Canada: Agricultural Law NetLetter - Thursday, May 21, 2015 - Issue 324

** HIGHLIGHTS ** *

  • An Alberta Master in Chambers has held that specific performance is not available for farm land unless the party seeking specific performance could meet the burden of establishing that the land is "unique" in the sense that it is "irreplaceable" or "one of a kind". The Master was satisfied the Plaintiffs had not met this burden. He granted the Defendants partial summary judgment, dismissing their claim for specific performance and discharging their Caveat and Lis Pendens. (Klimp v. Meinema, CALN/2015-013, [2015] A.J. No. 339, Alberta Court of Queen's Bench)

** NEW CASE LAW **

Klimp v. Meinema; CALN/2015-013, Full text: [2015] A.J. No. 339; 2015 ABQB 204, Alberta Court of Queen's Bench, Master W.S. Schlosser (In Chambers), March 27, 2015.

Real Property -- Enforcing Agreements for Sale -- Availability of Specific Performance to Enforce a Sale of Farm Land.

The Plaintiffs, William Rod Klimp and Joyce Jeannette Marie Hoedl-Klimp (the "Klimps") entered into an agreement with Kevin Shawn Meinema and Gladys Ann Meinema (the "Meinemas") pursuant to which the parties agreed to "swap" two parcels of land valued at $90,000.00 each near Sunset House, Alberta.

The Klimps also granted the Meinemas an option to purchase a third quarter section of land for $60,000.00.

The Klimps sued the Meinemas for specific performance of the land "swap" and filed a Caveat and a Lis Pendens against the land.

The Meinemas applied for partial summary judgment to have a portion of the claim dismissed and to have the Caveat and Lis Pendens discharged from their land, because it was preventing them from selling it to someone else.

The Klimps had initially entered into a separate concurrent agreement to sell the optioned land for $60,000.00, with the sale to conclude at the same time as the transfer of the other two parcels.

A revised agreement which granted the Meinemas an option to purchase this land for $60,000.00 was subsequently signed.

Prior to the date for the exercise of the option, the Klimps sold the optioned land to third parties.

Decision: Schlosser, Master in Chambers granted the Meinemas' application, summarily dismissed their claim for specific performance against the Klimps and directed that the Caveat and Lis Pendens be discharged [at para. 25 and 26].

Master Schlosser observed [at para. 16] that if the option for part of the swap agreement, the Klimps could not "claim specific performance of an agreement that they, themselves, are unable to perform" observing, at para. 17:

[17] A person seeking to have specific performance of an agreement must themselves be ready, willing and able to perform. Roma Construction Ltd. v Excel Venture Management Inc., 2007 ABQB 396 (CanLII), 2007 ABQB 396 (Macleod J): Poirier v Diamond Key Homes Ltd., 2009 ABQB 139 (CanLII) at para 21 (per Laycock, M.). If some of the land that was part of a larger deal has been sold, the seller is neither ready, willing, nor able to perform the whole agreement because performing his part of it has become impossible.

Master Schlosser concluded [at para. 19]:

"...I am inclined to prefer the more natural interpretation that it [the option] was part of a larger agreement."

Master Schlosser then considered the law with respect to whether the Meinemas could have an interest in land if the contract was not capable of specific performance because the farm land was not "unique". He summarized the law and concluded as follows, at para. 22 to 25:

Caveats and an Interest in Land

[22] The law in this Province is well settled. In order for a caveat to be sustainable, the person claiming it must have an interest in the land. In order for there to be an interest in land, the interest has to be capable of specific performance. Damages must not be an adequate remedy. In order for specific performance to be awarded the land must be unique: Semelhago v Paramadevan 1996 CanLII 209 (SCC), [1996] 2 SCR 415 SCC; 365733 Alberta Ltd. v Tiberio, 2008 ABQB 341 (CanLII); 1244034 Alberta Ltd. v Walton International Group Inc., 2007 ABCA 372 (CanLII), para. 17; Lamont (Town) v Jabneel Development Inc., 2014 ABQB 328 (CanLII). A damage claim cannot support a caveat or lis pendens. Dobson v Winton and Robbins Ltd., 1959 CanLII 19 (SCC), 1959 SCR 775 at 777; Blue Hill Capital Corporation v Daon Property Corporation, 2014 ABCA 282 (CanLII) (at para 9).

[23] Land may be unique if it is part of a development block. Balderston v Faul, 2014 ABQB 762 (CanLII), at paras 108, 109 (per Bensler, J). An argument might be that William Klimp is seeking to add the Meinemas swap quarter to his holdings in order to assemable a package of land that might be attractive to a grain farmer, sold as a block. William Klimp is 74 and it is easy to imagine that he might want to sell such a block of land to his advantage to insure the comfort of his retirement. But this was not the evidence.

[24] The difficulty is that while the evidence shows that the Klimps intended to move in a direction away from cattle and towards grain, their ultimate goal was to sell all or part of the land to members of the family. The Meinema land might have been complimentary to the Klimps' other holdings but that, in itself, does not make the Meinema home-quarter unique, in the sense that it is 'irreplacable', or 'one of a kind': Tiberio (above) and 410675 Alberta Ltd. v Trail South Development Inc., 2001 ABCA 274 (CanLII). While I acknowledge that the location of the Meinema home-quarter would afford some economy and convenience for the Klimps farming operation, the law does not regard it unusual enough to sustain an award of specific performance.

[25] The burden of establishing that land is unique for the purposes of obtaining specific performance is on the Plaintiffs: Festival City Holdings Ltd. v Worthington Properties Ltd., 2002 ABQB 543 (CanLII), 2002 ABQB 543 (per Funduk, M.) and Balderston (above). On the current state of summary judgment law, the threshold question is whether the applicant has shown that the respondent won't win this remedy at trial. Pannu v Urbia Venture Capital Ltd., 2015 ABQB 150 (CanLII) (for a review of the law in this area). To put it in terms of numbers, the court need be satisfied that there is an eighty percent chance (or thereabouts) that the plaintiffs won't prove an entitlement to specific performance on the balance of probabilities at trial. I am convinced that the Meinemas have met this burden and, accordingly, I am content to allow their application to dismiss the claim for specific performance. As a consequence, the Caveat and Lis Pendens are to be discharged.

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