2005 BCSC 134 Kim Le v. Haro Pacific Enterprises Co. Ltd. et al

Before: The Honourable Mr. Justice Kelleher

Reasons for Judgment

Counsel for the Plaintiff:	David J. Taylor
Counsel for the Defendant:	Robert J. Ellis
Counsel for the Defendants by Counterclaim:	Gregory C. Blanchard
Date and Place of Trial:	January 11, 12, 2005
	Vancouver, B.C.

[1] These proceedings are pursuant to Rule 18A of the Rules of Court. The action arises from an interim agreement whereby the plaintiff agreed to purchase and the defendant agreed to sell a commercial building on Kingsway, in the City of Vancouver. The plaintiff seeks an order for specific performance of what she says is the obligation of the defendant to take certain steps under a condition precedent. The defendant's position is that the matter is not suitable for disposition under Rule 18A. Alternatively, it argues that the action should be dismissed and its counterclaim for damages for misrepresentation should be allowed, and that the contract be rescinded. The defendant’s counterclaim against the defendants by counterclaim, David Angel and Crest Realty Ltd. doing business as ReMax Crest Realty, was dismissed by consent without costs.

[2] Most of the facts are not in dispute. The plaintiff’s agent, David Angel, approached the defendant in June 2003 and indicated the plaintiff's interest in acquiring the property. On June 11, he presented an offer to purchase the property for $750,000, with a $40,000 deposit. There were a number of conditions precedent or subject clauses. The relevant one was Number 5 - the plaintiff’s offer was subject to the buyer confirming with the City of Vancouver that the buyer could operate a retail business on these premises.

[3] The vendor countered at $850,000. The plaintiff made a further offer on July 14, 2003 of $825,000 with the same subject clause.

[4] On July 15, 2003, the plaintiff wrote to the defendant. The plaintiff had obtained some advice from Merwin Chercover, an engineer whose name had been provided by the defendant to the plaintiff. Ms. Le advised that Mr. Chercover had told her that the intended use of the building amounted to a change of use, and that the building would therefore need to be upgraded. There would have to be a seismic upgrade and creation of four areas of refuge. Her letter included this statement:

Mr. Chercover estimates that the seismic upgrade will cost $35,000, and building the four areas of refuge will cost $15,000.

[5] Ms. Le made two different suggestions about how to address the problem. First, the defendant could apply for the business licence and pay the upgrading costs, or second, “we jointly determine the exact cost of the required upgrades, and then reduce the selling price of the subject property.”

[6] A representative of the defendant, Jack Wizenberg, spoke to Mr. Chercover in what he calls “an extremely brief conversation”. He learned that the change of use was, in Mr. Chercover’s view, “achievable” and that Mr. Chercover had in fact provided the $50,000 estimate to Ms. Le.

[7] Mr. Wizenberg had a telephone conversation with the plaintiff’s agent, Mr. Angel, on August 10, 2003. According to Mr. Angel, Mr. Wizenberg indicated that the defendant would pay the cost of obtaining City approval of the change in use. According to Mr. Wizenberg he told Mr. Angel that this arrangement was agreeable, provided the costs did not exceed the $50,000 figure, and provided the deposit was increased and other subject clauses were removed.

[8] Mr. Angel's affidavit evidence is that Mr. Wizenberg did not make any statement about a limit and that the parties did not agree on any $50,000 cap on the cost of the upgrades.

[9] Mr. Wizenberg sent a message to Mr. Angel the following day:

As requested, we have talked to the owners and they are willing to proceed with obtaining a Change of Use from the City of Vancouver for a retail operation, at their sole cost. In order for them to do so and incur the costs, they require the following:

1. immediate removal by Kim Le of all the remaining conditions, so that it is a binding Sale.

2. increase the Deposit to 10% of the purchase price and make it a non-refundable Deposit, so that if we obtain the change of use but Ms. Le does not provide the remainder of the funds, the Owners retain the Deposit. Only if we can not obtain the change of use, will the Deposit be returned to Ms. Le.

3. we have to reach a clear understanding that occupancy changes will be at Ms. Le's sole cost and try to define what exactly the Owner is responsible for.

If Ms. Le is in Agreement with the above then we will have to enter into an Addendum to the Offer to purchase, clarifying our understanding and agreement.

There is no mention of a limit of $50,000.

[10] The parties eventually agreed to and signed a new contract. Condition Precedent Number 5 provided as follows:

5. Condition Precedent Number Five - Subject to the Seller obtaining, at the Seller's expense, on or before March 19, 2004, the requisite Change of Occupancy classification in accordance with the City of Vancouver Building By-law No. 8057, 1999, to allow the building to contain Group E and Group A, Division 2 uses (see the excerpts from the Vancouver building By-law 1999, pages App. A-27, and App. A-28 attached hereto), and also obtaining a Building Shell Occupancy Permit for Retail and Vocational School uses, to evidence the changes matching the Buyer's intended use for the Subject Property.

This Condition is for the sole benefit of the Buyer.

[11] On October 31, the defendant wrote to Mr. Chercover concerning the change of use. In this message the defendant wrote "based on your original assessment, you estimated a ball-park figure of $35,000 to do seismic upgrades and $15,000 for refuge areas".

[12] In early March 2004, Mr. Chercover obtained bids from four contractors for the work in question. The bids were much higher than Mr. Wizenberg anticipated: between $98,183 and $134,620, plus GST. The defendant realized that time was required to work on the problem. It sought and obtained from the plaintiff an extension of the completion date from March 2004 to May 2004. Mr. Wizenberg then had further discussions with Mr. Chercover about changing the work to save money. The results were revised quotations between $82,500 and $99,735 plus GST.

[13] The defendant wrote to the plaintiff's agent on April 13, 2004. Mr. Wizenberg explained that the defendant entered into the transaction with the estimate of $50,000 in mind. The cost was now to be much higher and Mr. Wizenberg wrote:

If Kim Le wishes to continue with this sale she will have to agree to pick up the costs over $50,000. Alternatively Kim can remove her conditions, accept the building 'as is', and we will contribute the $50,000 to the sale price.

[14] Ms. Le did not accept either of the alternatives. She offered to contribute $15,000 but her offer was rejected by letter dated April 19, 2004. In that letter, Mr. Wizenberg stated that the defendant's "April 13, 2004 letter proposal is open for acceptance until Friday, April 23, 2004."

[15] The plaintiff's position is that the defendant is required to use its best efforts to satisfy Condition Precedent Number 5. The defendant's position is that the cost of satisfying the Condition substantially exceeds $50,000, so there is no such obligation.

SUITABILITY FOR SUMMARY TRIAL

[16] The first issue is whether this matter is suitable for adjudication under Rule 18A. The proper approach on a summary trial was set out in Inspiration Management Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 265 (C.A.). Where the court is able to find the facts necessary to decide the issues before it, and it is not otherwise unjust to decide the matter summarily, the court should give judgment. At para. 7 of his decision in Mariotto v. Waterman (1996), 32 B.C.L.R. (3d) 125 (C.A.), McEachern C.J.B.C. stated the following with respect to Rule 18A applications: “Where possible it is always to be hoped that judges will give judgment and I repeat that admonition here.”

[17] The defendant submits that this matter is not suitable for adjudication under Rule 18A, as there is a conflict on the affidavit evidence before me. Mr. Wizenberg has deposed that in his conversation with Mr. Angel on August 10, 2003, they agreed that the defendant would only be responsible for the costs of obtaining the change of use up to $50,000. Mr. Angel, in his affidavit, denies this. The defendant submits that this conflict in the affidavit evidence requires me to make findings of credibility based on the affidavit materials, thus making the matter unsuitable for summary trial.

[18] I am mindful of the decision of the Court of Appeal in Cotton v. Wellsby (1991), 59 B.C.L.R. (2d) 366 (C.A.), in which Southin J.A. cautioned against the use of the summary trial procedure where there are conflicts in the affidavit evidence and “issues of who said precisely what to whom when are significant.” Southin J.A. continued at p. 378: “Where such issues are crucial, the trial judge must be alive to the possibility that the case is simply not suitable for summary trial.”

[19] Similarly, in Jutt v. Doehring (1993), 82 B.C.L.R. (2d) 223 (C.A.), the court observed at para. 13 that the material filed on the 18A application showed a “head on” conflict in the evidence which went directly to the foundation of the appellants’ action against the respondents. It was therefore not possible to resolve the conflicts without credibility findings being made. The case was unsuited to summary trial because the issues of fact could not be decided based solely on the conflicting affidavits.

[20] In both Cotton and Jutt, however, the only evidence before the court which was relevant to the issues was the conflicting assertions of fact contained in the parties’ affidavits. In each of these cases, it was simply not possible for the chambers judge to decide the case summarily without preferring one affidavit over the other.

[21] That is not the case here. I conclude that I am able to find the facts necessary to give judgment under Rule 18A, notwithstanding the conflicts in the affidavit evidence.

[22] The fact that there are conflicting affidavits does not necessarily make this matter unsuited to summary trial. On this point, McEachern C.J.B.C. observed in Inspiration Management that a chambers judge is not obliged to remit a case to the trial list just because there are conflicting affidavits. The Chief Justice observed that other admissible evidence could make it possible to find the facts necessary for judgment to be given. See also the decision of Holmes J. in Lalli v. Lalli, [1998] B.C.J. No. 2791 (S.C.) (QL).

[23] In Orangeville Raceway Ltd. v. Wood Gundy Inc. (1995), 6 B.C.L.R. (3d) 391 (C.A.), the issue before the court was whether the chambers judge had erred in giving judgment under Rule 18A where there were conflicts in the affidavit materials filed by the parties. The plaintiff commenced an action against the corporate defendant and one of its employees, claiming that the defendants had misrepresented the nature of certain securities transactions, and seeking any benefits received by the defendants from those transactions. The plaintiff alleged that it understood the defendants to be acting as its agents in the transactions, but in fact the defendants were acting as principals. The plaintiff filed an affidavit deposing as to certain statements made to him by the defendant employee. The defendant employee denied making the statements.

[24] The chambers judge acknowledged the obvious conflict in the affidavits, but concluded that he was able to find the facts necessary to decide the matter. He referred to copies of confirmation slips filed in evidence by the defendants, which stated in bold letters that the defendants were acting as principals in the relevant transactions. While declining to make a finding with respect to what the plaintiff believed he had been told by the defendant employee, the chambers judge held that it was not credible, in light of the documentary evidence, for the plaintiff to maintain that he believed the defendants were acting as his agents.

[25] On appeal, the plaintiff argued that the chambers judge had erred in giving judgment pursuant to Rule 18A in the face of conflicting affidavit evidence. A five-member panel of the Court of Appeal unanimously dismissed the appeal. Goldie J.A., speaking for the court, concluded that notwithstanding the direct conflict in the evidence, the case was appropriate for summary trial because the judge was able to resolve the issues by referring to undisputed documentary evidence. In this sense, the case did not turn solely on a determination of credibility, or the preference of one affidavit over the other.

[26] Goldie J.A. also observed, at paras. 44-45, that the court was not entitled to substitute its views for those of the chambers judge simply because he did not have the advantage of observing the witnesses under cross-examination. Goldie J.A. concluded that the onus was on the appellant to show that the chambers judge had reached a conclusion which could not reasonably be supported by the evidence.

[27] In MacMillan v. Kaiser Equipment Ltd., 2004 BCCA 270, a case with many factual similarities to the present one, the court concluded that the chambers judge had not erred in giving judgment under Rule 18A despite the fact that there were conflicts in the affidavit evidence. The plaintiff alleged that he had an agreement with the defendants, collateral to the written agreement between the parties, which entitled him to receive shares as part of his compensation. The parties had filed affidavits which gave conflicting versions of events, but the chambers judge concluded that judgment could be given based on the extensive documentary evidence before her.

[28] On appeal, the plaintiff argued that the matter was not suited to summary trial because a fair determination of the issue required the chambers judge to make findings of credibility with respect to the validity of promises of shares which were alleged to be collateral to the written agreement. Speaking for the court, Oppal J.A. noted at para. 22:

...[T]he mere fact that there is a conflict in the evidence does not in and of itself preclude a chambers judge from proceeding under Rule 18A. A summary trial almost invariably involves the resolution of credibility issues for it is only in the rarest of cases that there will be a complete agreement on the evidence. The crucial question is whether the court is able to achieve a just and fair result by proceeding summarily.

[29] After citing Inspiration Management and Orangeville Raceway, Oppal J.A. concluded that the trial judge was alive to the conflicts in the evidence but properly resolved the conflicts by making reference to and relying on the extensive documentary evidence before her.

[30] In McAllister Industries Ltd. v. McNestry Management Ltd., [1996] B.C.J. No. 1129 (S.C.) (QL), Hall J. (as he then was) considered the appropriateness of the matter before him for summary trial. At para. 14, he noted that assessing credibility involved more than merely observing the witness in the box, but rather “The court must consider a body of evidence to decide whether or not apparent differences can be resolved by reviewing and comparing other evidence in the case and deciding whether the evidence of a witness generally accords with written documents and the evidence of other witnesses.” Hall J. also noted that in cases such as this, where documentary evidence is available, “issues of credibility become perhaps more capable of resolution short of an assessment of the parties' manner of giving evidence.”

[31] Based on these authorities, I am of the view that this matter can be resolved without preferring simply one affidavit over the other. I conclude that I am able to resolve the conflicts on the affidavits by reference to other, undisputed evidence.

THE PLAINTIFF’S CLAIM

[32] In this case, it is necessary for me to examine all of the circumstances surrounding the transactions between the plaintiff and the defendant in order to discern what the parties reasonably believed they were agreeing to. I have considered Mr. Wizenberg’s statement that he believed there was a limit of $50,000 on the cost to the defendant of obtaining the change of use. I cannot accept this contention as realistic in light of the following undisputed evidence:

1. Mr. Wizenberg alleges the $50,000 limit was part of his August 10, 2003 conversation with Mr. Angel, but he wrote to Mr. Angel the very next day, August 11, to confirm their discussion. His message sets out the terms of the agreement which was reached in careful language. No mention is made of the $50,000 limit.

2. The wording of Condition Precedent Number 5 in the interim agreement makes no mention of $50,000. Both parties executed the interim agreement, which includes an ‘entire agreement’ clause stipulating that the parties agreed there were no terms of the contract other than those set out in writing in the interim agreement.

3. Mr. Wizenberg's conduct in 2004 is entirely inconsistent with an agreement that the defendant’s costs would be capped at $50,000. When the bids first came in, he did not simply inform Ms. Le of the amount and proceed with the work, but rather he sought lower quotes. The reasonable inference to be drawn from this is that Mr. Wizenberg fully expected that the defendant would be liable for the total cost of the work.

4. Mr. Wizenberg's letter of April 13, 2004 does not refer to any existing agreement that the defendant’s liability to pay the cost of the upgrades would not exceed $50,000. Rather, he states that if Ms. Le wishes to continue with the sale, "she will have to agree to pick up the costs over $50,000". This is not consistent with the defendant’s position that such an agreement had already been reached.

[33] The defendant points to the fact that the plaintiff agreed to increase the deposit payable to $60,000, and argues that this is consistent with the defendant's position on the content of the August 10 conversation. While it is not inconsistent with that position, it does not persuade me that the parties reached any agreement about any $50,000 cap on the defendant’s liability to pay the costs of obtaining the change of use. The written offer of August 11, 2003 contemplates a higher deposit, yet fails to make specific mention of any limit on the cost of the upgrades. Mr. Wizenberg included in his August 11 message a requirement that the deposit be increased. He made no reference to any $50,000 limit on the cost of the upgrades.

[34] The defendant argues that the plaintiff's offer of $15,000 in April 2004 is inconsistent with her position that the defendant was bound to comply with Condition Precedent Number 5 without regard to the cost. In my view, the reasonable inference from this offer is that the plaintiff was seeking to avoid litigation, not that the plaintiff recognized a monetary limit on the defendant's obligation.

[35] In my view, Mr. Wizenberg fully expected that the cost of upgrading would be approximately $50,000. He entered into the transaction on that basis. If he had known what the true cost would be, I accept that he would not have recommended the transaction. But I do not accept that there was any agreement between the parties that capped the potential cost to the defendant of the upgrades at $50,000. I am driven to conclude that the statements in Mr. Wizenberg’s affidavit are simply not consistent with the other documentary evidence in this case.

[36] The plaintiff is entitled to the benefit of the bargain that the defendant will make its best efforts to satisfy the Condition Precedent with respect to obtaining the change of use.

THE COUNTERCLAIM

[37] I turn to the defendant's counterclaim. The defendant pleads that it is entitled to rescission because the contract was the result of a false representation by the plaintiff. The representation which is said to be false is in paragraph 3 of the statement of defence:

3. The plaintiff represented to the defendant that she required certain changes to be made to the property and that the cost to complete these changes in order to obtain from the City of Vancouver a Change of Occupancy Clause and a Building Shell Occupancy Permit for Retail and Vocational School Uses ("the Changes") would be $50,000 (the "Representation").

[38] I agree with counsel for the plaintiff that there is no evidence of such a representation. Ms. Le, in her letter of July 15, states that Mr. Chercover estimated that the necessary construction would cost $50,000. She does not specify that the estimate was based on a detailed study of the building, or was a rough guess. She simply called it an estimate. She made it clear later in the letter that she did not consider the estimate to have certainty. One of the alternatives she suggested was that the parties jointly determine the "exact cost" of the required upgrades and reduce the selling price accordingly.

[39] Mr. Wizenberg spoke to Mr. Chercover to determine whether he had provided this estimate to Ms. Le. Mr. Chercover confirmed to Mr. Wizenberg that Ms. Le had accurately related what Mr. Chercover told her.

[40] Moreover, in October 2003, Mr. Wizenberg corresponded with Mr. Chercover about a number of matters. The letter included this: "based on your original assessment, you estimated a ball-park figure of $35,000 to do seismic upgrades and $15,000 for refuge area."

[41] I reach two conclusions. First, Ms. Le did not make the representation alleged in the statement of defence. Second, the representation she did make was accurate. She did not represent to the defendant that the cost would be $50,000. She said she had an estimate of $50,000. That was true. The plaintiff was relating to the defendant what Mr. Chercover had told her.

[42] The plaintiff is entitled to specific performance. The counterclaim against the plaintiff is dismissed. Subject to any submissions made by the parties, the plaintiff is entitled to costs.

“S. Kelleher, J.”
The Honourable Mr. Justice S. Kelleher

Citation:	*Kim Le v. Haro Pacific Enterprises Co. Ltd. et al.,*
	2005 BCSC 134