to 2001251; and

c. The grant of a right of second refusal for the purchase of the “Elgin South” property.

[33] As regard the Land, the August Agreement contained two provisions, section 2 and section 5, which are the object of contention in this litigation.

[34] Section 2 of the August Agreement contemplated two distinct transactions that were confusingly combined into a single compound provision: the sale of the “Initial Interest” (being a 4.75% net undivided interest) and the sale of the “Remaining Interest” to 2001251. Section 2 also provides that:

“the sale of the Remaining Interest is conditional for the benefit of the vendor and the purchaser on the valid exercise of the buy-sell rights under the Buy-Sell Provisions (as defined in paragraph 5 of this Agreement) and the completion of the buy-out of the interest of [Fram], or, in the alternative, the consent of [Fram] to the transaction... Romandale covenants to use reasonable best efforts to obtain the consent of [Fram] in respect of the sale of the Remaining Interest to 2001251”.

[35] Section 2(c) provides that “the closing of the sale of the Remaining Interest shall take place sixty (60) days (or the next business day following such sixtieth (60th) day after the earlier of (1) Romandale obtaining the consent of [Fram] pursuant to the Co-Owners Agreements to the sale of the Remaining Interest to 2001251 pursuant to the terms and conditions hereof; or (2) Romandale closing the purchase of [Fram’s] co-ownership interest in the [Land] pursuant to its rights under the Buy-Sell Provisions (as defined in paragraph 5 of this Agreement”. Section 7(c) provides that “time shall be of the essence hereof”.

[36] Section 5 of the August Agreement is entitled “Irrevocable Appointment” and provides in party as follows:

“Romandale hereby agrees that, in consideration of the entering of this agreement by 2001251, other good and valuable consideration and the sum of Ten Dollars ($10.00) paid by 2001251 to Romandale, the receipt and sufficiency of all of which is hereby acknowledged, Romandale hereby irrevocably appoints 2001251 as its exclusive true and lawful attorney and agent having full power of substitution, and 2001251 is hereby fully authorized as such to act on behalf of and/or give binding instructions to Romandale solely in connection with the exercise of the buy-sell rights pursuant to the Buy-Sell Provisions (as hereinafter defined)”.

[37] The definition of the “Buy-Sell Provisions” is contained in the last sentence of section 5 which provides as follows:

“Romandale further acknowledges that the foregoing rights of 2001251 are intended, without limitation, to permit 2001251 to cause Romandale to trigger Romandale’s buy-sell rights under section 5.07 of each of the Co-Owners Agreements in respect of the [Land] (collectively, the “Buy-Sell Provisions”) following Secondary Plan Approval being obtained for the [Land] such that Romandale acquires the co-ownership interest of [Fram] in the [Land] and then conveys such interest to 2001251 in accordance with this Agreement and to restrict Romandale from dealing with the Remaining Interest or any party thereof in the [Land] in any way whatsoever, subject to the terms and conditions of the Co-Owners Agreement” (emphasis added).

[38] It is undisputed that the August Agreement contemplated that 2001251 might in some circumstances be faced with having to complete a purchase of the Land prior to Secondary Plan Approval. This, at the very least, would be the case were Fram to consent to the transaction at Romandale’s request or should it have agreed to sell its interests to 2001251 under its “tag along” rights consequent upon the sale of the Initial Interest in June 2006.

[39] Romandale says that closing could also occur were the buy-sell provisions of s. 5.07 to be triggered at any time by reason of the admitted termination of the Management Agreement without waiting for Secondary Plan Approval. Romandale now pleads that 2001251 as its agent had fiduciary obligations under s. 5 of the August Agreement in relation to the triggering of that obligation that it has violated by entering into the Settlement Agreement and agreeing to defer triggering of the buy-sell prior to Secondary Plan Approval.

[40] On April 7, 2006 Romandale provided the plaintiff with formal notice of an agreement to sell the “Initial Interest” to 2001251. The agreement enclosed with the letter was not the full August Agreement but a new agreement effective as of August 29, 2005. The cover letter indicated “in the event you wish to elect to sell all or part of your co-owner’s interest on the same terms and conditions as contained in this offer, please respond within 10 days from receipt of this notice as provided for under the said Section 5.10”. The enclosed offer neither referred to nor attached the full August Agreement. Instead, a new agreement that reproduced the provisions of the August Agreement relating solely to the sale of the Initial Interest sale was enclosed. The new agreement, while dated as of August 29, 2005, bears a signature of Romandale dated February 3, 2006.

[41] The plaintiff claims that failure to disclose the remainder of the entire August Agreement rather than just the truncated version of it provided in April was a breach of the COA. No specific damages are pleaded to arise from this failure since it is not disputed that the plaintiff did not exercise its tag-along rights under s. 5.10. Rather, the plaintiff claims that it was prevented from invoking earlier than it did a separate contractual remedy for breach of contract – namely the ability to forcibly acquire the defaulting party’s interest at 95% of FMV after providing 30 days’ notice and an opportunity to cure under s. 6.02(d) of the COA.

[42] The plaintiff’s position is that it did not learn of the existence of the full August Agreement (as distinct from the April 2006 truncated agreement in respect of the sale of the Initial Interest only) until early 2007. That is disputed by Romandale. At all events, in early 2007, Fram began to request production of the full August Agreement, a quest which was satisfied only in part (in early February 2007) prior to the commencement of the litigation in July 2007.

[43] On February 26, 2007, Fram’s counsel provided Romandale with a letter outlining the alleged occurrence of defaults under the COA by reason of (i) having agreed to the sale of the Remaining Interest being more than the 39% interest permitted by s. 5.10 of the COA alleging “a conditional option to purchase would fall under the definition of Disposition”; and (ii) by reason of having accepted the offer to sell the Initial Interest prior to having given notice thereof to Fram.

[44] On June 25, 2007 Romandale gave notice of a new agreement to sell a further 7% of its Remaining Interest (6.65% net) in the Land to Kerbel pursuant to s. 5.10 of the COA. The June 25 notice again extended to Fram the offer to purchase its 5% interest on the same terms. Once again, Fram declined to exercise its tag along rights.

[45] Things proceeded swiftly towards litigation thereafter. On July 6, 2007, Fram declared that that the defaults notified in the letter of February 26, 2007 (further defaults have since been alleged in subsequent amendments to the Statement of Claim) had not been cured and gave notice of its intention to acquire Romandale’s interest pursuant to s. 6.02(d) of the COA. The same day, the Statement of Claim was issued.

[46] On July 26, 2007, Forestell J. issued an injunction until further order of the court barring Romandale from making any disposition of the Land or any part thereof. The proposed second sale of a 7% interest to 2001251 was never completed as a result.

[47] A second action (the “2008 action”) was initiated by Fram against Romandale and the Kerbel Parties on April 7, 2008. The 2008 action seeks damages for alleged breach of the Construction Management Agreements on the theory that the August Agreement was a breach thereof for failing to require the purchaser to assume the Construction Management Agreements. Under those agreements, Fram would have had the right to construct residences on the Land once Secondary Plan Approval had been obtained.

[48] The plaintiff delivered a notice to Romandale on July 30, 2007 claiming to have appointed its appraiser to determine FMV pursuant to s. 6.02(d) of the COA and requested Romandale do the same. Romandale responded by appointing its own appraiser on August 22, 2007 without prejudice to its position that it is not a defaulting party under the COA.

[49] Shortly thereafter, the plaintiff’s appraiser denied that it had yet been retained and the appraisal process ground to a halt.

[50] On March 25, 2010, Romandale again attempted to have the plaintiff to confirm the retainer of its appraiser in order to permit the process of determining FMV to move forward. On April 13, 2010, counsel for the plaintiff and took the position appraisal process could not move forward until after the litigation had determined the issues and has taken no steps to advance the process. As a result, there will be no evidence of FMV at trial – at least none determined according to the procedure mandated by the COA.

[51] This matter was originally scheduled for trial in September 2010. At a pre-trial held in August 2010, it appeared to the pre-trial judge that there were prospects of settlement. The trial was adjourned and a judicial mediator was appointed instead. The parties commenced three-way discussions with a view to settling the case.

[52] On December 17, 2010, the Kerbel Parties and Fram agreed to “go it alone” and entered into a two-way Settlement Agreement that excluded Romandale. It was thus only a partial settlement of some of the issues in the litigation. The implications of that Settlement Agreement upon Romandale and the additional defences it now seeks to plead in consequence are largely the subject of this motion.

[53] The Settlement Agreement is a carefully crafted document. The preamble indicates that the two parties to the Settlement Agreement have agreed “that the right of 2001251 …to acquire Romandale’s Remaining Interest in the Lands pursuant to the August 29, 2005 Agreement may be exercised 60 days after Secondary Plan Approval for the Lands is obtained, and upon such acquisition the entire Lands shall at [Fram’s] option be beneficially owned equally…”. While agreeing that Kerbel may exercise its right to acquire the Land from Romandale (but only 60 days after Secondary Plan Approval is obtained), the Settlement Agreement also provides that Fram “does not by this settlement agreement or otherwise consent to the transaction referred to in paragraph 2 of the August 29, 2005 Agreement” while nevertheless reiterating that “It is the intention of the parties that the purchase and sale of Romandale’s Remaining Interest in the Lands pursuant to these Minutes of Settlement will take place after Secondary Plan Approval for the Lands has been obtained” (emphasis added).

[54] The principal provisions of the Settlement Agreement include:

a. If Romandale will not concur in the settlement, Fram will continue its action against Romandale but will not seek any relief against the Kerbel Parties “and shall not seek a declaration that the August 29, 2005 Agreement is void nor that the June 6, 2006 transfer is invalid”; and

b. 2001251 granted an option to Fram to purchase a 50% interest in Romandale’s Remaining Interest as and when acquired by 2001251 under the August Agreement, the interests of the settling parties to be subsequently adjusted such that each beneficially holds a 50% interest.

[55] There was considerable dispute between the parties (at least in their written material) as to the admissibility of evidence regarding the unfolding of the negotiation process. Romandale took the position that such discussions were all privileged settlement discussions; Fram considered that privilege had been waived by reason of Romandale’s proposed pleading that it was not advised of all discussions between Fram and Kerbel.

[56] I did not review the produced correspondence nor did I invite the parties to pursue the so-called “strike motion” debate further. There was no disagreement between the parties that Fram and Kerbel did not advise Romandale of all aspects of their discussions prior to their two-way settlement being concluded on December 17, 2010 and that Romandale had made it quite clear that it would not participate in the settlement agreement that was ultimately finalized. There is no question that Romandale had a sufficient idea of the nature of the arrangement being discussed to reject participation in it and there is no question that the other two parties decided to go forward with their two-way deal armed with the knowledge that Romandale had rejected it. At this stage, the dispute would appear to be a tempest in a teapot. The sins allegedly committed in negotiating the Settlement Agreement are surely no graver than those attributable to having actually gone ahead with it. That, however, shall be a matter for the trial judge to consider.

[57] I shall not relate in any detail the procedural wrangling that followed. After a contested hearing before Spence J., Fram was ultimately able to amend its Statement of Claim to conform it to the new facts of the Settlement Agreement and release the Kerbel Parties without prejudice to Romandale’s right to bring a counterclaim. The Amended Statement of Claim was filed on March 28, 2012.

[58] As required by the Settlement Agreement, the Amended Statement of Claim removes a request for a declaration that the August Agreement is void and that the transfer of the Initial Interest on June 6, 20016 is invalid. Instead, a new claim seeking “directions approving Minutes of Settlement” has been added. Finally, the plaintiff amended its claim to specific performance of its claimed rights under s. 6.02(d) of the COA to claiming damages in lieu thereof in respect of 50% of the Land. All claims for relief against the Kerbel Parties have been removed with the result that the Kerbel Parties are no longer parties to the action.

[59] As contemplated by the Settlement Agreement, Fram ultimately issued Notices of Discontinuance to the Kerbel Parties in both the 2007 and 2008 actions on October 23, 2012.

[60] Soon thereafter, Romandale sought to file an “Amended Amended Statement of Defence Crossclaim and Counterclaim of the Defendant Romandale Farms Limited”. Master Graham dismissed Romandale’s motion for leave to amend on December 21, 2012. An appeal from the decision of Master Graham was heard by Kitely J. on March 31, 2014 and dismissed with reasons released on June 20, 2014. I shall review the content of the proposed amended pleading and the reasons for decision of Master Graham and Kitely J. in further detail below.

[61] There is one further piece of litigation which must be inserted into the chronology. While Kitely J. had her decision on the fate of Romandale’s original attempt to bring a counterclaim against 2001251 under reserve, Romandale commenced a separate action against 2001251 alone on April 29, 2014. In this action (the “2014 action”), Romandale sought a declaration that the August Agreement had been terminated by reason of alleged breaches of fiduciary duty by 2001251 in pursuing development approval for the Land by reason of alleged conflicts of interest arising from 2001251 having interests in neighboring tracts of land. That action remains outstanding. If successful, it would result in the termination of the rights of 2001251 to acquire Romandale’s interest in the Land under s. 2 of the August Agreement.

Issues

[62] The following issues are raised by this motion:

a. Is there non-compensable prejudice arising from the proposed amendment?

b. Does the current proposed amendment raise defences that are tenable?

c. Is the current proposed amendment barred by the doctrine of res judicata or as an abuse of process?

d. Does the current proposed amendment amount to a withdrawal of an admission?

e. Is the proposed amendment potentially subject to the Limitations Act, 2002?

f. Ought the Kerbel Defendants be added as parties to the 2007 action or should the 2014 action be consolidated with the 2007 action?

g. Should the 2007 injunction be dissolved?

Analysis and Discussion

(i) Is there non-compensable prejudice arising from the proposed amendment?

[63] Leave to amend at any stage of an action is mandatory under R. 26.01 of the Rules of Civil Procedure unless prejudice would arise that cannot be compensated for in costs or by an adjournment.

[64] The plaintiff has filed responding material, but included no affidavit from the plaintiff alleging actual prejudice. The affidavit filed was that of an associate lawyer in the office of plaintiff’s counsel. Apart from providing procedural history and contentious documents from the negotiation of the Settlement Agreement, it contains no evidence of actual prejudice arising from the amendments. Prejudice is not presumed.

[65] The plaintiff nevertheless argues that it will clearly suffer prejudice arising from having entered into the Settlement Agreement.

[66] The amendments proposed by Romandale are only relevant or material as a result of the plaintiff pleading the Settlement Agreement and seeking court approval thereof (to be binding upon Romandale). There is no suggestion that Romandale somehow lured the plaintiff into entering into the Settlement Agreement – to the contrary, it has been protesting that it is the victim of the Settlement Agreement loudly and persistently. It may have taken Romandale some time to give full voice to the precise reasons for its protests, but the plaintiff cannot claim to have been lured into a trap to its detriment.

[67] The prejudice claimed by the plaintiff does not arise from the proposed amendments but from its own actions taken over the vociferous objections of Romandale. The Settlement Agreement was entered into by the plaintiff to advance its own interest in a fashion Romandale claims is very much to its detriment. This is not an observation intended to cast aspersions. A settlement agreement is no more than a contract. Parties enter into contracts because they value what they get more highly than what they must give.

[68] While the Settlement Agreement required the plaintiff to compromise some claims, it also secured benefits. Among other advantages to the plaintiff, the Settlement Agreement lifted from the plaintiff`s shoulder the prospect of having to finance an immediate acquisition of approximately $40 million of land and the full assumption of the risks of ownership thereof thereafter (including development approval risk) and replaced it with a fixed-price option without up-front cost that it may or may not choose to exercise years in the future.

[69] By entering into the Settlement Agreement, the plaintiff knowingly assumed the risk that it could obtain that benefit without Romandale`s consent. Romandale seeks only to plead that this is not so and why. Romandale did not induce the plaintiff to enter into the Settlement Agreement in any way and is in no way a beneficiary of it. That is not the sort of prejudice contemplated by R. 26.01 as impeding the granting of leave.

[70] I can find no prejudice to the plaintiff arising from the proposed amendments.

(ii) Does the proposed amendment raise tenable defences?

[71] While leave to amend is mandatory under R. 26.01, our courts have long considered that there is a discretion to reject amendments where it is clear that they simply do not make a tenable claim or raise a tenable defence. The approach on such matters is not unlike a Rule 21(1)(a) motion – the proposed pleading is to be given a broad and generous reading and the facts pleaded are assumed to be true unless it is plain and obvious that they cannot be proved. A close examination of the merits is not called for – that will be the trial judge’s job. At this stage, my task it to assess whether the defences pleaded in the proposed amendment rise to the level of tenable. In my view they do.

[72] Taken together, the amendment proposed advances the following three theories:

a. Romandale disputes the plaintiff’s entitlement to any order approving or implementing the Settlement Agreement since the agreements underlying the Settlement Agreement – namely the COA and the August Agreement – have been repudiated and thus are not enforceable;

b. As a corollary to (a), Romandale pleads that the plaintiff has, by its conduct, repudiated the COA; and

c. As a further corollary to (a), Romandale pleads that the August Agreement has now been repudiated thereby curing any alleged continuing defaults under the COA related to having entered into it.

[73] I shall examine each of these three theories to see whether they are relevant and whether sufficient facts have been pleaded that, if proved, would make such defence tenable.

(a) Approval/Enforceability of Settlement Agreement

[74] The Settlement Agreement is binding only upon those who are party to it. This much is trite. Had the plaintiff simply discontinued its claims against the Kerbel Parties and withdrawn claims thereby made moot or that it contractually agreed not to pursue the amendments sought by Romandale and this motion would be unnecessary.

[75] The plaintiff’s Amended Statement of Claim has gone further than this. The plaintiff both pleads the fact of the Settlement Agreement and seeks directions for its approval. In so doing, the plaintiff is seeking directly to bind Romandale to the Settlement Agreement with a court order the full extent of which has yet to be delineated. The continued application of the COA and the August Agreement into the indefinite future are the foundation of the Settlement Agreement. The entire value of the plaintiff’s option depends upon it.

[76] This pleading by the plaintiff has opened Pandora’s Box and necessarily made relevant the present and future enforceability of both agreements. If as Romandale now pleads, the August Agreement has now been repudiated, the alleged default arising from having entered into it would not be continuing. Romandale would potentially be in a position immediately to trigger the buy-sell provisions of s. 5.07 (given termination of the Management Agreements) and purchase all of the plaintiff’s current interest in the Land; it may be in a position to exercise s. 6.02(d) in its own right and purchase the plaintiff’s interest at a discount to current value if the breaches of the COA it alleges were proved or it might seek to exercise its rights under 6.10 to sell a portion of its interest to a third party. If the August Agreement is repudiated, 2001251 has no right to acquire Romandale’s remaining interest and the option granted to the plaintiff by the Settlement Agreement has no object.

[77] The foregoing is just a partial list of the most obvious issues that would need to be assessed by any judge being asked to make orders approving the Settlement Agreement binding upon Romandale. The future, being unknowable, will bring further issues to the fore that may impact upon the enforceability of the Settlement Agreement.

[78] In my view, the pleading of the Settlement Agreement and in particular the request for directions approving same have placed in issue the current and future status of both the COA and the August Agreement. Romandale can and must put its position on both agreements on the record.

(b) Repudiation of COA

[79] Since the continued validity and enforceability of the COA has been put in issue by the Amended Statement of Claim, has Romandale pleaded tenable grounds for challenging it?

[80] The grounds alleged to constitute conduct amounting to repudiation of the COA by the plaintiff are the entering into of the Settlement Agreement. Three aspects of the Settlement Agreement are referenced: (i) the plaintiff contracting away its right to consent to an earlier disposition to 2001251 by Romandale; (ii) the provisions of s. 4 thereof providing for “all decisions concerning development and/or the exercise of all rights respecting the Lands on a joint basis”; and (iii) generally being contrary to the stated purpose of the COA.

[81] With respect to the first of these, Romandale points to the emerging doctrine of good faith performance of contractual obligations to suggest that, even if the plaintiff is entitled under the COA to withhold its consent to a Disposition unreasonably (s. 5.03), there is nevertheless a duty to consider such requests in good faith and fettering its discretion in advance violates that duty.

[82] Given the right to refuse consent unreasonably, it must be said that the argument appears rather a strained one. However, strained arguments are entitled to pass muster under R. 26.01 unless incapable of proof. I can’t say that this argument cannot succeed on any view of the facts particularly if combined with the other two.

[83] Romandale’s pleaded objection to s. 4 of the Settlement Agreement by reason of the delegation of rights to 2001251 is not dissimilar to the plaintiff’s own claims that s. 5 of the August Agreement breached the COA. I cannot find either of these claims to be incapable of proof. Romandale may face a consistency issue. However, pleadings in the alternative are an acceptable practice.

[84] Finally, the overall purpose of the COA as expressed by s. 2.02 thereof is that “The Lands shall be developed, sold, or otherwise operated for the mutual benefit of the Co-Owners” (emphasis added). It would appear open for Romandale to argue that the Settlement Agreement might be viewed as requiring that the Lands be developed, sold or otherwise operated for the exclusive benefit of the parties to the Settlement Agreement to the exclusion or Romandale and that such might be considered to go to the heart of the COA.

[85] In my view, Romandale has pleaded facts and theories which, if proved, could lead a trial judge to conclude that Fram has breached or repudiated the COA. Given the pleading of the Settlement Agreement and the prayer for relief in respect of it, this is a relevant allegation tenably pleaded.

(c) Repudiation of August Agreement

[86] The pleading takes a multi-prong approach to pleading the repudiation of the August Agreement. In essence, it alleges that 2001251 has repudiated it and, in any event, Romandale will not perform it.

[87] The proposed pleading alleges that 2001251 has repudiated the August Agreement by the following conduct:

a. Breach of its fiduciary duties as agent under s. 5 of the August Agreement; and

b. Contracting out of s. 2 of the August Agreement.

[88] In my view, proof of either of these two theories advanced against 2001251 could justify a court in concluding that 2001251 has lost the capacity to enforce s. 2 of the August Agreement as against Romandale.

[89] It is clearly arguable that s. 5 of the August Agreement, in constituting 2001251 as Romandale’s agent, entailed the undertaking by 2001251 of fiduciary duties vis-à-vis Romandale.

[90] 2001251 has a clear interest in deferring payment of the purchase price for as long as possible so as to minimize its holding and ownership costs and risks by paying for the Land as close to the time it is actually developed and sold as possible. That interest is quite opposite to Romandale’s interest as vendor to receive the purchase price as soon as practicable.

[91] The August Agreement provides that time is of the essence (and otherwise has no price adjustment or termination clause). By entering into an agreement with the plaintiff, 2001251 has procured the agreement of Fram not to consent to an earlier completion that Secondary Plan Approval and arranging by contract for the timing of that consent to be provided. Under the August Agreement, it was Romandale’s obligation and right to seek that consent – arguably including by payment of a consent fee if it chose. 2001251 has arguably paid a consent fee of its own (in the form of the option) to ensure the consent is not given until a later date. Romandale pleads that this favoured 2001251’s own interest in a delayed closing over those of Romandale. A trial judge could well conclude that procuring that agreement of the plaintiff violated 2001251’s fiduciary obligations and has released Romandale from any obligation to perform.

[92] It is also possible that a trial judge could reasonably conclude that foreclosing the triggering of the shotgun provisions until Secondary Plan Approval despite the termination of the Management Agreement similarly amounted to a breach of fiduciary duty given the exclusive control over the process given to 2001251 by s. 5 of the August Agreement, the lengthy delay in getting to Secondary Plan Approval or completion and the fact that time was of the essence to the August Agreement.

[93] In my view, Romandale has pleaded facts and theories which could lead a court reasonably to conclude that the August Agreement has been repudiated or cannot be enforced as against Romandale. This allegation has been made relevant by the Amended Statement of Claim seeking directions regarding approval of the Settlement Agreement.

[94] Romandale has also pleaded that it has determined in any event not to comply with the August Agreement. Any alleged defaults arising from having entered into the August Agreement would not be continuing defaults, thereby opening up the possibility of dispositions of its own interest other than to 2001251 or even forcible acquisitions by Romandale of the plaintiff’s interest in the Land. Once again, these allegations have been made relevant by the Amended Statement of Claim seeking directions regarding approval of the Settlement Agreement.

(iii) Is the proposed amendment barred by res judicata or as an abuse of process?

[95] Having found that the defences sought to be pleaded are responsive, relevant and capable of proof and thus meet the minimum standard of plausibility to be considered under R. 26.01, is there any other reason why I ought nevertheless to deny leave to advance such defences under R. 26.01?

[96] The plaintiff alleges that Romandale has already had one attempt at amending its pleading in response to the Amended Statement of Claim. Having failed before Master Graham and Kitely J, the plaintiff argues that Romandale is estopped from trying again. The current attempt at amendment is, the plaintiff suggests, merely an attempt to re-hash the allegations already rejected once and ought to be dismissed as res judicata or as an abuse of process.

[97] While there is a level of superficial similarity between the old and the new pleading in that both allege the Settlement Agreement was a breach of the August Agreement, the facts and legal positions advanced to justify that conclusion are utterly different. The destination may have been similar, but the road to it is quite different. The defences pleaded are different in substance as well as in form.

[98] The rejection of the proposed pleading by Kitely J. establishes no more than that the particular proposed pleading as pleaded disclosed no reasonable cause of action. It cannot be taken to foreclose the prospect of a revised pleading passing muster. Even pleadings dismissed pursuant to Rule 21 of the Rules of Civil Procedure are normally done with leave to amend unless it is plain and obvious that the claim cannot be pleaded back into life: AGF Canadian Equity Fund et al. v. Transamerica Commercial Finance Corporation Canada et al., (1993) 1993 8682 (ON SC), 14 O.R. (3d) 161 at para. 21. To hold otherwise would be “contrary to the policy that cases should be finally decided on their merits, not on technicalities arising from mispleading, and contrary to the liberal approach to pleading found in Rule 26.01”: AGF (supra) per Borins J. (as he then was) at para. 35.

[99] I cannot find that the doctrines of res judicata or abuse of process can stand as a bar to foreclose the proposed amendment.

(iv) Is the proposed amendment a withdrawal of an admission?

[100] The plaintiff argues that Romandale is now seeking to plead that the shotgun provisions in section 5.07 of the COA can be invoked prior to Secondary Plan Approval and in particular can be invoked due to the termination of the Management Agreement. The plaintiff claims to have changed its position by agreeing to the Settlement Agreement and therefore submits that an amendment to plead the availability of s. 5.07 due to the termination of the Management Agreement amounts to a withdrawal of an admission that it has relied upon to its detriment.

[101] The argument cannot succeed in my view.

[102] The alleged admission is no admission at all. In order for there to be an admission, there must be an “unambiguous deliberate concession to the opposing party”: Griffiths v Canaccord Capital Corp., 2005 42485 (ON SC) at para. 19. This is nothing of the sort. It was neither unambiguous nor was it a concession to the opposite party.

[103] The full text of s. 5.07 of the COA is specifically pleaded in paragraph 15 of the current pleading while the termination of the Management Agreement is pleaded in paragraph 18. That fact that subsequent paragraphs of the pleading omitted a reference to the possibility of earlier exercise of the buy-out right in summarizing s. 5.07 does not amount to an unambiguous abandonment of the specifically pleaded contractual rights under the COA when the full text is pleaded.

[104] The plaintiff rejected any suggestion that the “spin” put on the contractual provisions by Romandale in its pleading is of any relevance. The plaintiff’s Reply to Romandale’s Amended Statement of Defence denied Romandale’s allegations en bloc and pleaded that “the plaintiff will refer to the COA for a correct statement of the terms and effect thereof”. The proposed amended pleading adds no new facts but simply clarifies facts already pleaded and known to the plaintiff. In effect, it relies on the admission in the plaintiff’s reply that the COA will be relied upon “for a correct statement of the terms and effect of thereof”.

[105] The plaintiff argues that the August Agreement also affirms the inapplicability of s. 5.07 of the COA prior to Secondary Plan Approval. The claim does not withstand scrutiny. While s. 5 of the August Agreement does indicate that the agency powers granted thereby to 2001251 “are intended, without limitation, to permit 2001251 to cause Romandale to trigger Romandale’s buy-sell rights under section 5.07…following Secondary Plan Approval”, the operative words are “permit” and “without limitation”. The agency granted “permits” it to be exercised at after Secondary Plan Approval but does so “without limitation” and in a contract where time is explicitly stated to be of the essence (with, as noted, a fixed price). Nothing in s. 5 of the August Agreement can be construed as an admission narrowing the ambit of s. 5.07 of the COA (nor could the plaintiff claim rights in a contract it pleads is void).

[106] Secondly, the statements being amended were no concession to the position of the opposite party. There was no lis between the parties as to whether the August Agreement could be completed prior to Secondary Plan Approval. The August Agreement already clearly contemplated the possibility of a closing prior to Secondary Plan Approval (through the tag-along rights under s. 5.10 of the COA or via consent). The timing of possible completion of the August Agreement was no part of the plaintiff’s case which pleaded that entering into the August Agreement itself was a breach. There was simply no issue between the parties regarding the possible triggering of s. 5.07 earlier than Secondary Plan Approval.

[107] I would thus not characterize the proposed pleading as a withdrawal of an admission. Even if it were so characterized, I would grant leave pursuant to R. 51.05 of the Rules of Civil Procedure. The leading case on granting leave to amend and withdraw an admission under R. 51.05 is Antipas et al. v Coroneos et al., (1988), 1988 10348 (ON SC), 26 C.P.C. (2d) 63 (Ont. H.C.) which was endorsed by the Court of Appeal in Szelazek Investments Ltd. v. Orzech, 1996 490 (ON CA). The three part test is whether (i) the proposed amendment raises a triable issue; (ii) a reasonable explanation for the admission and (iii) lack of prejudice that cannot be compensated in costs.

[108] In my view, all three aspects of this test are satisfied. The Amended Statement of Claim has put in issue the Settlement Agreement and, through it, the continued enforceability of the August Agreement. There is a clearly triable issue as to whether 2001251 has violated fiduciary duties or breached the August Agreement by foreclosing completion of a contract that stipulates that time is of the essence to an indefinite date in the future when earlier avenues to seek completion may viably be shown to exist. The full potential application of s. 5.07 was not accurately summarized for the simple reason that it was not an issue in 2007 or 2008 when the pleading was filed. The existence of earlier avenues to completion of the August Agreement has self-evidently become relevant due to the subsequent passage of time without completion of a contract bearing a fixed price with time of the essence and due to the additional fact of the Settlement Agreement purporting to dictate how 2001251 is to exercise its agency rights under s. 5 of the August Agreement.

[109] The potential for an earlier triggering of s. 5.07 of the COA due to termination of the Management Agreement is there in black and white in paragraphs 15 and 18 of the existing Amended Statement of Defence. The plaintiff’s reply rejects any characterization of the application of the COA beyond the full text. The plaintiff cannot plead adverse reliance by entering into the Settlement Agreement when it elected to do so over the objections of Romandale.

(v) Is the proposed amendment potentially subject to the Limitations Act, 2002?

[110] The Kerbel Parties claim that Romandale’s proposed amended statement of defence coupled with the requested joinder of the Kerbel Parties to the 2007 amounts to making claims against them that are statute-barred. They point to allegations that entering into the Settlement Agreement amounted to a breach of fiduciary duty, that the Kerbel Parties have breached the August Agreement or otherwise repudiated it as amounting to claims that if made directly would be statute-barred given the occurrence of the underlying events in 2010.

[111] Were Romandale to bring a claim against 2001251 seeking damages or other relief as against 2001251, this assertion may well have merit. That is not the case here.

[112] The August Agreement – at least sections 2 and 5 thereof relating to the Land – is an executory contract. Romandale, one of the parties to the agreement, claims that the August Agreement has been repudiated by the actions of the Kerbel Parties. If now, or at any time in the future, 2001251 were to seek to enforce the executory obligations of Romandale under the August Agreement, Romandale would be entitled to resist such enforcement and plead – as it now does – that the obligation that 2001251 seeks to enforce has been extinguished. In such situation, the claim to which the Limitations Act, 2002, S.O. 2002, c. 24 might apply would be that of 2001251, not of Romandale. Section 4 of the Limitations Act, 2002 prohibits the commencement of a proceeding in respect of a claim. The raising of a proper defence to a claim asserted is by its very nature not subject to that prohibition.

(vi) Ought the Kerbel parties be joined as parties and/or consolidation of 2014 Action?

[113] The plaintiff has put the continued validity and enforceability of the August Agreement in issue with its request for approval of the Settlement Agreement in the Amended Statement of Claim. It would clearly be in the interests of justice that there be only one determination of the various issues raised by Romandale regarding the continued applicability or enforceability of the August Agreement.

[114] The 2014 action pending already seeks a declaration that the August Agreement is terminated by reason of breaches of fiduciary duty of the Kerbel Parties related to alleged conflicts of interest of the Kerbel Parties in pursuing development approval in respect of the Land and various neighboring parcels of land in which they also have an interest. The proposed Amended Statement of Defence of Romandale adds a number of other grounds to the mix including breach of those same fiduciary duties by reason of entering into the Settlement Agreement (whose approval the plaintiff has placed before the court in the 2007 action). The opportunities for multiple proceedings and conflicting judgments are manifest and ought to be avoided.

[115] In my view, if the court is asked by the plaintiff in the 2007 action to approve a Settlement Agreement to which 2001251 is a party and thereby to require completion of the August Agreement by Romandale, it will be plainly necessary to assess any and all objections Romandale has to the completion of the August Agreement including any claim that the Settlement Agreement itself breached fiduciary duties owed to it by 2001251. It is equally plain that doing so in circumstances where 2001251 would not be bound by the outcome would simply open the door to a multiplicity of proceedings on the same issues and conflicting findings of fact and law by different courts.

[116] 2001251 objects that the principle that a plaintiff’s choice of which parties it desires to sue ought to govern and that R. 5.03 is a narrow exception to that rule.

[117] Neither joinder nor consolidation would be necessary in this case but for the election made by the plaintiff to seek approval of the Settlement Agreement and thereby bind Romandale to it and indirectly to completion of the August Agreement in the manner agreed between Fram and the Kerbel Parties in the Settlement Agreement. Joinder is required as a consequence of the plaintiff’s election.

[118] In my view, joinder or consolidation ought to be accomplished on conditions that accomplish the intended goal and no more in this case. While Romandale has sought to join the Kerbel Parties generally, only 2001251 is a party to the August Agreement and it is the intersection of the August Agreement with the Settlement Agreement that is the basis of Romandale’s motion.

[119] Accordingly, 2001251 alone is to be added as a party defendant for the limited purpose of being bound by any determination made by the court in the 2007 action regarding:

a. Whether the Settlement Agreement ought to be approved and on what conditions;

b. In connection therewith, whether the August Agreement remains enforceable as against Romandale (other than by a claim for damages alone); and

c. Whether, in the alternative, Romandale can repudiate the August Agreement unilaterally as it claims.

[120] If 2001251 is bound by any finding of the trial judge in the 2007 action in relation to these three matters, there is no pressing need to seek consolidation of the 2014 action as well. While there are common issues of fact and law between the 2007 and 2014 actions, the risk of conflicting decisions is mitigated if any findings in the 2007 action in relation to the three issues I have listed are binding upon 2001251. In this fashion, further delay in the 2007 action that might be occasioned by the necessity of the 2014 action to play “catch-up” with the 2007 action can be forestalled. Accordingly, I decline for the time being to order consolidation of the two actions. I may need to revisit that question should it appear that circumstances warrant.

(vii) Should the 2007 Injunction be dissolved?

[121] The 2007 action was commenced by Fram on July 6, 2007. As originally framed, the Statement of Claim pleaded (i) that Romandale was in breach of the Co-Owners Agreements by reason of (a) having entered into the August Agreement; (b) having completed the sale of a 5% interest (approximately) in the Land to the 2001251 pursuant the sale agreement dated as of August 29, 2005; (c) having entered into an agreement dated June 25, 2007 for the sale of a further approximate 7% interest (approximately) in the Land; (ii) the existence of such breaches of contract constitute an Event of Default under the Co-Owners Agreements; and (iii) that Fram had triggered its remedy for such breaches of contract to required Romandale to sell its entire interest in the Land to Fram at 95% of Fair Market Value pursuant to s. 6.02(d) of the Co-Owners Agreements in aid of which remedy specific performance was being sought.

[122] In view of the possibility that Romandale might seek to complete the June 25, 2007 agreement with 2001251 or seek to employ its rights under s. 6.10 to sell further interests in the lands subject to the claim for specific performance of the remedy provided by s. 6.02(d) of the Co-Owners Agreements, Fram sought an injunction to prevent further dispositions of Romandale’s interests in the Land prior to trial.

[123] In short, Fram claimed a present proprietary interest in the Land coupled with a tangible risk that such interest might be defeated prior to trial if the status quo were not protected.

[124] On July 26, 2007, Forestell J. granted the requested injunction. In granting the injunction, Forestell J. noted that the plaintiff had demonstrated a strong case to be tried that Romandale had breached the Co-Owners Agreements as pleaded and the potential loss of all or part of the plaintiff’s rights to specific performance under s. 6.02(d) of the Co-Owners Agreements should the 7% sale or other sales occur was evidence of irreparable harm. The injunction was accordingly granted.

[125] On March 28, 2012, the landscape of the litigation changed quite dramatically with the issuance of the Amended Statement of Claim. The Amended Statement of Claim no longer seeks to pursue the remedy for breach of contract prescribed by s. 6.02(d) of the Co-Owners Agreements. Instead, the Amended Statement of Claim seeks to quantify the value of the remedy for breach that it has contractually agreed with the Kerbel Parties to abandon rather than to quantify the actual damages attributable to the alleged breaches themselves. Romandale had already taken issue with Fram’s eligibility to invoke s. 6.02(d) by reason of its failure to proceed with the appraisal process. The plaintiff has now definitively deprived itself of the capacity to proceed with the acquisition at all. Whether the plaintiff will nevertheless be entitled to a measure of damages based upon those facts will be a matter for the trial judge to determine – what is material for present purposes is the Amended Statement of Claim no longer provides any foundation to allege a continuing proprietary interest.

[126] There is simply no basis for the continuation of the 2007 injunction at this time. At its highest, Fram claims a contingent right – via the option granted to it by a third party (i.e. 2001251) – to acquire an interest in the Land. The option grantor’s right is itself is contingent on the enforcement of a contract (the August Agreement) to which the plaintiff is not only a stranger but has pleaded is void. As against Romandale, the plaintiff claims no proprietary interest in the Land that it does not already possess..

[127] The only surviving claim of the plaintiff as against Romandale in relation to the Land is one for damages. It goes without saying that damages are an adequate remedy for a claim that is now limited to damages.

[128] By asking the court to maintain the injunction, Fram is in effect asking the court to allow it to “lend” the injunction to the Kerbel Parties. Injunctions are not hockey cards to be traded. If 2001251 has a basis for an injunction it must seek it under its own steam.

[129] The plaintiff sought to argue that its optional interest in acquiring the Land pursuant to the Settlement Agreement is one which ought to be protected by the injunction. I cannot find that such interest is sufficiently crystallized or probable or would otherwise satisfy the minimum standards for issuing such an injunction in favour of the plaintiff. There are simply too many contingencies that stand between the plaintiff and any potential future rights to Romandale’s interest in the Land (which is the only interest subject to the injunction). It would be speculative at best to conclude at this point that the plaintiff will ever acquire Romandale’s interest in the Land. The plaintiff may be unable to finance the purchase price or decline to exercise its option; Secondary Plan Approval may never occur; Romandale may be successful in its claim that the August Agreement has been repudiated whether by reason of the allegations made in the 2014 action, those it seeks to allege by way of amendment in this action or otherwise; 2001251 may be denied specific performance – these are just the obvious contingencies. The alleged interest of the plaintiff is simply too remote to be protected by way of injunction. The fact that its claimed interest is entirely derivative of a contract (the August Agreement) that it pleads is void does not improve the analysis.

[130] The injunction must be dissolved. Romandale is entitled to file a claim for damages arising from the issuance of the injunction pursuant to the undertaking as to damages given by the plaintiff.

[131] I direct Romandale to prepare a list of particulars of the damages if any that it seeks to claim arising from the injunction. Such particulars shall be served upon the plaintiff by February 1, 2016. Should Romandale elect to pursue a claim for damages, I direct that the matter be referred to the trial judge hearing this matter unless this matter is not listed for trial by September 1, 2016 subject to further order of this court. I am of course making no finding at all that the injunction was wrongly issued or that there are in fact any such damages.

[132] I express no views at this stage as to whether the 2001251 may have an interest in its own right that warrants protection by way of injunction. The matter has not been argued before me. In order to avoid an unnecessary rush to the court house for injunctions on an urgent basis, as salutary as injecting a sense of urgency into this litigation might otherwise prove, I shall stay my order dissolving the injunction until February 1, 2016 as well. If 2001251 is of the view that there are grounds for it to seek its own injunction, it must take such steps as are needed in sufficient time to be heard by me as case management judge before that date.

Disposition

[133] Accordingly, I order as follows:

a. Romandale is granted leave to file its proposed “Further Amended Statement of Defence of the Defendant Romandale Farms Limited” referred to in its Notice of Motion dated July 24, 2015;

b. 2001251 is joined as a party defendant to this (2007) action for the limited purpose of being bound by any determination made by the court in the 2007 action regarding:

i. Whether the Settlement Agreement ought to be approved and on what conditions;

ii. In connection therewith, whether the August Agreement remains enforceable as against Romandale (other than by a claim for damages alone); and

iii. Whether, in the alternative, Romandale can repudiate the August Agreement unilaterally as it claims.

c. The injunction issued in this action on July 26, 2007 is dissolved, this paragraph of my order to be stayed until February 1, 2016; and

d. On or before February 1, 2016, Romandale shall serve the plaintiff with a statement of particulars of damages it alleges ought to be subject to compensation pursuant to the undertaking as to damages given by the plaintiff in connection with the injunction of July 26, 2007, such damages claim to be referred to the trial judge hearing this action.

[134] There remains the matter of costs. Romandale has been successful on this motion. If the parties are unable to resolve the matter of costs between themselves within 14 days of the date these reasons are released, I direct the following procedure to be followed:

a. Romandale to deliver its Outline of Costs to the Responding Parties along with its written submissions (not to exceed five pages in length excluding Outline) 21 days after release of these reasons;

b. The Responding Parties shall each respond with submissions (not to exceed five pages in length, not including Outline if any) within 14 days of receipt of Romandale’s written submissions and outline;

c. Romandale shall deliver the submissions of ALL parties including its own reply (limited to TWO pages) within three business days of receipt from the Responding Parties as above to the attention of my assistant at via email, fax or memory stick (copied to the Responding Parties);

d. All written submissions should be hyperlinked to citations where cases are referred to (pdf copies of other cases may be attached if needed);

e. All written submissions should assume full familiarity with Rule 57.01 and focus on issues particular to this case; and

f. If no ruling from the Court is received within three weeks, kindly remind my assistant.

S.F. Dunphy J.

Date: November 24, 2015

[^1]: “Secondary Plan Approval” is defined to mean an official plan amendment with respect to the land. There is no allegation that this has occurred or is imminent.