Chung v. Quay Pacific Property Management Ltd.

2020 BCSC 714 Chung v. Quay Pacific Property Management Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Chung v. Quay Pacific Property Management Ltd., 2020 BCSC 714 Date: 20200508 Docket: S195053 Registry: Vancouver Between: Chun Yuen Nelson Chung Plaintiff And: Quay Pacific Property Management Ltd. Defendant And: Veronica Wynn Third Party Subject to Rule 15-1 Before: The Honourable Madam Justice Adair Reasons for Judgment Counsel for the Plaintiff: M. Sheard S. Sloane, A/S Counsel for the Defendant: C. R. Wardell Counsel for the Third Party: G. R. Johnson Place and Date of Trial: Vancouver, B.C. January 20-24, 2020 Place and Date of Judgment: Vancouver, B.C. May 8, 2020 1. Introduction.. 2 2. Mr. Chung's wrongful dismissal claim.. 3 (a) Factual background. 3 (b) Discussion and analysis. 8 (c) Summary. 15 3. Quay Pacific's indemnity claim against Ms. Wynn.. 16 (a) Introduction.. 16 (b) Factual background. 16 (c) Discussion and analysis. 34 (i) Is QP entitled to rectification?. 34 (ii) Should para. 4.9.2 be severed?. 42 (d) Summary. 45 4. Summary and disposition.. 45 1. Introduction [1] The Plaintiff, Nelson Chung, was hired by Premier Strata Services Inc. ("Premier") in September 2016 as Premier's chief financial officer. Premier was in the business of providing professional property management services for rental and strata properties. When Mr. Chung was hired, Veronica Wynn, the third party, was Premier's sole shareholder. [2]

As of December 3, 2018, the defendant, Quay Pacific Property Management Ltd. ("QP"), acquired all of the shares in Premier from Ms. Wynn. QP and Premier then amalgamated to become QP. QP, which, prior to the amalgamation, had been in the same business as Premier, carried on that business following the amalgamation. [3] Mr. Chung's employment was terminated without cause on December 3, 2018. At that time, he was given one month's working notice. [4] Mr. Chung says that he was wrongfully dismissed, since he was not given reasonable notice. Mr. Chung says that, in his circumstances, reasonable notice would have been between nine and ten months. He says that, in addition to damages for wrongful dismissal, he is entitled to an unpaid bonus, vacation pay and aggravated damages. [5] QP accepts that Mr. Chung has a valid claim for damages for the failure to give reasonable notice. QP says that, in Mr. Chung's circumstances, reasonable notice would have been four months (including the month of working notice). However, QP says that there is no basis to award aggravated damages, and that it has no liability to Mr. Chung for any bonus or vacation pay. [6] In addition, QP claims that, if it is found to have any liability to Mr. Chung, it is entitled to be indemnified by Ms. Wynn, pursuant to the terms of a written Share Purchase Agreement stated to be made as of October 22, 2018 (the

"Share Purchase Agreement"), whereby QP purchased Ms. Wynn's shares in Premier. QP says that, in connection with the purchase and sale of her shares, Ms. Wynn agreed that Mr. Chung's employment would be terminated by Premier at Ms. Wynn's cost. QP says that para. 4.9.2 of the Share Purchase Agreement, dealing with Mr. Chung's termination, does not accurately reflect the parties' oral agreement in that respect. Accordingly, QP seeks to have para. 4.9.2 rectified, or, alternatively, to have that term severed. [7] Ms. Wynn says that she has no liability to QP, and that QP has not made out a case for either rectification or severance. [8] I will first address Mr. Chung's claim. I will then address QP's claim for indemnity from Ms. Wynn, including its claims for rectification and severance.

2. Mr. Chung's wrongful dismissal claim (a) Factual background [9] Mr. Chung was born in January 1965 and he was 53 years old when his employment was terminated. He has professional qualifications as a chartered professional accountant. [10] Mr. Chung began working for Premier on September 22, 2016, as its chief financial officer. After he began his employment with Premier, Mr. Chung was asked to and did sign a document titled "Employment Agreement," which included provisions regarding termination of employment. However, it was acknowledged in this action that, in the circumstances in which that document was signed, the provisions regarding termination are not enforceable against Mr. Chung. [11] According to Mr. Chung, as Premier's chief financial officer, in addition to his salary, he was entitled to four weeks' paid vacation and a car allowance. As of 2019, his annual salary was $105,000, or $8,750 per month (gross). [12] On the morning of December 3, 2018, Premier's staff (including Mr. Chung) were asked to assemble at the office in Langley. Ms. Wynn then advised those present that she had sold her shares in Premier. Representatives of QP were then called into the meeting to introduce themselves. They gave a brief presentation and handed out packages to staff concerning the new ownership. [13] As Ms. Wynn recalled, her staff were surprised at the announcement of new

ownership, and she recalled Mr. Chung being particularly concerned. According to Mr. Chung, he knew nothing about the sale until Ms. Wynn announced it to everyone, and he was worried about what it would mean for him. [14] As Ms. Wynn recalled, when Mr. Chung was getting up to leave the room, she followed him, and asked Mr. Chung to come into her office so that she could speak to him. As Mr. Chung recalled, Paul Mendes, Ms. Wynn's long-time lawyer, was also present in Ms. Wynn's office. [15] Ms. Wynn then gave Mr. Chung a letter dated December 3, 2018. The letter is on Premier's letterhead, and says in part [all sic]: I write to advise you that I have sold my share in Premier to Quay Pacific Management Ltd., effective December 3, 2018. Unfortunately, Quay Pacific already has a Chief Financial Officer, so they will not be able to keep you on. As a result, your employment with Premier will end on January 3, 2018 . . .. Over the next month; however, I will need you to assist Quay Pacific and me with the transition. Accordingly, Premier will pay you a bonus of one month's pay (less statutory deductions) if you stay in your position until January 3, 2018, and you assist Quay Pacific and me with the transition until your last day of employment. The bonus would be payable on January 3, 2018, upon the completion of your notice period and your satisfactory assistance with the

transition. I will also provide you with a reference letter and make myself available as a reference for you while you search for employment. Nelson, I wish to thank you for your service to Premier and me. I wish it were possible to for Quay Pacific to keep you on, but that it not possible. I am confident, however, that you will find alternative employment quickly, given your skills and experience and I look forward to helping you do that. Sincerely, Veronica Wynn President/Managing Broker Premier Strata Services Inc. [16] "January 3, 2018" is a typographical error, and there is no dispute that it should read "January 3, 2019." [17] According to Ms. Wynn, originally, the letter was a simple termination letter. However, because she was concerned that Mr. Chung would leave, she encouraged him to stay and offered him a bonus to do so. According to Ms. Wynn, during her meeting with Mr. Chung, the original version of the letter was then revised to reflect the bonus mentioned in the final version. Ms. Wynn explained that she did not discuss the bonus with any representatives of QP before including it in Mr. Chung's termination letter. She said that there was no time to do that. According to Ms. Wynn, a copy of Mr. Chung's termination letter was saved on the company's computer system and placed in Mr. Chung's file. [18] Mr. Chung did not recall the termination letter being revised

during the meeting. As he recalled, Ms. Wynn had the letter already prepared for him, and gave it to him after telling him that she needed to terminate his employment. As he recalled, this happened close to the beginning of the meeting. As Mr. Chung recalled, he and Ms. Wynn had a short discussion about QP taking over and that they wanted him to stay until January 3, 2019 for the transition. As he recalled, Ms. Wynn promised that if he stayed and finished the financial statements, then he would receive a bonus. [19] According to Mr. Chung, after receiving the termination letter, he assisted in the transition and prepared the financial statements for Premier. Ms. Wynn was no longer at the office after December 6, 2018. According to Mr. Chung, he found the month of December very stressful at work. Leslie Haycock, a managing broker with QP, had taken his keys and he was no longer able to work overtime. He was also not allowed to work from home. He felt that the new owners did not trust him. He recalled that Ms. Haycock yelled at him when he asked her for a copy of his employment contract. [20] On December 12, 2018, Mr. Chung sent an e-mail to Linda Ketchum, QP's director of accounting, asking to have the vacation pay owing paid to him on the December 15 payroll. Mr. Chung calculated the amount owing to be $11,957.66, based on what he asserted was the balance owing as of November

30, 2018 ($11,607.66) and the amount owing up to December 15 ($350.00). At trial, Mr. Chung explained that his vacation pay was calculated on the basis of 8% of his base salary, less vacation actually taken. Mr. Chung explained that, after starting work on September 22, 2016, he did not take any vacation until 2018. Mr. Chung explained that, since December 2016, and until Ms. Wynn sold her shares in Premier, he was the person responsible for tracking his vacation. [21] In response to Mr. Chung's e-mail communications about payment of vacation pay, Ms. Ketchum told Mr. Chung that QP was not responsible for payment for the period prior to December 3, 2018, and that he should look to Ms. Wynn for payment of this amount. Ms. Ketchum forwarded to Mr. Chung an e-mail dated December 12, 2018 from Geoffrey Rosen, QP's chief operating officer, stating that: This is a Veronica [i.e., Ms. Wynn] responsibility. Tell him to contact Veronica as that is not a Quay Pacific expense. [22] This was another source of stress and frustration for Mr. Chung. He felt as if he was stuck in the middle of a dispute between two other parties, and was very uncomfortable. [23] According to Mr. Chung, he has never been paid what is owed to him for vacation pay for the period up to November 30, 2018. [24] Although the termination letter stated that Mr. Chung's final day would be January 3, 2019, in fact, it

was not. His last day at work was another source of conflict between Mr. Chung and Ms. Ketchum in e-mail exchanged between them in mid-December 2018. Mr. Chung stated that his last day was January 3, 2019, whereas Ms. Ketchum asserted it was December 31, 2018. As Mr. Chung recalled, when he went into the office in the morning on December 31, his personal belongings were packed up in a box on his chair. Ms. Haycock followed him into his office and told him that QP no longer needed him. As Mr. Chung recalled, he was angry and upset, and told her that his last day was not until January 3, 2019. She then escorted him out of the office. As Mr. Chung recalled, two other staff in the accounting department saw what happened. Mr. Chung was unable to complete the work he had planned to do in the time remaining before what he considered was his final day, January 3, 2019. [25] I note that, although QP had alleged in the response to civil claim that it had cause to require Mr. Chung to leave before January 3, 2019, this was not pursued at trial. [26] According to Mr. Chung, his first month being out of work was very difficult and very stressful. He explained that his wife suffers from depression and was on disability, so he felt unable to discuss his situation with her. He explained that he worried about finding another job. Mr. Chung explained that he lost sleep and found it hard to

focus. He is a diabetic, and explained that he needed to seek help from his family doctor. However, as time went on, things improved. [27] It was agreed at trial that, after Mr. Chung left QP, he was able to earn $11,137.50 working for a former employer. Then, beginning May 20, 2019, Mr. Chung was successful in obtaining full-time employment, at a salary commensurate with his previous salary. It is agreed that, at this point, Mr. Chung fully mitigated his damages arising from his dismissal. (b) Discussion and analysis [28] In a wrongful dismissal action, the plaintiff must prove three elements: the dismissal; that the dismissal was without reasonable notice; and that the dismissal was without cause. If a plaintiff proves all three elements, the plaintiff is entitled to damages flowing from the failure of the employer to give reasonable notice. [29] Here, there is no dispute that Mr. Chung was dismissed, that his dismissal was without cause, and that he did not receive reasonable notice. [30] I note that, in submissions, Mr. Sheard, on behalf of Mr. Chung, argued that the notice given on December 3, 2018 was not effective as between Mr. Chung and QP, although he conceded that if the notice period is six months or more, the point was moot. [31] As set out below, I have concluded that reasonable notice in Mr. Chung's circumstances would be nine months. However, and although the

point is moot, I do not accept the proposition advanced by Mr. Sheard. In my view, the only reasonable conclusion on the facts is that Mr. Chung was given notice of termination of his employment on December 3, 2018 and was given one month's working notice. To draw a distinction between Premier and QP, and ignore the fact that the two companies amalgamated in December 2018 into QP, is completely artificial. I find that the notice given to Mr. Chung on December 3, 2018 was effective as between Mr. Chung and QP. [32] As I noted above, Mr. Chung fully mitigated his damages when he began new employment on May 20, 2019. As a result, the period for which damages based on the failure to give reasonable notice does not extend beyond May 19, 2019, a period of four and two-thirds months (after taking into account one month's working notice). However, Mr. Chung also seeks compensation for what he asserts is an unpaid bonus and also vacation pay. At the opening of trial, Mr. Chung abandoned any claim for punitive damages. However, he seeks aggravated damages. [33] I will deal first with the length of notice. [34] It is well established that the reasonableness of notice must be decided with reference to each particular case, having regard to what are commonly referred to as the Bardal factors: the character of the employment; the length of service; the age of the employee; and the availability of similar employment, having regard to the experience, training and qualifications of the employee. See Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), at p.

145. The list, of course, is not exhaustive, and a court must consider the entire factual matrix in a given case: see Sollows v. Albion Fisheries Ltd., 2017 BCSC 376, at para. 24. [35] Mr. Sheard submits that damages should reflect nine months' pay in lieu of reasonable notice. Mr. Sheard notes in particular: Mr. Chung's age (53) when his employment was terminated; that he had specialized employment skills as an accountant and was an executive (chief financial officer); and that he worked for QP's predecessor for two years and three months. In support of his position, Mr. Sheard cites (among other cases): ● Mitchell v. Paxton Forest Products Inc., 2002 BCCA 532 (plaintiff, age 52, employed for 2 years as a sales manager; reasonable notice found to be 9 months); ● Sollows v. Albion Fisheries Ltd., (plaintiff, age 60, employed for two years and nine months as a senior executive (part of the time as president); reasonable notice found to be 10 months); ● Mackie v. West Coast Engineering Group Ltd., 2009 BCSC 1775 (plaintiff, age 48, employed for 21 months as a manager; reasonable notice found to be 9 months). [36] Mr. Wardell, on behalf of QP, submits that reasonable notice in this case would be between three and five months. He submits that, although Mr. Chung was the highest-level accounting employee at Premier, his position was non-executive in character and (for example) he

had no knowledge of the sale of Ms. Wynn's shares until it was announced to all employees on December 3, 2018. In support of his position concerning the appropriate period of notice, Mr. Wardell cites (among other cases): ● Pecoskie v. Holloway Lodging Corp., 2015 NSSM 16 (54-year-old certified public accountant with 2.9 years of service was found entitled to 4 months' notice); ● Bhavsar v. Canadian Natural Resources Ltd., 2016 ABQB 471 (48-year-old "reliability specialist" with 2.5 years service, was found entitled to 5 months' notice); ● Firatli v. Kohler Ltd., 2008 CanLII 35266 (ONSC) (46-year-old director of quality assurance with 2 years and 6 months of service was found entitled to 5 months' notice). [37] I find the cases cited by Mr. Sheard, all of which are from B.C., to be the more persuasive. Moreover, I reject Mr. Wardell's submission that Mr. Chung's position was non-executive in character. Rather, I find that, while employed by Premier, Mr. Chung functioned in an executive position, consistent with his title of chief financial officer and his professional qualifications. In my view, the fact that Ms. Wynn did not involve Mr. Chung in her personal affairs in relation to the sale of her shares in Premier is not relevant. [38] Accordingly, in the light of Mr. Chung's age, the character of his employment, and his length of service, and after considering the cases cited

to me, I conclude that reasonable notice would have been nine months. On the facts, the effective notice, for which Mr. Chung is entitled to damages, is four and two-thirds months. I calculate that amount to be $40,835 (slightly rounding the two-thirds of a month). [39] However, the amount that Mr. Chung earned during the notice period ($11,135.50) must be deducted. [40] Accordingly, the net damages to which Mr. Chung is entitled for his employer's failure to give him reasonable notice are $29,699.50. [41] I turn next to Mr. Chung's claim for vacation pay. [42] Mr. Chung asserts that he is entitled to $11,607.66, representing the accrued vacation pay owing to him up to and including November 30, 2018. Mr. Chung is also seeking vacation pay during his notice period. [43] I find that it was a term of Mr. Chung's employment agreement that he receive vacation pay based on 8% of his base annual salary of $105,000, and that the amount owing as of November 30, 2018 was $11,607.66. [44] In the December e-mail communications between Mr. Chung and Ms. Ketchum concerning his vacation pay, Ms. Ketchum did not take issue with Mr. Chung's calculations of his unpaid vacation pay. Rather, she told Mr. Chung (based on Mr. Rosen's response to her inquiry about what do to) that QP was not responsible to pay him, and that it was a "Veronica responsibility." [45] In his evidence at trial, Mr. Rosen

said that it was his understanding that all costs prior to closing were to be born by Ms. Wynn, and that was the basis for his response to Ms. Ketchum that Mr. Chung's vacation pay was a "Veronica responsibility." However, Mr. Rosen's position was simply wrong so far as Mr. Chung was concerned. Mr. Chung's employer was not Ms. Wynn. Rather, it was Premier, and, after QP's acquisition of and amalgamation with Premier, it was QP. The terms of the Share Purchase Agreement, and Mr. Rosen's understanding of the effect of those terms, could not and did not affect the legal obligations of Premier and QP (post-amalgamation) to Mr. Chung or other employees. [46] I find that Mr. Chung accurately tracked and calculated his vacation pay owing by his employer, and that the balance owing to Mr. Chung as of December 31, 2018 was $11,607.66. Mr. Chung is entitled to judgment for that amount. [47] With respect to Mr. Chung's claim for vacation pay during the notice period, I agree with Mr. Wardell's submission that wrongfully dismissed employees are not entitled to additional compensation for vacation pay during a notice period: see Burry v. Unitel Communications Inc., 46 B.C.L.R. (3d) 349, 1997 CanLII 4088 (C.A.), at paras. 16-17. [48] I turn next to the matter of the bonus, which is described in the termination letter. [49] In Mr. Sheard's submission, based on the clear language of the

termination letter ("Premier will pay you a bonus of one month's pay"), Mr. Chung is entitled to be paid the sum of $8,750 by QP. I note, however, that the clear language of the termination letter adds "(less statutory deductions)." [50] Mr. Sheard argues (citing Marlowe v. Ashland Canada Inc., 2001 BCSC 954) that, where a bonus would become due during the notice period, a defendant cannot avoid its liability by breaching the contract and terminating it early without cause. [51] On the other hand, Mr. Wardell argues that QP has no liability for payment of this bonus. He submits that, although the promise of a bonus payable by Premier was made in a letter on Premier's letterhead, the promise was clearly personal and (like the promise to provide Mr. Chung with a reference letter) belonged only to Ms. Wynn. [52] In addition, Mr. Wardell submits that, as of December 3, 2018, Ms. Wynn did not have any authority to bind Premier to a promise of a bonus, because she had resigned as a director of Premier effective December 1, 2018. [53] In reply to this point, Mr. Sheard submits that QP is bound based on the indoor management rule. This rule has been codified by s. 146 of the Business Corporations Act, S.B.C. 2002, c. 57, which provides in relevant part: (1) Subject to subsection (2), a company, a guarantor of an obligation of a company or a person claiming through a company may not

assert against a person dealing with the company, or dealing with any person who has acquired rights from the company, that . . . (c) a person held out by the company as a director, officer or agent (i) is not, in fact, a director, officer or agent of the company, as the case may be, or (ii) has no authority to exercise the powers and perform the duties that are customary in the business of the company or usual for such director, officer or agent, . . . [54] In Mr. Sheard's submission, on December 3, 2018, Ms. Wynn was held out by QP as an agent of Premier with authority to enter into binding agreements on behalf of Premier, and Mr. Chung was not obliged to inquire into what actual authority Ms. Wynn had to bind Premier in relation to the termination letter. Moreover, by the terms of the Share Purchase Agreement, Ms. Wynn was given the responsibility on behalf of Premier to deliver "a termination notice" to Mr. Chung. In Mr. Sheard's submission, QP expressly authorized Ms. Wynn to deliver the termination letter to Mr. Chung on behalf of Premier, and, in that context, she was entitled, on behalf of Premier, to authorize the bonus. [55] I agree with Mr. Sheard's submissions on this point. [56] I prefer Mr. Chung's evidence to that of Ms. Wynn concerning what took place at their meeting on December 3, 2018, when Mr. Chung was given the termination letter. In my view, it is

implausible that, as Ms. Wynn described, events were paused while she made edits to and printed out a new version of Mr. Chung's termination letter. Rather, Mr. Chung's recollection of events is more consistent with the probabilities that a practical and informed person would recognize as reasonable in that place and those circumstances. There was no obligation on Mr. Chung in those circumstances to make any inquiry of Ms. Wynn concerning her actual authority with respect to the contents of the termination letter, and Ms. Wynn had been given the authority to terminate Mr. Chung's employment. The termination letter clearly distinguishes between matters that are personal to Ms. Wynn (for example, "I will also provide you with a reference letter") and matters belonging to Premier ("Premier will pay you a bonus . . ."). I find further that, as a result of QP's refusal to allow Mr. Chung to work until his termination date of January 3, 2019, he was denied the right to continue to work and finish projects, as he intended. [57] Accordingly, I find that Mr. Chung was and is entitled to a bonus of $8,750, equal to one month's salary, less statutory deductions, as set out in the termination letter. I will leave counsel to do the calculation of the final amount. [58] I turn finally to Mr. Chung's claim for aggravated damages. [59] Mr. Sheard argues that aggravated damages are appropriate

in this case. He pointed to Mr. Chung's evidence concerning how he was affected by his termination, the disputes over payment of his vacation pay and the circumstances of his last day at the office. Mr. Sheard argues that QP was unduly insensitive in dealing with Mr. Chung over his last day at work, and that QP unreasonably subjected Mr. Chung to crossfire in QP's dispute with Ms. Wynn. [60] In Mr. Sheard's submission, QP's actions caused Mr. Chung mental distress beyond what could normally be expected on termination of employment. In his submission (and citing Davies v. Canada Shineray Suppliers Group Inc., 2017 BCSC 304, in support), an award of $30,000 in aggravated damages is justified in this case. [61] In Mr. Wardell's submission, Mr. Chung has not provided sufficient evidence to support a claim for aggravated damages. He submits that, while Mr. Chung was certainly upset by his dismissal and the situation in December 2018, the circumstances do not rise above the ordinary level of upset one might expect. [62] Aggravated damages may be awarded against an employer where the employer engages in conduct during the dismissal that is unfair or is in bad faith. Damages must flow from the manner of dismissal (for example where the employer is untruthful, misleading or unduly insensitive), and not from the dismissal itself. Aggravated damages for wrongful dismissal must reflect

"actual damages," as they are intended to be compensatory. They cannot be presumed but must be proven in the same manner as damages for other psychological injury. See Honda Canada Inc. v. Keays, 2008 SCC 39, at paras. 57, 59-60. [63] Expert evidence is not required to prove mental distress caused by an employer's bad faith conduct. However, there must be an evidentiary foundation to support any award. The mental distress must be beyond the ordinary upset that results from termination of employment: Lau v. Royal Bank of Canada, 2017 BCCA 253 at paras. 45-49. [64] In my view, the evidence of how Mr. Chung was affected by his termination and the events in December 2018 does not satisfy his burden to show that the manner of his dismissal caused him injury going beyond the normal distress and hurt feelings that arise from the fact of dismissal. Accordingly, in my opinion, Mr. Chung has not made out a case for an award of aggravated damages. (c) Summary [65] In summary, I award damages to Mr. Chung as follows: (a) for wrongful dismissal, $29,699.50; (b) for vacation pay owing, $11,607.66; and (c) for the bonus owing, $8,750, less statutory deductions. [66] There will be pre-judgment interest in accordance with the Court Order Interest Act, R.S.B.C. 1996, c. 79. [67] I grant judgment in favour of Mr. Chung against QP accordingly.

3. Quay Pacific's indemnity claim against Ms. Wynn (a) Introduction [68] QP's indemnity claim against Ms. Wynn is based on the Share Purchase Agreement. Typically, such a claim would be concerned primarily with the interpretation of the parties' written agreement. In that context, evidence concerning their pre-contract discussions and negotiations, the exchange of draft documents and the contents of those drafts would be, with limited exceptions, irrelevant and inadmissible. See, for example, the discussion in British Columbia (Technology, Innovation and Citizens' Services) v. Columbus Real Estate Inc., 2017 BCSC 940, at paras. 127-134. [69] However, QP rejects the wording of para. 4.9.2 of the Share Purchase Agreement as reflecting the parties' bargain, and seeks rectification of that particular provision. That was the focus of QP's case and its submissions in closing. As a result, a great deal of evidence that would otherwise have been irrelevant and inadmissible was tendered at trial, and I will review that evidence in some detail, much more than would be needed if the only issue was the interpretation of the Share Purchase Agreement. (b) Factual background [70] Premier had been started by Ms. Wynn and a business partner in 2012, and Ms. Wynn later became the company's sole owner. According to Ms. Wynn, Premier's business grew rapidly, and, by 2018, the company was managing

about 70 buildings. However, according to Ms. Wynn, the business was very demanding. Strata council meetings were often scheduled in the evenings, and she recalled working long hours, seven days a week. [71] As a result, by early 2018, Ms. Wynn was considering selling the business and let that be known. To that end, Ms. Wynn was contacted in May by a representative of the accounting firm KPMG to meet with representatives of QP, Mr. Rosen and Adam Wanono, in what was described as a "meet and greet" format. [72] Mr. Rosen, in addition to being QP's chief operating officer, is a senior strata property manager. He also has a background in information technology. Mr. Wanono is QP's president and a managing broker, and has many years of experience in property management. Mr. Rosen and Mr. Wanono formed QP in 2007, when they amalgamated two previous businesses. [73] As Mr. Rosen recalled, he and Mr. Wanono had been informed that Premier was potentially up for sale, and they arranged for KPMG to contact Ms. Wynn to meet with them. At the May meeting, Ms. Wynn was accompanied by Mr. Mendes. As Mr. Rosen recalled, the discussion at this meeting was at a very high level, and lasted about an hour. [74] Another meeting was arranged in early July 2018, at KPMG's Langley office. Ms. Wynn, Mr. Mendes, Mr. Rosen and Mr. Wanono attended. As Mr. Rosen recalled, at that meeting "we got into the

negotiations for the purchase of Premier." As he recalled, he and Mr. Wanono outlined how they would do the "pricing" for the purchase, and their hope for a speedy completion of the transaction. [75] As Mr. Rosen recalled, they also began discussions concerning possible staff terminations. As both Mr. Rosen and Mr. Wanono recalled, the only person that they thought would need to be terminated was Premier's chief financial officer (namely, Mr. Chung), as QP already had someone in that position. Both Mr. Rosen and Mr. Wanono recalled communicating this to Ms. Wynn at the meeting. They recalled explaining to her that they expected the termination of the chief financial officer would be part of her responsibility, and that it was something that would be incorporated in both a letter of intent and then a share purchase agreement. According to Mr. Rosen, he and Mr. Wanono did not get any "push back" or opposition from Ms. Wynn on the point. As Mr. Rosen recalled, at this meeting, they also discussed the idea that Premier's chief financial officer would carry on for 30 days after the share purchase completed, to "complete the transition" of the accounting systems. According to Mr. Rosen, QP's key concern was that it did not want to pay the severance costs for Premier's chief financial officer, so he would need to be terminated before the closing date. Mr. Rosen did not recall Ms. Wynn

expressing any opposition. [76] For his part, Mr. Wanono recalled that Ms. Wynn indicated by her "body language" that she was agreeable. [77] As Ms. Wynn recalled, the early July meeting was quite informal. She recalled that they discussed Premier's basic operations, such as software, banking, employees and departments. They did not get into the terms of a sale. She recalled that Mr. Rosen and Mr. Wanono mentioned that they did not want to keep Premier's chief financial officer, as he was redundant, and that they wanted her to terminate him prior to closing of the sale. As Ms. Wynn recalled, she was just listening and did not respond one way or another. According to Ms. Wynn, at the end of the meeting, Mr. Rosen and Mr. Wanono were to get back to her about another meeting. [78] Ms. Wynn, Mr. Mendes, Mr. Rosen and Mr. Wanono next met on July 31, 2018 to discuss a letter of intent, and to continue negotiations. As Mr. Rosen recalled, the focus of the discussion at that meeting was primarily on price. As Mr. Rosen recalled, although the issue of the termination of the chief financial officer came up as part of completion of the deal, there was no "formal opposition" that he was aware of concerning the termination of the chief financial officer. At trial, when asked to tell the court everything he could remember about the discussion of the chief financial officer at this meeting,

Mr. Rosen testified based on his "understanding" from reviewing e-mail and notes. However, in my view, his evidence was vague and conclusory. Mr. Rosen said that he and Mr. Wanono "expressed again" through the discussion that the chief financial officer position was the only one that QP would need to terminate, and that was part of the agreement to purchase Premier. Mr. Rosen did not recall any opposition or response from Ms. Wynn. [79] As Mr. Wanono recalled, Mr. Chung and the chief financial officer position came up at the July 31 meeting, but they did not spend much time discussing the topics. According to Mr. Wanono, by this time there was an understanding that Mr. Chung would not be needed. [80] Neither Mr. Rosen nor Mr. Wanono could recall any other discussion about the termination of Premier's chief financial officer after the July 31 meeting. Mr. Rosen explained that his "understanding" was that the chief financial officer was to be terminated prior to closing of the transaction, and, since the termination was prior to closing, any costs associated with the termination were Ms. Wynn's responsibility, not QP's. [81] However, I find that, as of the conclusion of the July 31 meeting and contrary to what Mr. Rosen said he understood, there was in fact no agreement about the timing of Mr. Chung's termination or who would be responsible for his severance. [82] As Ms. Wynn

recalled, at the July 31 meeting and for the first time, Mr. Rosen and Mr. Wanono mentioned a price for her shares. She recalled them telling her that the price would be the "industry standard" of annual gross revenue multiplied by 1. According to Ms. Wynn, on this basis, the purchase price for her shares should have been close to $1.7 million. As Ms. Wynn recalled, there was also some discussion at the meeting concerning employees and the chief financial officer. As Ms. Wynn recalled, Mr. Rosen and Mr. Wanono also mentioned that they wanted employees terminated prior to closing. However, from her perspective, that would be a problem because, if the transaction did not close, Premier would have no employees. As she recalled, she asked them for a list of employees to be terminated. With respect to the chief financial officer, Ms. Wynn recalled that Mr. Rosen and Mr. Wanono felt they would need to keep him on for the transition, since Premier's software had been modified by Mr. Chung and the company was also changing banks. As Ms. Wynn recalled, she did not react much to what Mr. Rosen and Mr. Wanono were telling her. She wanted to discuss things with Mr. Mendes, and, in any event, Mr. Rosen and Mr. Wanono were going to put QP's offer in writing. [83] After the July 31, 2018 meeting, but the same day, Mr. Rosen sent an e-mail message to Ms. Wynn, with a copy to Mr. Wanono and Mr.

Mendes. The Subject was: "Premier Strata Offer," and the message read in part: Veronica, Nice to see you and Paul today. Please find attached to this email Quay Pacific's offer to purchase Premier contained within the Letter of Intent. As outlined in the LOI we would like to have it signed by you and returned no later than August 3rd, 2018 as outlined in the LOI. Please let us know if you have any questions regarding the offer. We're looking forward to working with you to complete the deal [84] QP's letter of intent ("LOI No. 1") was attached to Mr. Rosen's e-mail. It read in part [bold and underlining in original omitted]: Premier Strata Services Inc. Re: Letter of Intent to Purchase . . . This letter of intent is intended to set out the framework of the contemplated transaction between Quay and Premier Strata Services Inc. ("Premier") with regard to the acquisition of all of the issued and outstanding shares of Premier (this "Letter of Intent"). While the parties anticipate that the matters set forth in this letter of intent will form the basis of definitive agreements relating to the proposed transaction (collectively, the "Definitive Agreement"), the parties acknowledge that further negotiations and the conduct of due diligence may result in issues being raised that require the following matters to be supplemented, amended or qualified. The framework contemplated by the

parties to date is as follows: 1. Acquisition Structure and Financing It is proposed that Quay will acquire all of the issued and outstanding shares of Premier's shareholders in exchange for the consideration defined in Section 5 of this Letter of Intent ("Purchase Price"). . . . Following the acquisition of all of the [Premier shares] by Quay, it is expected that Premier would be amalgamated into ("Quay Amalco"). . . .

2. Closing Date Subject to the provisions of Section 17, the parties agree to work in good faith towards signing the Definitive Agreement no later than August 31, 2018 and closing the purchase and sale . . . on November 1st, 2018, or such other date as mutually agreed upon by the parties (the "Closing Date").

3. Definitive Agreement Subject to the provisions of Section 17, the parties will proceed in good faith with the negotiation of the terms and conditions of the Definitive Agreement . . .. The Definitive Agreement will contain such terms . . as are customarily included in agreements involving transactions similar to that contemplated hereby so as to reflect the matters such forth in this letter of intent and/or such other matter as may be subsequently negotiated between the parties. . . .

5. Purchase Price. Based on the preliminary financial and other information Quay has received to date, the purchase price for [all shares] of Premier shall be $1,600,000 (the "Purchase Price"), payable to Premier's shareholders as follows: First payment on November 1st: $880,000 Monthly payment for 10 months beginning December 1st, 2018: $48,000/monthly . . . Final Payment January 1, 2020: $240,000.00 6. Employees . . . Premier will endeavour to retain all of Premier's employees that Quay wishes to retain, and will prior to the closing date terminate the employment of all employees of Premier that are identified by Quay prior to the execution of the Definitive Agreement, and agreed to in writing by Premier. Premier will be responsible for all severance pay and other liabilities to or in respect of any person whose employment is so terminated prior to the Closing Date. In particular, Premier will deliver a termination notice to its Chief Financial Officer prior to the Closing Date, with a termination date effective 30 days after the Closing Date. Premier will use reasonable best efforts to ensure that the Chief Financial Officer will remain for the 30 day transition period following the Closing Date. . . .

7. Due Diligence Quay's proposal to acquire all [Premier shares] is conditional, among other things, on Quay being satisfied with the results of full financial, business, legal and other due diligence investigations, . . . Quay will be under no obligation to continue with . . . negotiations regarding the Definitive Agreement, or to enter into a Definitive Agreement if, at any time, the results of the due diligence investigations are not satisfactory to it, in its sole discretion. . . .

9. Conditions Precedent The transaction contemplated by this Letter of Intent would be subject to and contingent upon the satisfaction of the following conditions: a. Letter of intent signed by both parties no later than 12:00 p.m. on August 3rd, 2018 . . . d. Execution of the Definitive Agreement by Quay and Premier . . .

16. Letter of Intent Save and except for Sections 12, 13, 14, 15 and 18, which will be legally binding on the parties, it is understood that this Letter of Intent is not intended by the parties to create any legally binding obligations between them. No party will have any liability to any other party based upon, arising from, or relating to this Letter of Intent, including any termination hereof, except in respect of a breach of any of the enumerated Sections. A binding agreement, other than with respect to the enumerated Sections, is subject to the execution of the Definitive Agreement. . . . [85] I pause to note several things. First, LOI No. 1 is described by Mr. Rosen as an offer. Second, it is the first time that QP has stipulated a purchase price for Ms. Wynn's shares, and, in his evidence at trial, Mr. Rosen described this as an "opening price" offer. Third, LOI No. 1 is written as if Premier is the seller of the shares. However, it is not. Ms. Wynn was the seller. Finally, LOI No. 1 stated expressly that it was "not intended by the parties to create any legally binding obligations between them." This language was a feature of all of the letters of intent. [86] In any event, Ms. Wynn did not accept the offer contained in LOI No.

1. She explained that the purchase price was not what she expected, but had been rounded down. There had been no discussion in either of the meetings about the purchase price being paid over time. She was also not willing to terminate Premier's chief financial officer prior to closing. [87] In response to LOI No. 1, Ms. Wynn made a counter-offer. In his evidence at trial, Mr. Rosen agreed (not surprisingly) that it was open to Ms. Wynn to make a counter-offer in response to QP's offer in LOI No. 1. [88] On August 14, 2018, Mr. Mendes sent an e-mail message to Mr. Rosen, Mr. Wanono and Neil Nichols, with the subject "Premier & Quay Pacific Letter of Intent." A digital mark-up ("LOI No. 2"), including comments, of LOI No. 1 was attached. The message read in part: . . . I have included Neil Nichols on this email. Neil will be taking the lead in terms of negotiating the LOI and definitive agreement with Quay Pacific. Please include Neil in your reply to this email. . . . We should get everyone in a room with counsel to expedite finalizing this so you can hear and understand Veronica's position. We are available on Tuesday, August 21, 2018. . . . [89] LOI No. 2 shows that a number of changes had been made to LOI No.

1. Mr. Nichols was the author of those changes. [90] Among the most significant changes were that QP was now defined as "Quay" or "Buyer," and a clear distinction was made between Premier and Ms. Wynn. Ms. Wynn was not mentioned at all in LOI No. 1, although she was the owner and would be the seller of the shares. The necessary distinction between Premier and Ms. Wynn can be seen in the third paragraph of LOI No. 2, which reads [bold and underlining in original omitted]: This letter of intent is intended to set out the framework of the contemplated transaction between Quay and Veronica Wynn ("Wynn" or "Seller"), sole shareholder and sole director of Premier Strata Services Inc. ("Premier") with regard to the acquisition of all of the issued and outstanding shares of Premier (this "Letter of Intent"). [91] In LOI No. 2, a new closing date (October 1, 2018) was proposed in s.

2. New sections were added. This included a section (5.1) titled "Good Faith Deposit," which was identified as a section Ms. Wynn wanted to be legally binding. The concept in s. 5 of LOI No. 1 that the balance of the purchase price would be paid over time was rejected, and s. 5 was revised so that the entire purchase price was payable on closing. [92] Some changes were also made to s. 6 concerning Employees. Delivery of the termination notice to the chief financial officer was no longer to be prior to the Closing Date. Section 6 now read [strike-through in original; bold in original omitted]: Premier has provided comprehensive disclosure as to the terms of employment for each employee, including their date of hire, years of service, compensation and benefits. Premier will endeavour to retain all of Premier's employees that Quay wishes to retain, and will prior to the Closing Date terminate the employment of all employees of Premier that are identified by Quay after prior to the execution of the Definitive Agreement, and agreed to in writing by Premier. Premier will be responsible for all severance pay and other liabilities to or in respect of any person whose employment is so terminated prior to the Closing Date. In particular, Buyer proposes to identify to Premier will that it wishes Premier to deliver a termination notice to its Chief Financial Officer prior to upon the

Closing Date, with a termination date effective 30 days after the Closing Date. Premier will use reasonable best efforts to ensure that the Chief Financial Officer will remain for the 30 day transition period following the Closing Date. Premier will be responsible for all severance pay and other liabilities to or in respect of the CFO; Buyer will be responsible for the compensation of the CFO for any period after Closing. [93] The last sentence, beginning "Premier will be responsible . . . ," was new, and was identified as such in LOI No. 2. [94] Since Ms. Wynn and Premier were now treated (as they needed to be) as separate legal entities, obligations described in LOI No. 2 as belonging to Premier belonged to Premier, and not to Ms. Wynn. [95] A third meeting was held on August 21, 2018. Mr. Rosen, Mr. Wanono, Ms. Wynn, Mr. Mendes and Mr. Nichols attended. Mr. Nichols was now taking the lead in the negotiations on behalf of Ms. Wynn. However, neither Mr. Rosen nor Mr. Wanono considered Mr. Nichols' involvement, or his negotiating style, to be helpful. Mr. Rosen, for example, described Mr. Nichols as overly adversarial. [96] On August 23, 2018, Mr. Nichols sent an e-mail message to Mr. Rosen and Mr. Wanono, with a new version (again a digital mark-up) of the letter of intent ("LOI No. 3"). In his message, Mr. Nichols said in part: Gentlemen Further to our recent meeting, we

enclose the revised Letter of Intent, showing changes from v2 and keeping some of the comments for clarity. . . . Ms. Wynn is ready to sign and exchange this LOI. . . . Let us know if you are responding to this draft LOI directly, so I can accept changes and send a final version for execution or if I am to hear from your counsel. [97] According to Mr. Rosen, he sent a copy of LOI No. 3 to QP's lawyer, who I will refer to as "Ms. AG." Ms. AG had been involved in the background on behalf of QP since early August, when LOI No. 1 was sent out by Mr. Rosen. [98] As Mr. Rosen recalled, he reviewed parts of LOI No. 3, particularly concerning the good faith deposit. According to Mr. Rosen, he did not review the section concerning "Employees" (s. 6 of this version) because he understood that section had already been "settled." [99] Section 6 shows changes have been made, compared with the corresponding section in LOI No. 2, and provides in relevant part [strike-through in original; other markings omitted]: Premier has provided comprehensive disclosure as to the terms of employment for each employee . . .. Premier will endeavor to retain all of Premier's employees that Quay wishes to retain, and will prior to immediately after the Closing Date terminate the employment of all employees of Premier that are identified by Quay after the execution of the Definitive Agreement and prior to the

Closing Date, and agreed to in writing by Premier. Premier will be responsible for all severance pay and other liabilities to or in respect of any person whose employment is so terminated prior upon or immediately after to the Closing Date and seller shall indemnify Buyer therefor by an offset reducing the Purchase Price on a dollar-for-dollar basis. In particular, Buyer proposes to identify to Premier that it wishes Premier to deliver a termination notice to its Chief Financial Officer upon the Closing Date,. Premier will use reasonable best efforts to ensure that the Chief Financial Officer will remain for the 30 day transition period following the Closing Date. Premier will be responsible for all severance pay and other liabilities to or in respect of the CFO; Buyer Premier will be responsible for the compensation of the CFO for any period after Closing and such amount shall not be an offset reducing the Purchase Price. . . . [100] The words beginning "and Seller shall indemnify . . ." at the end of the first paragraph were new, compared with LOI No.

2. The words "and such amount shall not be an offset . . ." at the end of the second paragraph were also new. [101] At trial, Mr. Rosen was asked about his understanding of the meaning of "Premier" in this section of LOI No.

3. He explained that, in his understanding, Premier's meaning was "dynamic". He explained that, before closing, it meant Ms. Wynn, while after closing it meant QP. According to Mr. Rosen, there was no discussion with anyone (including with Ms. AG) about changes in this part of any of the versions of the letter of intent, and, as he recalled, this part of the letter of intent was never discussed after the July 31, 2018 meeting. [102] Ms. AG explained that she had been sent a copy of both LOI No. 2 and LOI No. 3, which she described as a "parallel" letter of intent. According to Ms. AG, she was instructed to make changes to the letter of intent, and she used her own document, not LOI No. 3, to do this. However, it is clear that she accepted and incorporated changes from LOI No. 3 in her document. As Ms. AG recalled, she probably saw the changes that had been made in s. 6 ("Employees") of LOI No. 3 and would have confirmed them with her client. [103] Ms. AG agreed that LOI No. 3 had clear definitions on p.

1. QP was the "Buyer"; Ms. Wynn was "Wynn" or the "Seller"; and Premier was "Premier." However, she commented that, although there were clear definitions, the definitions were probably not used very clearly, at least not in earlier versions of the LOI. She agreed, with respect to s. 6 of LOI No. 3 concerning "Employees" and the chief financial officer, that the effect of saying "Premier will be responsible" was that liability for the chief financial officer was being passed on to Premier and, ultimately, to QP. However, Ms. AG said that she understood "Premier" to be Ms. Wynn's or the Vendor's side. According to Ms. AG, those were the instructions she had from Mr. Rosen and Mr. Wanono. [104] I pause here to observe that, if those were the instructions Ms. AG received from her clients, it is difficult to understand why she did not change the wording from "Premier will be responsible," to "Wynn (or the "Seller") will be responsible." Mr. Rosen and Mr. Wanono may have thought and understood the use of "Premier" to be "dynamic," essentially meaning whatever they wanted it to. But, by this time (indeed, as of LOI No. 2), "Premier" was defined and being used in a particular way. [105] On August 28, 2018, Mr. Rosen sent an e-mail message to Ms. Wynn, with a copy to Mr. AG (and a colleague at her law firm), Mr. Wanono, Mr. Mendes and Mr. Nichols. The message read in part [all sic]: . .

. Please find attached to this email our final draft of the LOI. Up until now our dealing have been direct and personal. Neil's method has seriously compromised the goodwill of this deal. We are not prepared to bankroll endless legal and accounting fees on a LOI and the purchase agreement if this is how the negotiations are going to be conducted. . . . We would like to move forward and begin drafting of the purchase agreement. We believe our current offer is fair based on market conditions. The Purchase agreement will set the framework and details of the agreement, the LOI is a proposal as to how the agreement will be drafted it is not the purchase agreement. Adam and I are very concerned that with Neil's method of negotiations and purchase agreement drafting will take an extended period of time and will cost a significant amount of legal fees and could result in the agreement not being completed on-time to ensure we can [execute] the purchase on the agreed time line. Please review our final LOI proposal if it is agreeable let us proceed and move onto purchase agreement. Otherwise we are better not wasting each others time and cease negotiations. In the future if you want to sell your company we are welcome to continue with negotiations under the terms we have presented in the attached LOI. [106] Mr. Rosen attached a clean version of a letter of intent ("LOI No. 4") and a digital mark-up, which showed changes made from LOI No.

3. Ms. AG was responsible for the preparation of both the clean and marked-up LOI No.

4. Thus, the digital mark-up showed what parts of LOI No. 3 Ms. AG had accepted in LOI No. 4. [107] LOI No. 4 continued to use the definitions of "Quay", "Buyer", "Wynn" or "Seller", and "Premier" that originated in LOI No.

2. The terms concerning "Employees" (now in a section numbered 5.4) were identical to the terms in LOI No.

3. In my view, the only logical conclusion is that, in preparing LOI No. 4, Ms. AG had deliberately accepted all of Mr. Nichols' drafting. As with previous versions of the letter of intent, certain provisions (described in s. 16) were identified as intended to be legally binding. However, s. 16 provided that, except for those sections, "it is understood that this Letter of Intent is not intended by the parties to create any legally binding obligations between them." This was consistent with Mr. Rosen's description (in his e-mail) of LOI No. 4 as a "proposal." [108] LOI No. 4 was not quite the final version of the parties' letter of intent. Ms. Wynn returned a signed copy of the final version (the "Final LOI"), which contained some handwritten changes (including reducing the amount of the "Good Faith Deposit"), to Mr. Rosen and Mr. Wanono on August 29, 2018. [109] Ms. AG and Mr. Nichols then began preparation of the "definitive" share purchase agreement contemplated by the Final LOI, with Ms. AG taking the lead. Her first draft was sent by e-mail to Mr. Nichols on September 11, 2018, for his review and comments. Ms. AG's covering e-mail message advised Mr. Nichols that the draft "remains subject to Quay's review and comments." [110] In this draft, QP was defined as the "Purchaser" (rather than the "Buyer", the term used in the Final LOI) and Ms. Wynn was defined as the "Vendor"

(rather than "Wynn" or the "Seller", the terms used in the Final LOI). Premier was defined as the "Company." [111] Section 4.9 was titled "Termination of Employees," and, in para. 4.9.2 provided in part that: The Vendor will deliver to the Chief Financial Officer prior to the Closing Date a termination notice, effective 30 days after the Closing Date. The Company will be responsible for payment of the compensation to the Chief Financial Officer for his services during the 30 days after the Closing Date and all legal obligations relating to the termination of the Chief Financial Officer . . . [112] I note that, in this draft, the delivery of the termination notice "prior to the Closing Date" was not consistent with s. 5.4 of the Final LOI, which (like LOI No. 3 and LOI No. 4) had the termination notice being delivered "upon the Closing Date." [113] At trial, Ms. AG said that there was an "unfortunate typographical error" in para. 4.9.2. She explained that the LOI had used the terms "Premier," "Seller" and "Wynn" interchangeably, and that the word "Company" in the second sentence of para. 4.9.2 should be "Vendor." [114] Based on the various versions of the letter of intent discussed above, I do not agree with Ms. AG that the terms "Premier," "Seller" and "Wynn" had been used interchangeably. In fact, they clearly (at least beginning with LOI No. 2) had not been. As I will discuss

below, I also do not accept her evidence that the word "Company" in the second sentence of para. 4.9.2, should have been "Vendor." [115] Section 5.2 was titled "Indemnification," and para. 5.2.1 addressed "Indemnification by the Vendor." In her evidence, Ms. AG explained that paras. 5.2.1(a)(v) and (vi), like para. 4.9.2, were also applicable to Mr. Chung. [116] I pause again to note that Ms. AG's evidence is essentially her opinion concerning the correct interpretation of these provisions. However, her opinion, especially in hindsight, is irrelevant and inadmissible. [117] Mr. Nichols sent his digital mark-up to Ms. AG by e-mail dated September 19, 2018. Mr. Nichols' mark-up included comments concerning s. 4.9. [118] According to Ms. AG, she discussed Mr. Nichols' mark-up with Mr. Rosen. As far as Ms. AG was concerned, despite Mr. Nichols' comments on s. 4.9, and apart from raising an issue about the timing of when notice would be given to Mr. Chung, there were no fundamental changes to that section. [119] However, according to Ms. AG, her client was upset with the large number of changes Mr. Nichols had made in his mark-up. She received instructions to raise this with Mr. Nichols, which she did in an e-mail message dated September 20, 2018, attached to which was her revised draft of the share purchase agreement. As with other draft documents exchanged, the draft showed

changes that had been made from the previous draft. Specifically, in this draft, Ms. AG had made revisions to para. 4.9.2, as follows [colour omitted]: The Vendor will deliver to the Chief Financial Officer prior to the at Closing Date a termination notice, effective 30 days after the Closing Date. The Company will be responsible for the payment . . . [etc.] [120] I note that the changes made are in the sentence immediately before the problem sentence in para 4.9.2, and change the timing of delivery of the termination notice to Mr. Chung so that it is consistent with the Final LOI. [121] The Share Purchase Agreement, which is detailed and comprehensive, is stated to be made between QP as "Purchaser" and Ms. Wynn as "Vendor." Premier is defined as the "Company." [122] Section 1.1 contained defined terms. These included the following [bold in original]: "Chief Financial Officer" means Nelson Chung; "Closing Date" means the 1st day of December 2018 or such other date to which the Parties may agree in writing; "Company" means Premier Strata Services Inc., a Company incorporated pursuant to the laws of the Province of British Columbia; "Damages" means all liabilities, demands, claims, actions or causes of action, regulatory, legislative or judicial proceedings or investigations, assessments, levies, losses, fines, penalties, damages, costs and expenses, including, without

limitation, legal fees on a solicitor and own client basis and reasonable accountants', investigators', and experts' fees and expenses, sustained or incurred in connection with the defence or investigation of any such claim, action, suit, proceeding or investigation but, for certainty, excluding special, consequential and punitive damages; "Employees" means all salaried personnel and employees paid on an hourly basis, employed or engaged by the Company on a full or part-time basis and including all individuals who may be considered to be employees of the Company pursuant to any Applicable Law, notwithstanding that they may have been laid off or terminated; "Parties" means the Purchaser and the Vendor collectively, and "Party" means any one of them; "Terminated Workers" means the Employees terminated under Section 4.9 and includes the Chief Financial Officer of the Company; "Workers" means the Employees and the Terminated Workers. [123] Paragraph 1.2.5, in the section titled "Interpretation," stated: This Agreement is the joint project of the Parties, has been subject to mutual consultation, negotiation and agreement and will not be construed for or against any Party. [124] Section 4.9 provided as follows [bold in original]: 4.9 Termination of Employees 4.9.1 The Vendor will retain all of the Employees that the Purchaser wishes to retain and terminate the employment of any

Employee that is identified by the Purchaser during the Interim Period and agreed to in writing by the Company immediately prior to the Closing Date. The Vendor will be responsible for the payment of all legal obligations relating to the termination of the Terminated Workers, including all amounts required to be paid either by Applicable Law or by contract, including payment in lieu of notice, termination pay, severance pay, vacation pay, legal costs, costs of defense or other proceedings, and all other outstanding amounts relating to any Terminated Workers. The Vendor shall indemnify the Purchaser therefor by reducing the Purchase Price on a dollar for dollar basis. 4.9.2 The Vendor will deliver to the Chief Financial Officer at Closing a termination notice, effective 30 days after the Closing Date. The Company will be responsible for the payment of the compensation to the Chief Financial Officer for his services during the 30 days after the Closing Date and all legal obligations relating to the termination of the Chief Financial Officer, including all amounts required to be paid either by Applicable Law or by contract, including payment in lieu of notice, termination pay, severance pay, vacation pay, legal costs, costs of defense or other proceedings, and all other outstanding amounts relating to the Chief Financial Officer. Any such payment made to the Chief Financial

Officer shall not be an offset against the Purchase Price. [125] Ms. AG explained that the "typographical error" that appeared in her original draft remained in the second sentence of para. 4.9.2, and instead of "The Company", it should say "The Vendor." [126] In s. 5.2, titled "Indemnification," para. 5.2.1 provides as follows (in relevant part) concerning indemnification of Purchaser (QP) by the Vendor (Ms. Wynn) [bold in original]: 5.2.1 Indemnification by the Vendor: (a) The Vendor agrees to indemnify and hold the Purchaser, its successors and permitted assigns, harmless against and in respect of any Damages which the Purchaser may incur or be required to pay (a "Purchaser's Claim"), arising in connection with the following matters: . . . (v) the termination of any Terminated Workers, including any amounts required to be paid either by Applicable Law or by contract, including Damages, payment in lieu of notice, termination pay, severance pay, vacation pay, legal costs, costs of defense or other proceedings, and all other outstanding amounts relating to any Terminated Workers; (vi) any and all liability or amounts owing of any nature arising from the Company's employment of, engagement of, or relationship with, any current or former Workers, prior to the Closing Date, including, without limitation, payment in lieu of notice, termination pay, severance pay, vacation pay,

legal costs, costs of defense or other proceedings, Damages, including, without limitation, any failure to pay, remit, deduct or withhold any income tax, GST, Canadian Pension Plan contributions or Employment Insurance premiums, and all other outstanding amounts, and for certainty excluding any liability arising after the Closing Date, including any liability for years of service for employees (other than Nelson Chung, CFO) terminated by the Company after the Closing Date; . . . (c) Any loss, damage, claim, cost or expense which the Company may incur or be required to pay arising in connection with any of the matters referred to in Section 5.2.1(a) shall, dollar for dollar, be deemed to be incurred by the Purchaser. [127] Article 9 contained general provisions, including the following [bold in original]: 9.1 Entire Agreement This Agreement and the Transaction Documents constitute the entire agreement between the Parties relating to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written. There are no representations, warranties, conditions, covenants or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement and the Transaction Documents, except as specifically set forth herein and therein. . . . 9.3

Severability If any provision of this Agreement is determined to be invalid, illegal or unenforceable by . . . any court of competent jurisdiction, that provision will be severed from this Agreement, and the remaining provisions will remain in full force and effect. . . . [128] At trial, evidence (both oral and documentary) was presented about events that took place after December 3, 2018 and into January 2019. Much of it was tendered as evidence of post-contract conduct, to support QP's position concerning the interpretation of the Share Purchase Agreement and its claims for rectification and severance (in the alternative). [129] Given the view I take of the claims for rectification and severance, I do not consider it necessary to review that evidence here because it does not make QP's case for rectification or severance any more persuasive. The post-contract conduct does now show that, at the relevant time, there was any consensus resulting in a prior oral agreement, sufficient to justify an order for rectification. Mr. Rosen's statement concerning obligations to Mr. Chung being a "Veronica responsibility," for example, is no more than his subjective opinion, and is irrelevant. I accept Mr. Nichols' evidence at trial that where, in a December 14, 2018 e-mail message to Ms. AG asking for her "input" to assist Mr. Chung, he wrote "All of the costs of [Mr. Chung's] termination

are for the account of Wynn," he meant "All of the costs . . . are for the account of Premier." In the circumstances in which this e-mail message was sent, and in context, no other interpretation makes sense. There would be no reason to send the e-mail if "All of the costs" were for Ms. Wynn's account. [130] In any event, I note that there are limits on how post-contract conduct can be admitted and used. These limits are discussed in Wade v. Duck, 2018 BCCA 176, at paras. 25-32, where Kirkpatrick J.A. (for the court) cites the leading case, Re Canadian National Railways and Canadian Pacific Ltd. (1978), 95 D.L.R. (3d) 242, aff'd [1979] 2 S.C.R.

668. Where the wording of a contract is clear, subsequent conduct cannot be used to create an ambiguity. (c) Discussion and analysis [131] QP says that, at the two July 2018 meetings, QP and Ms. Wynn reached a final agreement concerning the termination of Mr. Chung on the purchase of Ms. Wynn's shares by QP, whereby Mr. Chung's employment would be terminated and Ms. Wynn would bear the costs of that termination except for his salary for the 30 days of working notice to be given to Mr. Chung. QP says that, this intention, namely, that Ms. Wynn bear responsibility for all costs associated with Mr. Chung's termination, can be seen by reading the terms of the Share Purchase Agreement as a whole, and that para. 4.9.2 must be rectified so as to reflect the parties' prior oral agreement concerning the allocation of liability for costs associated with Mr. Chung's termination. [132] In the alternative, QP argues that para. 4.9.2 must be severed. [133] On the other hand, Ms. Wynn says that QP's claim for rectification must fail. She says that QP is not asking to have the Share Purchase Agreement rectified to reflect what QP says was a prior oral agreement, but something radically different. In addition, Ms. Wynn says that QP's claim for rectification fails on the facts, and that QP has failed to prove the existence of any prior oral agreement. Ms. Wynn says further that, on the contrary, she (through Mr. Nichols in LOI No. 3) made an offer to allocate responsibility for Mr. Chung in a particular way, and her offer was accepted by QP in LOI No.

4. That allocation of responsibility was subsequently incorporated in the Final LOI and ultimately in para. 4.9.2 of the Share Purchase Agreement. (i) Is QP entitled to rectification? [134] The basic legal principles applicable to a claim for rectification are not in dispute. [135] Rectification is predicated on the existence of a prior oral contract whose terms are definite and ascertainable: Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, at para. 31. [136] The Supreme Court of Canada recently considered when the remedy of rectification is available, in Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56. There, Brown J. (for the majority) wrote (at paras. 12-15 and 19) [italics in original]: [12] If by mistake a legal instrument does not accord with the true agreement it was intended to record -- because a term has been omitted, an unwanted term included, or a term incorrectly expresses the parties' agreement -- a court may exercise its equitable jurisdiction to rectify the instrument so as to make it accord with the parties' true agreement. Alternatively put, rectification allows a court to achieve correspondence between the parties' agreement and the substance of a legal instrument intended to record that agreement, when there is a discrepancy between the two. Its purpose is to give effect to the parties' true intentions, rather

than to an erroneous transcription of those true intentions (Swan and Adamski, at §8.229). [13] Because rectification allows courts to rewrite what the parties had originally intended to be the final expression of their agreement, it is "a potent remedy" (Snell's Equity (33rd ed. 2015), by J. McGhee, at pp. 417-18). It must, as this Court has repeatedly stated (Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 S.C.R. 157, at para. 56, citing Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, at para. 31), be used "with great caution", since a "relaxed approach to rectification as a substitute for due diligence at the time a document is signed would undermine the confidence of the commercial world in written contracts": Performance Industries, at para.

31. It bears reiterating that rectification is limited solely to cases where a written instrument has incorrectly recorded the parties' antecedent agreement (Swan and Adamski, at §8.229). It is not concerned with mistakes merely in the making of that antecedent agreement: E. Peel, The Law of Contract (14th ed. 2015), at para. 8-059; Mackenzie v. Coulson (1869), L.R. 8 Eq. 368, at p. 375 ("Courts of Equity do not rectify contracts; they may and do rectify instruments"). In short, rectification is unavailable where the basis for seeking it is that one or both of the parties wish to amend not the instrument recording their agreement, but the agreement itself. More to the point of this appeal, and as this Court said in Performance Industries (at para. 31), "[t]he court's task in a rectification case is . . . to restore the parties to their original bargain, not to rectify a belatedly recognized error of judgment by one party or the other". [14] Beyond these general guides, the nature of the mistake must be accounted for: Swan and Adamski, at §8.233. Two types of error may support a grant of rectification. The first arises when both parties subscribe to an instrument under a common mistake that it accurately records the terms of their antecedent agreement. In such a case, an order for rectification is predicated upon the applicant showing that the parties had reached a prior

agreement whose terms are definite and ascertainable; that the agreement was still effective when the instrument was executed; that the instrument fails to record accurately that prior agreement; and that, if rectified as proposed, the instrument would carry out the agreement: [citations omitted]. [15] In Performance Industries (at para. 31) and again in Shafron (at para. 53), this Court affirmed that rectification is also available where the claimed mistake is unilateral -- either because the instrument formalizes a unilateral act (such as the creation of a trust), or where (as in Performance Industries and Shafron) the instrument was intended to record an agreement between parties, but one party says that the instrument does not accurately do so, while the other party says it does. In Performance Industries (at para. 31), "certain demanding preconditions" were added to rectify a putative unilateral mistake: specifically, that the party resisting rectification knew or ought to have known about the mistake; and that permitting that party to take advantage of the mistake would amount to "fraud or the equivalent of fraud" (para. 38). . . . [19] . . . As I have stressed, rectification is available not to cure a party's error in judgment in entering into a particular agreement, but an error in the recording of that agreement in a legal instrument. Alternatively put, rectification

aligns the instrument with what the parties agreed to do, and not what, with the benefit of hindsight, they should have agreed to do. [137] Brown J. continued, at paras. 32-38: [32] It therefore falls to a party seeking rectification to show not only the putative error in the instrument, but also the way in which the instrument should be rectified in order to correctly record what the parties intended to do. "The court's task in a rectification case is corrective, not speculative": Performance Industries, at para.

31. Where, therefore, an instrument recording an agreed-upon course of action is sought to be rectified, the party seeking rectification must identify terms which were omitted or recorded incorrectly and which, correctly recorded, are sufficiently precise to constitute the terms of an enforceable agreement. . . . [A]bsent evidence of what the parties had specifically agreed to do, rectification is not available. While imprecision may justify setting aside an instrument, it cannot invite courts to find an agreement where none is present. . . . . . . (2) Standard of Proof [34] The second point requiring clarification is the standard of proof. In Performance Industries, at para. 41, this Court held that a party seeking rectification will have to meet all elements of the test by "convincing proof", which it described as "proof that may fall well short of the criminal standard, but which goes beyond the sort of proof that only reluctantly and with hesitation scrapes over the low end of the civil 'more probable than not' standard". . . . [35] In light, however, of this Court's more recent statement in F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 40, that there is "only one civil standard of proof at common law and that is proof on a balance of probabilities", the question obviously arises of whether the Court's description in Performance Industries of the standard to

which the elements of the test for obtaining rectification must be proven is still applicable. [36] In my view, the applicable standard of proof to be applied to evidence adduced in support of a grant of rectification is that which McDougall identifies as the standard generally applicable to all civil cases: the balance of probabilities. But this merely addresses the standard, and not the quality of evidence by which that standard is to be discharged. As the Court also said in McDougall (at para. 46), "evidence must always be sufficiently clear, convincing and cogent". A party seeking rectification faces a difficult task in meeting this standard, because the evidence must satisfy a court that the true substance of its unilateral intention or agreement with another party was not accurately recorded in the instrument to which it nonetheless subscribed. A court will typically require evidence exhibiting a high degree of clarity, persuasiveness and cogency before substituting the terms of a written instrument with those said to form the party's true, if only orally expressed, intended course of action. . . . [37] In brief, while the standard of proof is the balance of probabilities, the essential concern of Performance Industries remains applicable, being (at para. 42) "to promote the utility of written agreements by closing the 'floodgate' against marginal cases that dilute what

are rightly seen to be demanding preconditions to rectification". . . . [38] To summarize, rectification is an equitable remedy designed to correct errors in the recording of terms in written legal instruments. Where the error is said to result from a mistake common to both or all parties to the agreement, rectification is available upon the court being satisfied that, on a balance of probabilities, there was a prior agreement whose terms are definite and ascertainable; that the agreement was still in effect at the time the instrument was executed; that the instrument fails to accurately record the agreement; and that the instrument, if rectified, would carry out the parties' prior agreement. In the case of a unilateral mistake, the party seeking rectification must also show that the other party knew or ought to have known about the mistake and that permitting the defendant to take advantage of the erroneously drafted agreement would amount to fraud or the equivalent of fraud. [138] In my opinion, QP has failed to prove, to the standard required, the existence of any prior oral contract whose terms are definite and ascertainable. This is fatal to its claim for rectification. [139] I consider first QP's allegations in para. 6 of Part 1: Statement of Facts of the amended third party notice: 6. In or around 2018, Ms. Wynn and [QP] entered into negotiations for [QP's] purchase of

all of the existing shares of Premier. In the course of these negotiations, [QP] specifically expressed that part of any purchase would involve the termination of the Plaintiff's employment at no cost to [QP]. At all material times prior to completion of the sale, Ms. Wynn agreed with this(ese) term(s). [140] In my view, QP has failed to prove what it has alleged. [141] In their evidence, Mr. Rosen, Mr. Wanono and Ms. Wynn all agree that, at the July meetings, Mr. Rosen and Mr. Wanono expressed QP's wish that, as part of QP's purchase of Ms. Wynn's shares in Premier, Mr. Chung's employment as chief financial officer would be terminated at no cost to QP. However, the evidence does not support the conclusion that, in July 2018, Ms. Wynn had agreed to what QP wanted. The evidence provides no support for a conclusion that, as of July 31, 2018, QP and Ms. Wynn had concluded any oral contract on such terms. The arrangements concerning Mr. Chung were not part of a stand-alone transaction, separate and apart from the purchase and sale of Ms. Wynn's shares in Premier. Termination of Mr. Chung was relevant only in the context of that larger transaction. As of July 31, 2018, the parties were in the process of discussing and negotiating the terms of that transaction, including when the chief financial officer would be terminated. Nothing had been settled or agreed to. [142] There is no

dispute that, following the July 31, 2018 meeting, Mr. Rosen was going to send out QP's letter of intent - its offer - concerning the transaction. Mr. Rosen in fact did just that. In that context, Ms. Wynn's evidence that, at the end of the meeting on July 31, 2018, she was waiting to see what would be in QP's letter of intent is credible. The assertions of Mr. Rosen and Mr. Wanono that they had a concluded oral contract with Ms. Wynn concerning Mr. Chung are not. Whatever Mr. Rosen and Mr. Wanono, subjectively, might have understood from Ms. Wynn's body language (which was never described at trial) or her non-response at the meetings is irrelevant, since the test for intention to create legal relations is objective: see Shaw Production Way Holdings Inc. v. Sunvault Energy, Inc., 2018 BCSC 926, at paras. 139-142. Every version of the letter of intent repeated expressly that it was "not intended to create any legally binding obligations" between the parties. [143] In my opinion, the content of LOI No. 1 is also inconsistent with the proposition that the parties had a prior oral contract concerning Mr. Chung as of end of the meeting on July 31, 2018. As I noted above, LOI No. 1 was described (correctly) by Mr. Rosen as an offer. However, for a valid contract to exist, there must be offer and acceptance, among other things: see Redfern Resources Ltd. (Re), 2012 BCCA 189, at para.

72. LOI No. 1 expressly stated that, with limited exceptions (none of which concerned Mr. Chung), it was not intended to create any legally binding obligations between the parties. It also expressly contemplated that there would be further negotiations. The plain words of LOI No. 1 are inconsistent with QP's assertion that, as of July 31, 2018, QP had a prior oral contract with Ms. Wynn concerning Mr. Chung, sufficient to satisfy the legal requirements for rectification of the Share Purchase Agreement. [144] In its closing submissions, QP argued that LOI No. 2 supported its assertion that the parties had reached a prior oral agreement on definite and ascertainable terms. QP argued that LOI No. 2, which (although circulated by Mr. Mendes) was prepared by Mr. Nichols on behalf of Ms. Wynn, in fact reflected what QP says was the oral agreement (what QP termed the "Chung Agreement") reached concerning Mr. Chung, based on which QP seeks to have para. 4.9.2 of the Share Purchase Agreement rectified. [145] QP argued that in LOI No. 2, on any reasonable interpretation, the section concerning Employees made it clear that: (a) Mr. Chung would be fired at Ms. Wynn's cost; (b) Mr. Chung would be given 30 days of notice at closing and would be expected to work for that period; (c) Ms. Wynn would make efforts to see that Mr. Chung would remain working for 30 days following closing; and (d)

QP would be responsible for Mr. Chung's salary during the 30 day notice period. [146] QP says that both LOI No. 1 and LOI No. 2 reflected the parties' discussions at the July meetings. QP says further that, after LOI No. 2 was circulated, Ms. Wynn then changed her mind about responsibility for arrangements concerning Mr. Chung, the results of which were seen in LOI No. 3. [147] However, I do not agree with or accept QP's characterization of the facts. [148] QP is correct to point out that there are changes in the paragraphs concerning Employees from LOI No. 2 to LOI No.

3. For example, in LOI No. 3, employees are not to be terminated prior to closing, and there is an express allocation of responsibility to Ms. Wynn for terminated employees, except for Mr. Chung. [149] However, what QP's argument overlooks is one of the most important changes made in LOI No. 2, compared with LOI No. 1, namely, the necessary, separate identification of Ms. Wynn and Premier. This was a fundamental problem with LOI No. 1, which treated Premier as if it was the seller, and treated Premier and Ms. Wynn as if they were legally identical, which they were not. Where, in the last sentence of the paragraph dealing with Employees in LOI No. 2, it says "Premier will be responsible for all severance pay and other liabilities to or in respect of the CFO," it means Premier, the company. It does not mean Ms. Wynn. Premier and Ms. Wynn are not treated as one and the same. Mr. Rosen's and Mr. Wanono's subjective understanding of LOI No. 2 is inconsistent with the plain words of the document, and with changes clearly identified as made in LOI NO. 2 as compared with LOI NO.

1. These changes were not slipped in surreptitiously by Ms. Wynn or her lawyer. [150] A fatal problem with the argument QP advances based on LOI No. 2, and the proposition that Ms. Wynn "changed her mind" in LOI No. 3, is that QP assumes Premier and Ms. Wynn are synonymous, and that where LOI No. 2 uses "Premier," it means "Wynn." However, and with respect, the argument is circular. [151] In any event, the changes made by Mr. Nichols in the section concerning Employees in LOI No. 3 were accepted by Ms. AG, and incorporated into LOI No. 4, which was sent out under Mr. Rosen's name. [152] In addition to the lack of clear and persuasive evidence of a prior oral agreement, there is no single version of the "Chung Agreement." Rather, there are at least six. [153] First, there is the version pleaded in para. 6 of Part 1 of the amended third party notice. Second, there is the version described by Mr. Rosen and Mr. Wanono in their evidence at trial. This version is mostly consistent with what is found in LOI No.

1. There is a third version in Mr. Rosen's affidavit sworn September 30, 2019, which was put to him on cross-examination, and is the version described as the "Chung Agreement" in QP's written submissions. As compared with LOI No. 1, the version described in Mr. Rosen's affidavit has notice being given to Mr. Chung at a different time, namely, at closing (consistent with LOI No. 2), rather than prior to closing (as in LOI No. 1). It also includes an obligation on the part of QP to pay Mr. Chung's salary during the 30 days of working notice, which is not part of LOI No. 1. [154] Ms. AG's evidence that there was a typographical error in para. 4.9.2 of the Share Purchase Agreement is a fourth version. I accept Ms. AG's evidence that the word "Company" is now, in hindsight, seen as a "typographical error." However, based on the whole of the evidence, I cannot accept Ms. AG's assertion that it was in fact a "typo," and that para. 4.9.2 should be corrected or rectified by simply changing "The Company" to "The Vendor" in the second sentence. Based on this change, Ms. Wynn (the Vendor) would be responsible for paying compensation to the Chief Financial Officer during the 30 days after the Closing Date. However, this is inconsistent with Mr. Rosen's evidence. Indeed, the proposition that para. 4.9.2 should be rectified in the manner proposed by Ms. AG was not accepted in the "Relief

Sought" in the amended third party notice. [155] Finally, there are the versions pleaded in "Part 2: Relief Sought" of the amended third party notice. For example, in para. 1(f), QP seeks rectification of para. 4.9.2 of the Share Purchase Agreement so that it reads: The Vendor will deliver to the Chief Financial Officer at Closing a termination notice, effective 30 days after the Closing Date. The Vendor will be responsible for the payment of all legal obligations relating to the termination of the Chief Financial Officer, including all amounts required to be paid either by Applicable Law or by contract, including payment in lieu of notice, termination pay, severance pay, vacation pay, legal costs, costs of defense or other proceedings, and all other outstanding amounts relating to the Chief Financial Officer. The Buyer will be responsible for payment of the salary of the Chief Financial Officer for the 30 days period after the Closing Date. Any such payment made to the Chief Financial Officer shall not be an offset against the Purchase Price. [156] Paragraph 1(g) of the "Relief Sought" proposes something different and even less concrete. [157] The multiple versions of the "Chung Agreement" mean that not only is QP unable to prove the existence and content of an inconsistent prior oral agreement, but it is also unable to prove the precise form by which the Share Purchase

Agreement can be corrected. [158] It follows that QP's claim for rectification of the Share Purchase Agreement must be dismissed. (ii) Should para. 4.9.2 be severed? [159] I turn then to QP's alternative argument that para. 4.9.2 should be severed from the Share Purchase Agreement, based on s. 9.3. [160] QP argues that para. 4.9.2 should be severed, based on the proposition that, in the context of a mistake in a material or essential term, the contract itself may be invalid or void ab initio. In support of this proposition, QP cites Vandal v. Cousineau, 2014 ABQB 658, at para. 104 (aff'd 2015 ABCA 408), which in turn cites Seong Yun Ko v. Hillview Homes Ltd., 2012 ABCA 245. QP also cites Fairmont, at para. 32, where Brown J. comments that "imprecision may justify setting aside an instrument." [161] QP argues that "illegal" features of a contract can be removed by "blue pencil" or "notional severance," without affecting the enforceability of the remaining terms. It argues further that blue-pencil severance can be applied where there is an unambiguous severance term in the contract in issue, citing Miller v. Convergys CMG Canada Ltd., 2014 BCCA 311, at paras. 36-37. It says that s. 9.3 of the Share Purchase Agreement is such a term. [162] QP argues that para. 4.9.2 of the Share Purchase Agreement directly contradicts para. 4.9.1 and para. 5.2.1. It argues further that the

admissible evidence suggests that this problem arose from a "clear case" of mistake, and that the parties intended for the liabilities associated with Mr. Chung's employment and termination to fall to Ms. Wynn, with QP bearing only the costs associated with Mr. Chung's salary during the 30 days of working notice. QP argues that para. 4.9.2 is therefore invalid, or at least unenforceable, given the language of the Share Purchase Agreement as a whole. [163] I reject the assertion that the parties intended for the liabilities associated with Mr. Chung's employment and termination to fall to Ms. Wynn. The evidence does not support QP's assertion concerning what the parties, objectively, intended. The strongest evidence is found in the Share Purchase Agreement itself. [164] QP argues that severance of para. 4.9.2, like rectification, would reflect the true intentions of the parties and remove a contradictory provision QP says was inserted by Ms. Wynn without discussion or substantive negotiation. However, QP has failed to prove any pre-existing oral "Chung Agreement" on the terms it asserts, and failed to prove that the Share Purchase Agreement does not reflect the parties' true intentions. [165] Having rejected QP's case on rectification, I must also reject its argument on severance. [166] Implicit in QP's argument is the idea that difficulty in interpretation should lead me to

conclude that para. 4.9.2 is either invalid or unenforceable. (QP did not advance any argument that might support a conclusion that para. 4.9.2 was "illegal.") [167] In her submissions, Ms. Wynn acknowledged the difficulty of reconciling the indemnity provisions in para. 5.2.1 with para. 4.9.2. However, Ms. Wynn argued that, in such circumstances the courts are clear in the approach to be taken, citing BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12. [168] In BG Checo, Mr. Justice La Forest and Madam Justice McLachlin (as she then was), for the majority, first set out some basic principles of contract interpretation and then described how they should be applied in the face of seemingly inconsistent terms in a contract, at pp. 23-24: It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole: [citations omitted]. Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective: [citations omitted]. In this

process, the terms will, if reasonably possible, be reconciled by construing one term as a qualification of the other term: [citations omitted]. A frequent result of this kind of analysis will be that general terms of a contract will be seen to be qualified by specific terms -- or, to put it another way, where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term to not extend to the subject-matter of the specific term. [169] When the interpretative task is approached in this way, para. 4.9.2 (the more specific provision) can be reconciled with para. 4.9.1 and para. 5.2.1 (the more general provisions), and those provisions interpreted so that their scope does not extend to cover what the parties have addressed specifically in para. 4.9.2, namely that: "Any such payment made to the Chief Financial Officer shall not be an offset against the Purchase Price." This interpretation reasonably gives meaning to all of the provisions in question. An interpretation giving reasonable consistency to the terms in question can be found, and there is no need to rule one clause or the other ineffective. [170] The result is that QP has failed to show that para. 4.9.2 is either invalid or unenforceable, and its alternative argument based on severance of para. 4.9.2 must also fail. (d) Summary [171] I find, therefore, that QP has failed to show any basis on which it can require Ms. Wynn to indemnify it for amounts QP must pay to Mr. Chung.

4. Summary and disposition [172] In summary: (a) Mr. Chung is entitled to judgment against the defendant for the amounts set out above; (b) the defendant's claim that it is entitled to be indemnified by Ms. Wynn is dismissed. [173] Unless the parties wish to make submissions concerning costs, costs will follow the event. Accordingly, Mr. Chung is entitled to costs in accordance with Rule 15-1(15) against the defendant, and Ms. Wynn is entitled to costs in accordance with Rule 15-1(15) against the defendant. [174] If the parties wish to make submissions on costs, they may do so in writing, provided that any submissions must be filed within 45 days of the date of these reasons. However, with respect to costs, I remind counsel of the provisions of Rule 1-3(2) concerning proportionality. Any written submissions must be no more than 10 pages double-spaced (except for quotations) using a font size no smaller than 12 point (except for quotations). I will leave counsel to agree on a suitable schedule for the exchange of submissions. "Adair J."