Hawrelak v. City of Edmonton

Hawrelak v. City of Edmonton
Collection
Supreme Court Judgments
Date
1975-03-06
Report
[1976] 1 SCR 387
Judges
Laskin, Bora; Judson, Wilfred; Spence, Wishart Flett; Dickson, Robert George Brian; de Grandpré, Louis-Philippe
On appeal from
Alberta
Subjects
Municipal law
Decision Content
Supreme Court of Canada
Hawrelak v. City of Edmonton, [1976] 1 S.C.R. 387
Date: 1975-03-07
William Hawrelak (Defendant) Appellant;
and
The City of Edmonton (Plaintiff) Respondent.
1974: March 27, 28; 1975: March 7.
Present: Laskin C.J. and Judson, Spence, Dickson and de Grandpré JJ.
ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION
Municipal law—Mayor of city a major shareholder in building company—Shares sold at enhanced value after adoption by city of replotting programme—Mayor involved in certain land transactions—City’s claim to recover gain made upon sale of shares dismissed.
The appellant was elected mayor of the respondent city on October 16, 1963. At that time he was a major shareholder in a company (Sun-Alta Builders Ltd.) which had acquired lands in an area that was annexed to the city in 1961. While he was mayor the appellant was involved in certain transactions, one of which was between Sun-Alta and the city and involved a consent by Sun-Alta to replotting and an agreement to sell some of its land to the city. That transaction cost the appellant his office as mayor as a result of disqualification proceedings taken against him under provincial legislation.
Another transaction involved an attempt by the Chrysler Corporation to acquire certain land owned by the city and to have it rezoned to suit Chrysler’s intended use. In order to tempt the city to this end, Chrysler acquired certain lands adjacent to those owned by Sun‑Alta, for the purpose of exchanging them for the city’s land. The appellant favoured the exchange and, moreover, gave advice to Chrysler on a fresh presentation of its proposal to the city after its first approach had been rebuffed. The transaction came to nought when the city refused to pass the required rezoning by-law, but, thereafter, the city, being desirous of acquiring the Chrysler lands in order to advance its proposed replotting programme, purchased the land from Chrysler. The appellant took no part in the arrangements for the purchase. The city proceeded to adopt the replotting programme at a City Council meeting on November 23, 1964. The appellant did not vote on the question. Shortly after the adoption of the replotting programme by the city, the appellant sold his shares in Sun-Alta at a considerable profit over his small original cost. The city sued the appellant for the profits which he thus obtained and for damages. At trial, the city was awarded $72,197. On appeal, the Appellate Division dismissed the appellant’s appeal and allowed the city’s counter-appeal, so that judgment against the appellant was increased to $80,117. The appellant then appealed to this Court.
Held (Dickson and de Grandpré JJ. dissenting): The appeal should be allowed.
Per Laskin C.J. and Judson J.: There was no statutory basis for the city’s claim to recover the gain which the appellant made upon the sale of his Sun-Alta shares, and there was no ground upon which the city could support it under the principles, which it invoked governing the duty of fiduciaries or persons of like character to account for profits made through improper use of position. On the facts of the case, the city’s recovery under the judgments below sounded more in simple unjust enrichment than in accountability for breach of fiduciary duty, and there was no basis for the city’s claim for recovery even in that aspect. The appellant was not unjustly enriched at the city’s expense.
Per Laskin C.J. and Judson and Spence JJ.: The replotting was part of a development which had become the firm policy of the municipality prior to the time the appellant became mayor. That policy had been carried so far as to obtain from Sun-Alta and others their approval of the replotting and their agreement to convey lands making such replotting possible at a price which was a mere fraction of the value of those lands. The proposal for the exchange with the Chrysler Corporation would have made that replotting easier, or caused it to be carried out sooner. Any part the appellant played in furthering that exchange came to naught and the Chrysler lands were purchased by the city after it had full knowledge of the appellant’s interest in the Sun-Alta lands adjacent thereto and without the city being in any way forced to carry out the purchase. The respondent simply failed to make out a case to fall within the Regal (Hastings), Ltd. line of authorities.
Moreover, even if the appellant by his actions had placed himself in the position where he was required to disgorge a profit, the respondent had not proved that the appellant made any profit as a result of his actions or position. Per Dickson and de Grandpré JJ., dissenting: At all material times, as found by the Courts below, the appellant had a conflict of interest—(a) his important shareholdings in a company standing to benefit from a replot; (b) his duty to the population of the city, a duty which required that all decisions relating to the replot be taken objectively. The appellant failed to respect his duty to the population.
The concurrent findings of the Courts below that at the time City Council adopted the replotting programme all members of Council were not aware of the appellant’s interest in the Sun-Alta lands involved in the replot was based on the evidence and should not be disturbed. Also, on the question of profit, the concurrent findings of the Courts below against the appellant should not be disturbed.
[Toronto v. Bowes (1854), 4 Gr. 489, aff’d. 6 Gr. 1, aff’d. 11 Moo. P.C. 463, 14 E.R. 770; Regal (Hastings), Ltd. v. Gulliver et al., [1942] 1 All E.R. 378; Reading v. The King, [1948] 2 K.B. 268, distinguished; Midcon Oil and Gas Ltd. v. New British Dominion Oil Co. Ltd., [1958] S.C.R. 314; Peso Silver Mines Ltd. (N.P.L.) v. Cropper, [1966] S.C.R. 673, referred to]
APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], dismissing an appeal from a judgment of Kirby J. Appeal allowed, Dickson and de Grandpré JJ. dissenting.
B.J. MacKinnon, Q.C., and J.E. Sexton, for the defendant, appellant.
W.A. McGillivray, Q.C., and J.W. Rose, for the plaintiff, respondent.
Judson J. concurred with the judgment delivered by
THE CHIEF JUSTICE—I agree with my brother Spence that this appeal should be allowed and the action dismissed for the reasons he has given. There is, however, another feature of this litigation with which I wish to deal and which equally, if not more emphatically, justifies dismissal of the action. The claim of the city is to recover the gain which the appellant Hawrelak made upon the sale of his shares in Sun-Alta Builders Limited. There is no statutory basis for the claim, and I am unable to see how the city can support it under the principles, which it invoked, governing the duty of fiduciaries or persons of like character to account for profits made through improper use of position. In short, assuming that the value of Hawrelak’s shares in Sun-Alta rose as a result of the city’s development or replotting programme respecting the area in which Sun-Alta owned land, there is not, in my opinion, any title in the city in the present case to capture that enhanced value for itself, any more than it could recover from any other owner in the area the increase in value of his land, realized upon a sale thereof, brought about by the municipality’s development scheme.
The basis upon which the Courts below held that Hawrelak must account and pay over to the city his gain on the sale of his shares was that while he was mayor he was involved in certain transactions, one between Sun-Alta and the city and a second between Chrysler Corporation and the city, which led to the adoption of a replotting programme by the city, with the consequent enhancement of the value of his shares in Sun-Alta, shares which he sold soon after at a considerable profit over his small original cost.
The transaction between Sun-Alta and the city, formalized on March 12, 1964, and involving a consent to replotting and an agreement to sell land to the city at a price which yielded no profit to Sun-Alta, cost the appellant his office as mayor as a result of disqualification proceedings taken against him under provincial legislation. The Alberta Appellate Division, in its reasons herein, stated that Hawrelak’s ouster from office was because he was a party to a contract with the city under which money was payable or under which he had a pecuniary interest. That interest was his major shareholding in Sun-Alta which held an option on land in an area that had been annexed to the city and was marked for replotting.
The Chrysler transaction involved an attempt by Chrysler to acquire certain land owned by the city and to have it rezoned to suit Chrysler’s intended use. In order to tempt the city to this end, Chrysler acquired the so-called market garden lands, adjacent to those owned by Sun-Alta, for the purpose of exchanging them for the city’s land. Hawrelak was not alone in favouring the exchange but, of course, his interest in Sun-Alta would make his position suspect. Moreover, he had given advice to Chrysler on a fresh presentation of its proposal to the city after its first approach had been rebuffed. The Chrysler transaction came to nought when the city refused to pass the required rezoning by-law, but, thereafter, the city, being desirous of acquiring the market garden lands in order to advance its proposed replotting programme, purchased the land from Chrysler. Hawrelak took no part in the arrangements for the purchase and the trial judge noted that the city did not stand to lose on that purchase. The city was then in possession of all the facts bearing on Sun-Alta’s interest in land in the area of the proposed replotting and of Hawrelak’s interest in Sun-Alta. Having that full knowledge, it proceeded to adopt the replotting programme at a City Council meeting on November 23, 1964. Hawrelak did not vote on the question and it is not suggested that he influenced adoption of the scheme by Council. Indeed relator proceedings to oust him from office were imminent and were formally launched some three weeks later.
Apart from other considerations touching its claim herein, I fail to see how the Chrysler matter could be an element in the city’s claim to take Hawrelak’s gain on the sale of his Sun-Alta shares. My brother Spence has dealt so completely with this aspect of the litigation as to make any further observations by me superfluous. The gravamen of the case for the city lies, in my view, in the Sun-Alta transaction with the city, as finally concluded on March 12, 1964 (although initiated before Hawrelak’s election as mayor on October 16, 1963) and in the subsequent adoption by the city of its replotting scheme. The case law upon which the respondent city has relied and which the Courts below applied, such as Toronto v. Bowes[2], are cases in which the faithless fiduciary, where he was obliged to account for a gain, had profited out of a transaction, whether secretly or otherwise, with his principal, or had taken for himself property or a business opportunity which, because of his position in the organization, he had intercepted against the interest of or without the principal’s concurrence which would have to be based upon a full disclosure of the facts. Thus, in Toronto v. Bowes, supra, a mayor had secretly arranged to purchase at a discount debentures of the city authorized under a by-law which he actively supported. In like cases, whether involving interception and capture of corporate opportunities, as in Canadian Aero Service Ltd. v. O’Malley[3], or involving even more blatant faithlessness, as in Zwicker v. Stanbury[4], there is no difficulty in finding accountability for the gain, whether or not the deprived corporation or principal proves any loss. The present case would fall within this line of authority if there was any gain involved in the agreement of March 12, 1964, between Sun‑Alta and the city.
That, however, is not this case. Hawrelak, as a principal shareholder of Sun-Alta, made no gain out of any transaction between Sun-Alta and the city, unless it can be said that because the replotting programme enhanced the value of his shares and it was a programme to which he lent his support as mayor while not disclosing his interest in the affected land, he must account to the city for the enhanced value of his shares, although the adoption of the replotting scheme was the city’s unilateral legislative act, done with full knowledge of all the facts.
Counsel for the city conceded that it would have gone ahead with the replotting scheme in any event. It was, moreover, also part of his submission that there was no accretion in value of the lands in the affected area until there was an assurance that the replot was going to proceed, and he asserted that this was after the city purchased the market garden lands on November 12, 1964. His position appeared to be that this no more bars the city’s claim than a corporation’s claim would be barred against a faithless director who used his position to take a business opportunity that was open to the corporation but which it was unable to acquire. The analogy is misleading on at least two counts. First, if the corporation had by proper resolution released the business opportunity, there having been full disclosure, there could be no liability. Here the city acted, not through Hawrelak (who was in any event merely one voice in a chorus of elected representatives) but in proper form and upon full knowledge, and there is no suggestion that its adoption of the replotting scheme was impeachable for want of good faith or otherwise. Second, the line of authority relied upon by the city respecting the obligation to account for gains concerned situations where there was an actual or notional deprivation of a benefit, and not, as here, where it was the city which, in the exercise of a public function, acted for the public advantage, as it saw it, and incidentally added value to private holdings.
On the facts of this case, the city’s recovery under the judgments below sounds more in simple unjust enrichment than in accountability for breach of fiduciary duty, and I see no basis for the city’s claim for recovery even in that aspect. Hawrelak was not unjustly enriched at the city’s expense. There may be ways in which a municipality may capture all or part of the increase in the value of private holdings brought about by its exercise of its public functions, as, for example, by expropriation or by some form of special assessment but not, in my view, by direct action for its recovery (unless, of course, authorized by legislation). There may be a dilemma for a municipality, which has in mind a redevelopment scheme which, if approved, will enhance the value of land in which Council members, directly or indirectly, have an interest. The dilemma, whether to go ahead with the scheme, seen as a public advantage, or to drop it, does not arise, however, if Council members declare their interest and refrain from voting. If they do not, they risk disqualification. The question of good faith of the Council in its enactment of by-laws may become material to their validity, but where the Council knows the facts and, as here, the one interested party, has refrained from voting, I can find no basis upon which the municipality can support a claim to recover that party’s ensuing gain.
I would allow the appeal as proposed by my brother Spence.
Judson J. concurred with the judgment delivered by
SPENCE J.—This is an appeal from the judgment of the Appellate Division of the Supreme Court of Alberta, pronounced on November 23, 1972. The respondent, the City of Edmonton, had sued the appellant, William Hawrelak, for profits which he had obtained upon the sale of certain shares in the Sun-Alta Builders Limited and for damages. By the judgment of Kirby J., of the Supreme Court of Alberta, pronounced on February 24, 1972, the respondent City of Edmonton was awarded the sum of $72,197. Both the present appellant and the present respondent appealed from that judgment to the Appellate Division. By its judgment aforesaid, the appeal of the appellant William Hawrelak was dismissed and the counter-appeal of the respondent City of Edmonton was allowed, so that the judgment against the appellant was increased to the sum of $80,117.
I find it necessary, in order to outline my opinion upon this appeal, to give a somewhat lengthly and detailed review of the circumstances. In the year 1960, the appellant was a private citizen in the City of Edmonton and negotiated for an option to purchase approximately 67 acres of land in the Town of Beverly, which was immediately to the north-east of the City of Edmonton. This option was assigned by the appellant to a company known as Zeiter Homes Limited in which the appellant held 40 per cent of the shares. The option as executed, from the owner George Gordon Davidson to Zeiter Homes Limited was dated February 3, 1961, and granted an option to purchase the said acreage for the sum of $125,000. Zeiter Homes Limited later changed its corporate name to Sun-Alta Builders Limited. In August of 1962 Sun-Alta Builders exercised its option and acquired the said lands. The reason for this purchase may be gleaned from a report to the Edmonton City Council, dated November 23, 1964, by the City Commissioners, which report cites in some detail the history of the land dealings of the preceding years.
On p. 5 of that report it is said:
On November 27th, 1961, the Commissioners placed a plan before Council covering the unsubdivided areas in the North East section of the City (including the area that was annexed to the City on December 31st, 1961), on which was indicated the Planning Department’s recommendation for the chronological development of the area, the said plan suggesting that the Rundle Heights area be developed during the years 1963-1965. Since 1961 development in the North East of the City has been carried out in conformity with the suggested plan of development so that today the Rundle Heights area is the only large district proposed for 1963-1965 development that has not yet been replotted and served with utilities.
The annexation of the lands in the Town of Beverly, including the 67 acres to which reference thereto has been made, was carried out on December 31, 1961, and, as the City Commissioners pointed out, development had proceeded in that area ever since, so that the Rundle Heights area which included inter alia the 67 acres, was the only large district proposed for redevelopment which had not been replotted by 1964. The city, in proceeding with its plans for that development by August of 1963, had progressed to the stage where it had negotiated for the purchase of lands for parks, school sites and like uses in the Rundle Heights from one Samuel Belzberg and from Sun- Alta Builders Limited. The purchase of such lands was carried out at the price of $600 per acre. By exercise of the option first referred to the appellant Hawrelak had paid $125,000 for 67 acres so $600 per acre would seem to be a very low price. This was explained by the appellant and other witnesses as being the result of the city’s demand so that the city would proceed with the redevelopment of the Rundle Heights area. Although the arrangement for the purchase of Sun-Alta Builders Limited lands was all settled by August of 1963, the actual contract whereby Sun-Alta agreed to convey the lands and also to consent to the replotting of the area, is dated March 12, 1964. I shall refer hereafter to the executions thereof. On October 16, 1963, the appellant was elected to the office of mayor of the City of Edmonton.
The Chrysler Corporation desired to obtain from the City of Edmonton lands which the city owned at the corner of 142nd Street and 111th Avenue so that it might at some time thereafter construct on the said land a retail automobile distributor building. The Chrysler Corporation, however, were not prepared to commence the building immediately upon acquiring the said lands and it was the city’s policy that a commitment to commence a building within six months after acquirement must be demanded from any purchaser of lands from the city. That commitment could not be extended for more than 12 months. When the City of Edmonton held fast to its policy of demanding such a building commitment, the Chrysler Corporation refused to make such an agreement and Donald Crawshaw, a real estate agent with Hoosan and Company Realtors, conceived the device of having the Chrysler Corporation acquire other lands which the City of Edmonton desired to obtain and then exchanging those lands for the city’s lot at 142nd Street and 111th Avenue, thereby avoiding the requirement of a building commitment. Crawshaw obtained information as to various properties which the city desired to obtain for its development schemes and settled on one piece of land which, throughout the course of this litigation, has been referred to as the market garden lands. Those lands were in the Rundle Heights area and were, in fact, immediately adjacent to the lands owned by Sun-Alta Build- ers Limited. Chrysler Corporation took an option on those lands for the sum of $92,000 and offered to exchange them for the city’s building lot, putting a valuation of only $69,960 on the lands and paying the balance of some $48,000 in cash. J.R. Warner, head of the Land Department of the City of Edmonton, in a memorandum to the City Commissioners dated October 10, 1963, outlined this transaction in exact detail. It was significant that it hinged on two particular conditions. Firstly, that no building commitment would be required from the Chrysler Corporation as to the city-owned lot, and secondly, that the city-owned lot would have to be rezoned to permit a retail automobile dealership with outside vehicle display. This report was in the hands of Mr. D.B. Menzies, the Chairman of the City Commissioners, until it was made the subject of a report to council on November 12, 1963. It will be noted that between the date of Warner’s report and this last report to Council, the appellant had been elected mayor of the city and, as such, became a member of the City Commissioners. The report dated November 12, of course, stressed the fact that the acquirement of the market garden lands would make possible the registering of a new residential subdivision plan and make available badly needed property for the two school boards and for park lands. The appellant William Hawrelak signed that report. The appellant testified that he did not then, or for many months thereafter, know that the market garden lands which it was proposed that the city should acquire in exchange for its lot at 142nd Street and 111th Avenue, were immediately adjacent to the Sun-Alta Builders Limited lands and that therefore the development plot would eventually include the latter land. There has been much debate on the appellant’s knowledge, or lack of knowledge, of this fact for reasons which I shall give in detail later. I am of the opinion that that is unimportant. I repeat here that the proposal for the replotting of the Sun-Alta and Belzberg lands had been settled in August of 1963, and that it had been arranged at that time that Sun-Alta would convey some acres of its lands to the city for $600 per acre. That was, of course, months before the appellant was elected mayor. At the meeting of November 12, 1963, the exchange was approved in principle. The appellant was not present at that meeting. The City Council, however, on December 19, 1963, refused the redevelopment permit for the city-owned land. On December 30, 1963, the appellant conferred with Mr. Cameron Steer, who was then acting as the solicitor for the Chrysler Corporation, and with Mr. Crawshaw the realtor, and advised them that when the matter came back to Council, they should make a more attractive presentation of their proposal. This advice was followed by the representatives of Chrysler Corporation and on January 27, 1964, at a subsequent meeting of Council, the redevelopment plan was approved. The appellant was present at that meeting. Two days later, on January 29, the Chrysler Corporation exercised its option to obtain title to the market garden lands.
As I have pointed out, more than the redevelopment permit was necessary before Chrysler Corporation could erect on the city lot a retail automobile distributors building. A rezoning was required. That rezoning was the subject of By-law 2512 which came before Council of the City of Edmonton and received two readings. Opposition to such rezoning, however, gathered weight. Local residents objected to the intrusion into a residential area of a commercial building and the Alberta Teachers Association, which owned and occupied a nearby building, was most adamant in its opposition. The matter was referred back to the By-law Committee again and it was considered by the By-law Committee on June 18, 1964, and referred back to Council without recommendation. At a meeting of the City Council held on June 29, 1964, the City Commissioners submitted a long and detailed report dealing with the exchange and included a chronological report. At the meeting considering both By-law 2512 as to the rezoning of the city lot at 142nd Street and 111th Avenue and the proposed replot of the Rundle Heights area, the minutes noted that Mayor Hawrelak stated that he was a director of Sun-Alta Builders who owned land in the proposed replot. He did not vote in regard to this matter. By-law 2512 was not read a third time and, therefore, of course, was not enacted. Later it was struck off the agenda and filed. The device conceived by Mr. Crawshaw, therefore, had failed and at this point the city was left the owner of the lot at 142nd Street and 111th Avenue, and the Chrysler Corporation Limited was the owner of the market garden lands. The possibility that the transaction would fail to get Council support had been considered and the By-law Committee had requested that the city solicitor report on the legal position of the city in reference to the Chrysler Corporation in such event. The city solicitor made such a report under date of June 22, 1964. Two paragraphs of that report read:
Should Bylaw No. 2512 not be read a third time and finally passed I can see no means by which the City can be required in law to make Lot 1 available as a new car dealership site because of the express statement of the applicant company that it cannot agree to bind itself to act by changing its Development Permit into a Building Permit and by building on the site within 18 months or less after 28th January, 1964.
It follows, of course, that if for these reasons the Chrysler Corporation cannot proceed on Lot 1, it has no obligation to make available to the City all or any part of the parcel of 11.2 acres in the former Town of Beverly that the City wishes to buy for schoool and park purposes. It delivered, in trust, to the City Land Department on April 9th, 1964, the transfer for this land but the City has taken no steps to register the transfer.
Therefore, as of the date of the meeting of Council on June 29th, the members of Council knew that the city, in the opinion of its solicitor, would not make itself liable to the Chrysler Corporation for damages if it failed to carry out the proposed exchange. Three days after the date of that report, i.e., on June 25, 1964, the city solicitor wrote to Messrs. Milner, Steer and Company, solicitors for Chrysler. That letter is of some considerable interest and I quote it in full:
Dear Mr. Steer:
Speaking as a member of the Municipal Planning Commission which supported the proposal to create a C-2 site at the South West corner of 142nd Street and 111th Avenue, I am hopeful that the zoning will take place. However as City Solicitor, I am concerned as to whether if, for any reasons, the Chrysler development at the above site is now allowed, the parcel of 11.2 acres now owned by your client and located in the former Town of Beverly will be available to the City. As you know, the City wishes to buy this 11.2 acres for school and park purposes and if the site cannot be bought the proposed subdivision plan for the area may be delayed.
We discussed this matter on Thursday, June 25th and you indicated to me that you thought it probable that the Chrysler Corporation would be prepared to sell the 11.2 acres to the City whether or not the West Glenora parcel became available to your clients for development. If it is possible I would very much like to know by the afternoon of Monday, June 29th, just what is the position of Chrysler respecting the 11.2 acres that the City wishes to purchase should the proposed exchange involving the West Glenora property be frustrated for any reason.
It elicited a reply, dated June 29, the very date of the meeting at which the exchange had been effectively refused. I quote the operative paragraph of that reply:
Chrysler Canada Ltd. has now given us instructions as to its wishes in the eventuality that this land exchange should not be completed. Speaking without prejudice to whatever rights Chrysler Canada Ltd. has or may have the Company has instructed us to advise that its sole and only purpose in acquiring the land it now holds in Beverley was for the purpose of this land exchange. Accordingly, should the exchange not be completed the Company wants to and will turn this Beverley land over to the City of Edmonton at the Company’s cost plus its expenses including solicitor’s fees. The later letter from Messrs. Milner, Steer to the Mayor and Commissioners of the City of Edmonton, dated July 21st, included the paragraph:
The result of Council’s decision is that Chrysler has put out the money necessary to purchase the Beverly land and has incurred expenses in so doing and the Company is of the view that the City should now take the Beverly lands and reimburse the Company for these expenditures.
The expenditures were set out in detail in that letter, totalling $94,702.15, and throughout the litigation it has been said that the city, when they acted on that letter and did acquire the Beverly lands, were doing so as a result of a moral, if not a legal, liability. In my view the documents exhibit the complete fallacy of that position. The city solicitor had made a report prior to the breakdown of the exchange, that the city was under no legal liability to the Chrysler Corporation. Three days later the city solicitor had written to the solicitors for the Chrysler Corporation stressing that the city desired the very lands which were the subject of the exchange and which adjoined immediately the Sun-Alta Builders Limited lands. On the very day when the city council with complete knowledge of the fact that the market garden lands adjoined the Sun-Alta Builders Limited lands refused to carry out the exchange, the solicitor for the Chrysler Corporation informed the city solicitor that the Chrysler Corporation were ready to convey to the city the market garden lands at Chrysler Corporation’s exact cost. To put it shortly, the subsequent completion of that deal whereby the city acquired these market garden lands was not the result of any feeling that the city had at least a moral responsibility to the Chrysler Corporation, but was an ordinary step in obtaining the lands which the city had needed since the year 1961, and which the city had been moving steadily toward acquiring for instance, by in August 1963, having obtained Belzberg’s and Sun-Alta’s consent to this very replotting and to agreeing to convey some acres of these lands at the ridiculous price of $600 per acre. I return to that transaction whereby Sun-Alta Builders Limited consented to the replotting and agreed to convey lands to the City of Edmonton at the rate of $600 per acre. As I have already said, the agreement had been made firmly in August of 1963. Mr. Zeiter, the appellant’s fellow shareholder in Sun-Alta Builders Limited, testified that in early 1963 the company received from the city a plan of how the replot would deal with the lands of Sun-Alta and that at that time he was told by the city officials that his company would have to sell part of the land to the city for parks and they were offering $500 per acre. In view of the cost to him of the lands to which I have already referred, he regarded that valuation as foolish, and after conferring with Mr. Belzberg, they had agreed to accept $600 per acre. At trial Exhibit 44 was produced. It was a plan dated July 1963 showing the replotting of the Sun-Alta lands. At trial Exhibit 46 was produced being written notes made by Mr. Clarke of the Edmonton Land Department, dated August 1, 1963, outlining his conference with Mr. Zeiter, and which included the reference, inter alia, to the $600 per acre for a total of $9,350 for lands which would have to be conveyed to the city and a compensation which was described as being for “under allocation” at $6,666 per acre.
Mr. Zeiter testified that that concluded his negotiation with the city and nothing more occurred until February or early March, when he received from the city for execution an agreement between the City of Edmonton on the first part, and George Gordon Davidson, the vendor of the lands to Sun-Alta of the second part, and the said Sun-Alta Builders Limited of the third part. At that time the appellant was absent in Hawaii and Mr. Zeiter testified he telephoned to the appellant and asked whether he, Zeiter, should execute on behalf of the company, but that the appellant insisted that the document await his personal execution so that there could be no allegation that he, the appellant, was attempting in any way to hide his connection with Sun-Alta Builders Limited and ownership of the land in question. The appellant then executed the document under date of March 12, 1964. The appellant testified that many months later the document came on his desk in the mayor’s office for his execution as mayor, and that he directed that the document be returned to the municipal officer and that it be brought into Council so again his, the appellant’s position, could be clearly revealed. The appellant then left the city and during his absence, and without any instructions from him, so the appellant testified, the document was executed on behalf of the city by William Mitchell, the acting mayor. This circumstance gave rise to the action of R. ex rel. Anderson v. Hawrelak which was an action by a ratepayer to declare the appellant be disqualified from holding office.
Under s. 97 of the City Act of the Province of Alberta a person who is a party to a subsisting contract with the city was not eligible to be elected mayor or member of the Council, or entitled to sit on or vote thereon and by s. 98 1(a) (1) that prohibition extended to persons who hold more than 25 per cent of the issued stock of a corporation. Since the document was actually executed after the appellant became mayor, the appellant was disqualified by the judgment of McLaurin C.J.T.D. and that disqualification was affirmed by the judgment of the Appellate Division[5]. An appeal to this Court was dismissed[6]. That result seems to be quite in accordance with the provisions of the statute which I have cited, but in my view it has no relevance to the present action which is based solely on a claim for the profits which it was alleged the appellant made through his action as mayor. Kirby J., in his judgment after trial of the action, would appear to have based his finding that the appellant made profits from his dealings as mayor upon two matters. Firstly, the one to which I have last referred, that is, the agreement of March 12, 1964, and secondly, upon the mayor’s action in joining the report of November 12, 1963, in favour of the exchange of the market garden lands for the city lot and the subsequent dealership in reference thereto. As to the first of the matters, I have already pointed out that in my view it has been quite conclusively proved that the whole transaction had been completed in August of 1963, much before the appellant became mayor and that, despite the fact that the actual document was only executed on March 12, 1964, and such execution was sufficient to disqualify the appellant, certainly no action of the appellant in reference to that agreement could be found to justify the allegation that he had made profits as a result of his office as mayor.
As to the second of the incidents, the situation is somewhat more complicated. It will be remembered that the appellant only became mayor by election on October 16, 1963, and this report of November 12, 1963, was less than a month after that. The basis for the report had been Mr. Warner’s submission to the City Commissioners, which was dated October 10, 1963, and according to the evidence given by the appellant, that submission had been kept by Mr. Menzies, the Chairman of the City Commissioners, until November 12, 1963, when he prepared his report of that date. All members of the Commission signed that report, i.e., the appellant and Messrs. Menzies, Tweddle and Hamilton. At the meeting of Council of November 12, 1963, the appellant was not present. The appellant was, however, present at a meeting on December 19, 1963. The report of the Development Appeal Board in reference to the lot at 142nd Street and 111th Avenue, that is, the exchange, was referred back to the Commissioners for further negotiations and report. It was following this meeting that the appellant discussed the matter with Mr. Steer and Mr. Crawshaw.
I have referred already to the question as to whether, at this time, the appellant knew that the market garden lands which it was proposed should be exchanged for the city lot, were immediately adjacent to the lands of Sun-Alta Builders Limited. Whether or not the appellant had that information, the appellant certainly knew of the proposed replotting of the lands in the Rundle Heights area, and knew that it had been proposed from 1961 on that Sun-Alta lands in Rundle Heights were to be replotted, not to benefit Sun‑Alta Builders Limited, but as part of the settled redevelopment policy of the city in that area. Certainly replotting would benefit Sun-Alta Builders Limited. It was recognition of that fact which alone moved Sun-Alta Builders Limited to agree, in October 1963, to sell some of its lands to the city for the ridiculous price of $600 per acre. Replotting would equally benefit Belzberg and replotting would benefit the City of Edmonton for, as the report of November 12, 1963, pointed out, by that means the city would obtain needed land for schools and parks. It was, therefore, quite proper in my view for the appellant as mayor to suggest to the Chrysler Corporation representatives a most efficient way to present their proposal, a proposal, the acceptance of which would benefit all parties. One further fact should be mentioned here. The appellant was elected mayor on October 16, 1963, and immediately thereafter, on October 24, 1963, the appellant addressed a letter to the members of the City Council of Edmonton, Alberta, which read in part:
In view of my position as Mayor of this City, I should like to inform Council about some of the companies in which I have an interest, that may be or are doing business with the City as permitted by the City Act. These are:—
Prairie Rose Mfg. Co. Ltd.
Independent Wholesale Ltd.
Durethane Industries Ltd.
Sun-Alta Builders Ltd.
This letter the appellant testified he read at the first meeting of Council over which he presided as mayor. Some members of the Council remembered hearing it, some di