



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Cornerview Farms Ltd. v. Friesen,









2020 BCCA 2




Date: 20200102

Docket: CA45798

Between:

Cornerview Farms
Ltd.

Appellant

(Plaintiff)

And

Everett Friesen
and Emilie Friesen

Respondents

(Defendants)




Before:



The Honourable Mr. Justice Willcock

The Honourable Mr. Justice Fitch

The Honourable Mr. Justice Hunter




On appeal from:  An
order of the Supreme Court of British Columbia, dated
November 22, 2018 (
Cornerview Farms Ltd. v. Friesen
,
2018 BCSC 2060,
Chilliwack Docket S27907).




Counsel for the Appellant:



R.W. Howarth





Counsel for the Respondent:



M.L. Palleson





Place and Date of Hearing:



Vancouver, British
  Columbia

November 15, 2019





Place and Date of Judgment:



Vancouver, British
  Columbia

January 2, 2020









Written Reasons by:





The Honourable Mr. Justice Willcock





Concurred in by:





The Honourable Mr. Justice Fitch

The Honourable Mr. Justice Hunter








Summary:

A contract for the sale of a
farm granted the buyer early access to the residence before the completion
date. The parties discussed a change in the early access date, before and after
the first agreed date, but did not come to an agreement. The sellers eventually
gave the buyer early access to the home but not the garage. The appellant buyer
terminated the contract and brought an action for the return of its deposit and
damages, arguing the respondents had fundamentally breached the contract by not
affording access to the home by the first agreed date, or to the garage at any
point. The respondents counterclaimed for damages arising from the lost sale.
The trial judge dismissed the appellants claim and awarded the respondents
damages, holding: the respondents had not breached the contract by failing to
give access to the home by the first agreed date, because the appellant waived
the right to rely on that date; and the term residence in the contract did
not include the garage. Held: Appeal dismissed. The trial judge correctly
applied the principles of contractual interpretation. There was ample evidence
to support the judges conclusion that the buyer had waived the November 1
access date. There is no basis to interfere with the judges assessment of
damages.

Reasons for Judgment of the Honourable
Mr. Justice Willcock:

Introduction

[1]

On August 12, 2013, Cornerview Farms Ltd., the appellant,
entered into a contract to purchase Everett and Emilie Friesens poultry farm
at 6957 Bradner Road in Abbotsford, British Columbia for $1,560,000. The
buyer paid a deposit of $100,000. The contract called for the sellers, the
respondents, to deliver up vacant possession of the property at noon on January 31, 2014.
It allowed, however, for the appellant to have early access to the residence on
the property, pursuant to a clause that read as follows:

Seller will vacate residence not later than November 1, 2013
and will allow Buyer access for purposes of improvements as follows:

- replace flooring

- painting

- replacement of
plumbing fixtures.

[2]

Negotiations with respect to the early access to the residence continued
in the period between the execution of the contract and the completion date. The
sellers say those negotiations resulted in an agreement to modify the date upon
which the buyer would get early access to the residence to November 30, 2013.
The sellers vacated the home on the property by November 24 but did not
vacate the garage outbuilding.

[3]

The buyer took the position the term residence included the garage
and, on December 2, 2013, asked the sellers to vacate the garage
immediately. The sellers refused to do so. On December 16, 2013 the
buyer advised the sellers they had breached the contract, purported to
terminate the contract and asked for the immediate return of the $100,000
deposit and interest.

[4]

The sale did not complete. The property was subsequently sold by the
sellers for an amount substantially below $1,560,000. The deposit was not
returned.

[5]

The buyer brought this action for return of the deposit and damages for
breach of contract. The sellers commenced a counterclaim seeking damages
arising from the breach, principally the difference between the sale price and
the price for which they later sold the farm, but also including carrying
costs: interest expenses, utilities and property taxes.

[6]

The judge found the contract permitted the buyer to have early access to
the house only and not the garage. He also found the buyer had waived the
provision allowing it to have early access to the house on November 1, and
agreed that the contract could be performed by affording access to the house by
November 30. In any event, he found the failure to give the buyer early
access to the garage (if that had been required by the contract) would not have
amounted to a fundamental breach of the contract so as to permit the buyer to
terminate the agreement. He found the buyer to be in breach of the contract of
purchase and sale and awarded the sellers damages in the sum of $120,000

[7]

The appellant says the trial judge erred:

a)

in finding that the term residence did not include the garage;

b)

in finding that there was waiver of the November 1 vacancy date and
no fundamental breach of the contract;

c)

in assessing damages by:


i.

failing to take into account the inadequate measures taken by the
sellers to mitigate their losses;


ii.

excluding revenue from a specific flock of chickens; and


iii.

failing to adequately assess the credibility of Mr. Friesen.

[8]

The critical finding of the trial judge with respect to the
interpretation of the contract is at paras. 241243 of the reasons for
judgment:

[241]

Having
considered counsels submissions and construed the plain language and primary
meaning of the words used in the debated term; and having regard to the context
of the contract as a whole; and, to a lesser degree, evidence related to the
factual matrix  or surrounding circumstances -- when the contact was made 
that is to say, circumstances the parties knew or reasonably ought to have
known about that assist in determining the meaning a reasonable person would
give to the words use by the parties, I have come to the view that the term
residence insofar as it relates to the defendants obligation to vacate the
garage by November 30 is not ambiguous; that the term residence in this
factual matrix meant the house. The defendants had vacated the house on
November 24, 2013. They were not obligated to vacate the garage by no
later than November 30, and were not in breach of the contract for their
not having vacated the garage by November 30, 2013.

[242]

To
the extent any ambiguity may remain. I find this interpretation consists [sic] with
commercial efficacy and good sense, and is reasonable and fair.

[243]

It is noteworthy that the
plaintiff had asked for early access to carry out some renovations in the
house. The defendants granted what was a request as a pay forward response to a
kindness they had received with respect to their own quite recent purchase of
another property. The plaintiff did not stipulate anything specific with
respect to the garage, which was fully occupied at the time. The plaintiff was
minded to use the garage as a staging area, but never stipulated that or an
intention to gut the house, as Mr. Shead [the buyers principal] testified.

[9]

The trial judge then turned to the question of waiver. As the sellers
had not afforded the buyer access to the residence by the date specified in the
contract, November 1, 2013, the sellers claim for damages hinged
upon the continued validity of the contract after that date. The judge
addressed that issue obliquely, by describing the positions of the parties,
without expressing a clear conclusion.

[10]

At paras. 246254 of the reasons, the judge set out the submission
of the sellers counsel to the effect that, whether or not an agreement to
amend the vacancy date was actually reached, there was no doubt that, after a
meeting between the parties to discuss the issue on October 24, neither
side expected the buyer to have access on November 1. The sellers relied
on statements in
Endacom 2000 Inc. v. Hydro
One Networks Inc.,
[2002] O.J. No. 129 (S.C.J.);
Rados v. Paconla Investments Ltd
., [1981] B.C.J. No. 72 (S.C.),
and
2329131 Ontario Inc. v. Carlyle
Development Corp
., 2014 ONCA 132
to illustrate the consequences that arise when parties to a contract conduct
themselves in a manner that indicates they are no longer relying on a deadline
stipulated in the agreement. The reasons for judgement cite the following
passage from
Endacom
in this regard:

[37]      In law, when both
parties to a contract let the time for completion go by, and one of the parties
wishes to reinstate time as of the essence, it is necessary to serve a notice
upon the other party, fixing a new date for completion, which must be
reasonable, and stating that time is to be of the essence with respect to the
new date.

[11]

Based on this principle, the sellers reasoned that after having agreed
to extend the November 1, 2013 date, and letting that date pass, the
buyer could only impose a new schedule on reasonable terms and could not
reinstate the November 1 early access date.

[12]

The judges recitation of the position taken by the sellers ends with
the following passages:

[253]

The
defendants submitted there is in place an entirely enforceable Contract between
the parties consisting of the document set out in Ex. 2 at p. 6, [the
original agreement] together with the waived or later date to vacate the
residence. Accordingly, the defendants submit the plaintiff did not have the
ability or right to try walk away from that enforceable deal.

[254]    The defendants further
submitted that the agreement to move the date to November 30 is a waiver
of the November 1 date; the plaintiff, in essence, acquiescing in
approving the delay to November 30, 2013.

[13]

These paragraphs are immediately followed by a discussion of fundamental
breach, clearly founded upon the presumption that the sellers were to provide vacant
possession of the residence by November 30:

[255]

I will briefly consider an
alternative finding if my disposition of the issue of whether the term
residence encompassed both the house and the garage; and on the operative
date, if the defendants were to provide vacant possession of the garage as well
as the residence by November 30. Is in error. [sic] Then, I will consider
whether the failure to vacate the garage (the house was vacated by November 24)
by that date does not amount to a fundamental breach of the Contract.

[14]

Only by reading the judgment as a whole is it apparent that the judge
implicitly accepted the argument that the buyer had, through the course of its
conduct, agreed to treat November 30 as the operative date by which it
was to have early access to the residence. When he turned to the question of
fundamental breach, the trial judge addressed only whether failure to vacate
the
garage
by November 30 went to the root of the contract; he did not
consider whether the failure to vacate the house
on November 1
amounted to a fundamental breach.

[15]

He concluded that even if the contract had called for the sellers to
afford early access to the garage as well as the house, the failure to do so
did not amount to a fundamental breach of the contract:

[267]

There
is no breach justifying repudiation where the parties have received
substantially what they had bargained for:
Sail Labrador Ltd. v. Challenge
One (The)
, [1999] 1 S.C.R. 265 at para. 86.



[270]

I agree with the defendants
that
the failure to vacate the garage
cannot reasonably be characterized
as a breach of Contract that deprived the plaintiff of substantially the whole
benefit of the Contract; further, counsel for the defendant aptly submitted
that while the failure of the defendants to vacate the entire residence by the
early possession date arguably could be considered an inconvenience for the
plaintiff, it cannot tenably be said that they lost substantially the whole
benefit of the Contract (see
Stearman v. Powers
, 2014 BCCA 206).
[Emphasis added]

[16]

Having found the contract to be binding, he concluded the buyer, by
failing to complete, had breached the contract and was liable for consequential
damages. Those damages included the difference between the original purchase
price and the final purchase price, $130,000, together with carrying costs,
less the deposit, interest on the deposit and earnings flowing from the
continued operation of the chicken farm in the interval between the collapse of
the first sale and the completion of the subsequent sale of the property.

Appellants argument

Interpretation of the contract

[17]

The buyer takes issue with the trial judges finding that the sellers
undertook to provide early access to the residential building only and not the
garage.

[18]

The buyer does not take issue with the trial judges description of the
principles of contractual interpretation. These were drawn from the decision of
this Court in
Miller v. Convergys CMG Canada Limited Partnership
,

2014 BCCA 311
.
However, the buyer contends the analysis was inadequate because the judge
did not consider the principle of
contra proferentem
which, it submits,
has application in this case because the sellers lawyer drew up the contract.

[19]

As this Court noted in
Miller
, resort to the rule
of

contra
proferentem
is necessary only where there is ambiguity that cannot
otherwise be resolved. The principle may not be used to create or magnify an
ambiguity. In my view, it was not an error to interpret the contract in the
case at bar without resort to the rule. The contract was interpreted by
considering, first the ordinary meaning of the word residence, and turning,
secondly, to the words of the contract describing the purpose for which access
was to be afforded to the buyer. Early access was given to the buyer
specifically for purposes of improvements that were to be effected to the
residential building, not the garage. That analysis left no ambiguity.

[20]

The appellant does not identify either an error in principle or a
palpable or overriding error that can be said to undermine the trial judges
findings of fact. This is clearly a case where the contractual interpretation
involved issues of mixed fact and law. That being the case, we should defer to
the trial judge for the reasons expressed in
Sattva Capital Corp. v. Creston
Moly Corp.
, 2014 SCC 53 at para. 52: such deference promotes
the goals of limiting the number, length and cost of appeals and of promoting
the autonomy and integrity of trial proceedings. That is particularly so
where, as here, only the parties have an interest in defining the legal
obligations arising from the contract.

Waiver and fundamental breach

[21]

The buyer submits the facts do not support the submission of Respondents
counsel as set out by the trial judge with respect to waiver of the November 1, 2013
early access date. Properly, in my view, the buyer considers the judge to have
accepted the sellers submissions with respect to waiver.

[22]

The buyer identifies instances in the history of dealings between the
parties where its principal, Mr. Shead, took the position that unless an
amendment to the contract could be agreed to, he would insist upon the right to
have access to the residence on November 1, 2013. It contends these
weigh heavily against the conclusion that it waived the provision for access on
November 1.

[23]

However, these instances were not
overlooked by the judge, who clearly appreciated the buyers position that it
had occasionally sought to reinstate the original agreement. I
n my view, the evidence strongly supported the judges
implicit conclusion that the provision calling for early access to the
residence on November 1, 2013 was waived by the buyer.

[24]

The trial judge referred in his
reasons to the following evidence with respect to waiver:

a)

the buyer acknowledged there was a meeting on October 24, 2013
to discuss extension of the November 1, 2013 vacancy date (para. 35);

b)

it was undisputable that the parties had a discussion on October 24, 2013,
that touched on the question of early vacant access (para. 86);

c)

on October 24, 2013, Mr. Shead wrote to the sellers
solicitor confirming he had agreed with Mr. Friesen that he would have full
access and possession of the house on Nov 30- 2013 at noon (para. 42);

d)

on cross examination, Mr. Shead acknowledged the parties agreed on
October 24th, as gentlemen, that the early access date would be November 30
(para. 90);

e)

Mr. Shead confirmed an e-mail was sent on October 31 at 4:04 p.m.,
to the sellers solicitor which read, in part: The date for access to the
house was discussed to be November 30
th
at noon (para. 95);

f)

on cross examination Mr. Shead acknowledged that as of October 31
he was still living with an agreement with the November 30
th
date (para. 97);

g)

on November 6, 2013 the buyers acting solicitor wrote a
letter to the sellers solicitor that included the following passage: my
clients indicate that they and the Friesens agreed to November 30, 2013
at noon for possession of the residence (paras. 36, 83 and 84);

h)

Mr. Shead agreed in cross-examination that he had provided those
instructions to his solicitor (para. 92); and

i)

finally, the following cross-examination was noted (para. 94):

Q    Now, youve eventually
agreed with me that the November 1st date for vacancy  of the garage or
whatever we want to call it  it was agreed it would be extended to November
30; correct?

A    Correct.

Q   All right. And that was an
agreement you reached with the Friesens at this October 24th meeting at their
house; right?

A    That was discussed and agreed upon verbally.

[25]

In my view, the evidence supported the conclusion that the buyer had
waived the term of the contract providing the buyer access to the residence on
November 1, 2013.

[26]

There is some merit to the buyers submissions that the reasons are deficient
in failing to address numerous issues and conflicts in the evidence identified
by the judge. The buyer says, for example, that the judge describes in detail
the submissions impugning the credibility of Mr. Friesen but does not make
any finding with respect to his credibility. Similarly, I note, the judge set
out in detail the submissions impugning the credibility of the buyers
principal, Mr. Shead, without making any finding with respect to his
credibility. However, I am unable to identify any point of importance turning
on the credibility of either party. There is little dispute with respect to the
terms of the contract and the essential aspects of the negotiation relied upon
by the judge were set out in correspondence between the parties and their
solicitors.

[27]

In light of his finding that the sellers complied with their contractual
obligations when they vacated the residence and made access available to the
buyer before November 30, 2013, the judges consideration of the
fundamental breach issue became unnecessary and can be regarded as
obiter
.
Because I would uphold the trial judges interpretation of the contract and
would find the buyer to have waived the provision affording it access to the
residence on November 1, 2013, it is not necessary to revisit the
question of fundamental breach.

[28]

I would note, however, that the appellant does not take issue with the
trial judges description of what amounts to a fundamental breach: a breach
that is such as to deprive the party who has further undertakings still to
perform of substantially the whole benefit which it was the intention of the
parties as expressed in the contract that he should obtain as consideration for
performing those undertakings. (
Coal Harbour Properties Partnership v. Liu
,
2005 BCSC 873 at para. 36 (citing
Hongkong Fir Shipping Co.
Ltd. v. Kawasaki Kisen Kaisha Ltd
., [1962] 2 Q.B. 26 (C.A.)).
The course of negotiations between the parties made it clear that the buyer was
flexible about obtaining that access and there was nothing in the buyers
conduct that suggested that later access to the residence to effect repairs
would frustrate its intentions. The course of dealings that led the trial judge
to find the agreement to afford early access to the residence had been waived is,
in my view, inconsistent with the argument that breach of that term would
amount to a fundamental breach of the contract, if it had not been waived.

Assessment of damages

[29]

When he assessed damages the judge had before him a detailed calculation
of the loss on the resale of the property and carrying charges. He accepted
that the deposit was forfeited on account of damages. He made an allowance
for interest on the deposit and for profits the Friesens earned through their
continued operation of the poultry farm. He accepted the evidence of Mr. Friesen
that one cycle of poultry production, identified as A122, would have been
completed and the profits from that cycle would have been earned before the
completion date. He deducted profits from cycles that finished after the
completion date. He made a moderate adjustment to the claim to reflect the
delay in listing the property for resale while giving some weight to the
Friesens uncontradicted testimony that the market did not favour selling at
the time of the breach (para. 263).

[30]

The appellant contends the trial judge inadequately assessed Mr. Friesens
credibility. The appellant says the trial judge should not have given credence
to Mr. Friesens explanation of his slow attempts to sell the property and
erred in accepting the evidence that flock A122 would have been sold before the
scheduled completion date.

[31]

In my view, the appellant has not identified an error in principle or a
palpable and overriding error affecting the findings of fact. The trial judge
expressly addressed the appellants argument that the respondents failed to
mitigate and made some allowance for deficiencies in the respondents conduct.
In the course of argument we were taken to documentary evidence in support of
the trial judges findings of fact. In my view, there is no basis to interfere
with the trial judges assessment of damages and in particular no reason to say
that the trial judge should have drawn an adverse inference from any
deficiencies in the documentary record.

[32]

I would dismiss the appeal.

The Honourable Mr. Justice
Willcock

I agree:

The Honourable Mr. Justice
Fitch

I agree:

The Honourable Mr. Justice Hunter


