Introduction
The equitable remedy of specific performance is often claimed by contracting parties regarding the sale and purchase of land, in order to compel the other party to perform their contractual obligations. However, it is well-established that the remedy will not be granted unless the land is unique, such that the common law remedy of damages is inadequate. Further, unless the land is unique, a purchaser is unable to file and maintain a caveat against the title to the land.
The Alberta Court of Appeal’s (the “COA”) recent decision in Pittman Brothers Production Ltd. v Evans (the “Evans Decision”) provides useful guidance on the test for specific performance in such circumstances.[1] More specifically, the Evans Decision elaborates on who bears the burden of proof for proving a piece of land is unique in the context of summary dismissal applications.
The dissent of Justice Slatter suggests that proving uniqueness of land is not a “burden of proof” issue, but rather a “weighing of the evidence” issue, at least in the context of a summary dismissal application; in his view the issue is best addressed, at least at the interlocutory stage, by examining whether it is “just” to maintain a caveat pending trial. It remains to be seen whether such reasoning will be applied in other jurisdictions.
Background
The brother shareholders of the Plaintiff/Appellant, Pittman Brothers Production Ltd. (“Pittman”), had worked with the father of the Defendants/Plaintiffs, Bonnie Evans and Nancy Skrynyk (collectively, the “Evans”), farming certain lands (the “Disputed Lands”) via a crop share agreement from 1997 through 2019.[2]
In fall 2019, after having inherited the Disputed Lands from their late father, the Evans sent an email to Pittman advising that the Evans planned on selling the Disputed Lands and that they hoped that Pittman would purchase them. This led to an email chain between the parties, which was later argued by Pittman to constitute a binding agreement regarding the purchase and sale of the Disputed Lands.[3]
On April 2, 2020, Pittman filed a caveat on title to the Disputed Lands, claiming a purchaser’s interest. On that same date, the Evans sold the lands to another party, who offered approximately $535,000 more than the price Pittman had offered and that the Evans allegedly agreed to.[4]
Procedural Background
Pittman commenced a claim concerning the Disputed Lands, alleging that the Evans had breached their contractual obligations to complete the sale of the Disputed Lands to Pittman, and sought specific performance of the alleged agreement or, in the alternative, damages for their incurred losses. In response, the Evans filed an application for summary dismissal of the claim and for discharge of the associated caveat and certificate of lis pendens (“CLP”).
The applications judge dismissed the application. The Evans appealed to a justice in chambers, but only on the availability of specific performance and the discharge of the caveat and CLP (as opposed to the underlying breach of contract claim). The chambers judge allowed the Evans’ application, summarily dismissing Pittman’s claim for specific performance and discharging the caveat and CLP: Pittman Brothers Production Ltd v Evans, 2022 ABQB 541 (the “Chambers Decision”).
In so doing, the chambers judge agreed with the Evans that even if Pittman was ultimately successful in proving its claim for breach of contract, damages would be an adequate remedy because Pittman “failed to demonstrate” or prove that the Disputed Lands were unique. She found that there was no genuine issue to be tried regarding the remedy of specific performance.[5] More specifically, the chambers judge found that Pittman “failed to demonstrate that there is no substitute lands readily available to it or the Lands are ‘irreplaceable’ or ‘one of a kind’” and that Pittman had made “no effort” to find other suitable land in the area, so as to demonstrate whether other land was “unavailable, prohibitively expensive or less suitable.”[6]
Court of Appeal Decision
Pittman appealed to the COA, the majority of whom allowed the appeal and set aside the Chambers Decision. Although Pittman advanced several grounds of appeal, the majority of the COA assessed and based their decision solely on the first ground, which was that the chambers judge erred in placing the evidentiary burden on Pittman to demonstrate that a substitute property was not available.[7]
i. THE MAJORITY’S ANALYSIS REGARDING SPECIFIC PERFORMANCE, UNIQUENESS OF LAND, AND BURDEN OF PROOF IN SUMMARY DISMISSAL APPLICATIONS
In its analysis, the COA first noted that specific performance is no longer presumed in cases involving the sale of land.[8] Rather, a property must be unique – this will include an assessment of the specific suitability to the plaintiff and whether a substitute property is readily available.[9] Such factors inform the decision of whether damages are an “adequate remedy to serve justice between the parties.”[10]
In assessing the burden of proof, the COA noted that at trial, the party claiming specific performance bears the onus of proving that damages are not an adequate remedy. However, when a defendant applies for summary dismissal, the defendant has “the burden of proving the factual elements of its case and that there is no genuine issue requiring a trial, on a balance of probabilities.”[11]
The COA found that the Evans bore such a burden in bringing their application, and that the chambers judge ultimately “erred in law by requiring Pittman (as opposed Evans) to demonstrate that substitute property was not readily available, or that the disputed lands were sufficiently unique to justify specific performance, in order to raise a triable issue.”[12] The COA found that the chambers judge (incorrectly) implied that Pittman could not raise a triable issue without having looked for alternate land itself, notwithstanding that evidence of a failed search for alternate land is “not a pre-requisite to a successful claim for specific performance.”[13]
The COA ultimately determined that the record gave rise to a genuine issue for trial for two reasons. First, while there was similar farmland located around the Disputed Lands, none of those lands were of the same size or could be sold within a reasonable time of the alleged failed sale.[14] Even though similar land was available and sold within a 25 month period, none of the properties were realistically available for Pittman’s purchase.[15] To this point, the COA noted that farm properties are often sold under rights of first refusal or through informal arrangements. The COA pointed to the alleged transaction in support of this point, noting that the disputed lands were privately offered to Pittman and then to the ultimate purchaser, rather than being publicly marketed and/or listed on MLS.[16]
The COA also noted that the Disputed Lands were better suited to Pittman’s farming operation because of their proximity to other lands it owned. This proximity could not be “wholly accounted for” through compensation for, by way of example, the extra cost of hauling equipment. In short, the COA found that the analysis of comparable properties is “not necessarily as simple as looking for other lands of similar size available in the area.”[17]
Second, in considering whether Pittman could be adequately compensated by way of damages for the loss of expected profits from the Disputed Lands, the COA found that calculating such damages would be “speculative, time-consuming, difficult and complex.” The Pittman brothers’ undisputed evidence indicated that they planned to continue farming the Disputed Lands indefinitely and had no intention to sell. Although historical production could assist in determining short-term profits, it could not be used for a longer-term assessment, particularly due to the variables affecting farm income and lack of evidence on that point.[18]
Thus, the COA found that the Evans failed to demonstrate that there was no triable issue on the remedy of specific performance and set aside the Chambers Decision.[19]
ii. THE DISSENT’S ANALYSIS ON BURDEN OF PROOF
In a lengthy dissent, Justice Slatter noted that claims for purchase and sale of lands engage several shifting burdens of proof, the first of which is on Pittman to show there was a binding contract. At trial, in order to justify any failure to mitigate its losses, Pittman would also have to show that it had “a fair, real and substantial justification,” or “a substantial and legitimate interest” for claiming specific performance. This would require showing “some unique quality in the lands that justify specific performance.” Similarly, the Evans, as defendants, would also have to prove at trial that Pittman failed to mitigate its losses. Justice Slatter found these “overlapping burdens” were best addressed at the interlocutory stage by examining whether it was “just” to maintain a caveat prior to trial.[20]
Further to this point, Justice Slatter suggested that “where the legal burden of proof lies is rarely decisive in civil proceedings” and that, in most cases, “the body of evidence will prove the disputed fact on a balance of probabilities, one way or the other.”[21] He concluded that the burden of proving the uniqueness of a property and the availability of a substitute property properly shifts from one party to the other throughout the analysis, and that any allegation of error in this regard “is best approached as an evidentiary issue rather than an issue engaging the burden of proof.”[22]
In this regard, Justice Slatter determined that the reasons in the Chambers Decision demonstrated a “weighing of the [competing] evidence” regarding the availability of substitute lands, as opposed to selecting the evidence of one party over the other or tying the analysis to the burden of proof. He was of the view that the chambers judge had properly found that such evidence demonstrated, on a balance of probabilities, that there were substitute lands available and that the Disputed Lands had no special value to Pittman. Following this, he found that the “uniqueness” of the lands and the availability of substitute lands were findings of fact to which deference was owed.[23]
Justice Slatter posited that there was a burden on the purchaser to show “a fair, real and substantial justification” for claiming specific performance; this placed “at least some evidentiary burden on [Pittman] to show the uniqueness of the property.” To the extent that there was equally a burden on the Evans to show that Pittman had no “fair, real and substantial justification” for claiming specific performance, the chambers judge properly found that this burden had been met.[24]
He went on to reason that the chamber judge’s finding regarding the lack of uniqueness was sufficient to “defeat the claim for specific performance,” thereby “undermin[ing] the legal basis for [Pittman’s] caveat.” He further concluded that showing a prima facie case of a binding agreement is not conclusive of whether it is “just” to maintain a caveat until trial, and that there was no reviewable error in the Chambers Decision to discharge the caveat.[25]
Practical Takeaways
The Evans Decision speaks to the factors and evidence that Alberta courts will consider when assessing whether specific performance is warranted in the context of a purchase and sale agreement for land. To this point, land may be more likely to be considered unique if, for example, there is no substitute land of comparable size, if such land cannot realistically be purchased within a reasonable period of time, or if the disputed land is better suited for the purchaser’s circumstances or use. Parties should also be prepared to discuss the appropriateness (or lack thereof) of damages as a remedy. The majority’s decision makes clear that the plaintiff bears the burden of proving uniqueness of land at trial, but that the defendant bears the burden of proving such factual elements if it brings a summary dismissal application.
The dissent’s reasons suggest that proving uniqueness of land is not a burden of proof issue, but rather a “weighing of evidence” issue and that the overarching focus at the interlocutory stage should be whether it is “just” to maintain a caveat on title pending trial. While the dissent’s reasons are not binding, it may be prudent for all parties involved in such a claim or application to consider adducing such evidence, either from the parties themselves, an expert, or both, depending on the circumstances.
Miller Thomson’s Commercial Litigation group is experienced in a variety of disputes, including those involving caveats and purchase and sale agreements for land, and is mindful of conducting litigation in a cost-effective and efficient manner. If you require assistance or advice in this area, please reach out to our team.
[1] Pittman Brothers Production Ltd v Evans, 2024 ABCA 185 [Evans].
[2] Ibid at paras 4 and 6.
[3] Ibid at para 10.
[4] Ibid at para 11.
[5] Ibid at para 12; see also Pittman Brothers Production Ltd v Evans, 2022 ABQB 541 [Chambers Decision] at para 73.
[6] Chambers Decision at paras 68 – 70, citing Klimp v Meinema, 2015 ABQB 204 at para 24.
[7] Evans, supra note 1 at paras 13, 27-28.
[8] Ibid at para 16, citing Semelhago v. Paramadevan (SCC), [1996] 2 SCR 415, 136 DLR (4th) 1.
[9] ibid at para 15.
[10] Ibid, citations omitted.
[11] Ibid at para 16, citing Weir-Jones Technical Services Incorporated v Purolator Courier Ltd., 2019 ABCA 49 at para 32.
[12] Ibid at para 17.
[13] Ibid.
[14] Ibid at para 19.
[15] Ibid at paras 20-21.
[16] Ibid.
[17] Ibid at para 22.
[18] Ibid at para 25.
[19] Ibid at paras 27 and 28.
[20] Ibid at paras 51 and 57.
[21] Ibid at para 58.
[22] Ibid at para 59.
[23] Ibid at paras 59-64.
[24] Ibid at para 64.
[25] Ibid at paras 66-67.
