Executive Summary: Key Legal and Evidentiary Issues

• Defendant Mirjana Polajzar sought to retain $1.15 million in deposits paid by plaintiff 1459534 B.C. Ltd. under a contract of purchase and sale for property on 80 Avenue in Langley, B.C.

• Plaintiff alleged the defendant's son and agent, Randy Polajzar, made representations inducing reliance that the completion date would not be strictly enforced and a joint development opportunity would be explored.

• Insufficient material facts were pleaded in the notice of civil claim to support a breach of the duty of honest contractual performance, particularly regarding the nature and content of the alleged representations.

• Conflicting affidavit evidence from Mr. Singh and Mr. Polajzar created credibility issues that the court found could not be resolved on a summary judgment application.

• Canadian law does not recognize a duty to negotiate in good faith absent an underlying contractual obligation, posing a challenge to the plaintiff's claim as pleaded.

• The purchaser's lien claim survived dismissal as the court determined the evidence raised a weak but triable issue that could not be concluded as bound to fail.

The property transaction and contractual framework

This case arose from a failed real estate transaction involving a property located on 80 Avenue in Langley, British Columbia. On January 9, 2024, the plaintiff, 1459534 B.C. Ltd., whose principal is Jaspreet Singh, entered into a contract of purchase and sale with the defendant, Mirjana Polajzar, the registered owner of the property. The original purchase price was set at $11,500,000, with a deposit of $750,000 and a completion date of July 17, 2024. The contract contained a "time will be of the essence" clause, and provided that unless the balance of payment was paid on or before the completion date, the seller could terminate the contract and the amount paid by the buyer would be non-refundable and absolutely forfeited to the seller on account of damages, without prejudice to the seller's other remedies. The contract also contained an entire agreement clause stating there were no representations, warranties, guarantees, promises, or agreements other than those set out in the CPS.

Appendix A and the addendum

Through clause 3, the CPS incorporated an "Appendix A: Terms and Conditions," which provided that all deposits were deemed non-refundable and immediately payable to the seller upon receipt, and that in the event of cancellation by the buyer for any reason, the deposits would be retained by the seller as liquidated damages and not as a penalty. On June 14, 2024, the parties agreed to an addendum that modified the original contract in several ways. The completion date was changed from July 17, 2024, to March 15, 2025, and the purchase price was increased from $11,500,000 to $12,500,000. On or before July 14, 2024, the buyer was required to provide an additional deposit of $400,000 directly to the seller's lawyer, in trust subject to the terms and conditions in Appendix A. The buyer was also obligated to provide the seller in writing with monthly progress updates for the development applications for the property submitted to the applicable local government, with the first update to be provided by June 30, 2024. The addendum reaffirmed that all other terms and conditions contained in the CPS including Appendix A remained the same and in full force and effect, and that "time shall remain of the essence."

The alleged representations and breakdown of negotiations

The plaintiff's notice of civil claim alleged that "in or around February 2025," the plaintiff engaged in discussions with Randy Polajzar during which the plaintiff was led to believe that further extensions would be entertained in good faith, or the parties would pursue a joint or collaborative development opportunity. However, Mr. Singh's affidavit referred to one conversation with Mr. Polajzar on March 11, 2025 — an approximately 28-minute telephone call. Mr. Singh stated that during that call, Mr. Polajzar indicated the defendant was open to discussing a potential joint venture with the plaintiff for the future development of the property, rather than proceeding strictly by way of an outright sale. Mr. Singh stated he understood this to mean the defendant was still considering collaborative options and that discussions concerning completion remained ongoing in good faith. On March 12, 2025, Mr. Singh texted Mr. Polajzar the contact information for the Langley senior planner, stating he sent this information because Mr. Polajzar had expressed interest in exploring a joint-venture arrangement and had requested details of the planning process and municipal contacts. Mr. Singh stated that in reliance on his understanding from the conversation, he did not take immediate steps to finalize financing before the March 15, 2025 completion date.

Mr. Polajzar's account contradicted Mr. Singh's version of events. Mr. Polajzar stated that Mr. Singh called him several times on the week of March 10, 2025, that he did not answer several of those calls, although he did speak with him on March 13, 2025, two days before the completion date. Mr. Polajzar stated he took notes of the phone calls he had with Mr. Singh, that Mr. Singh asked for an extension to the completion date several times, and that each time he reiterated that he was not interested in providing a further extension. When Mr. Singh asked about a joint venture, Mr. Polajzar told him that he and his mother just wanted the money from the sale of the property, that his mother was elderly, and that he wanted her to benefit from the sale before she died. Mr. Polajzar stated that Mr. Singh did not propose any terms of a joint venture and only used the loose language of "joint venture" without providing any detail. Mr. Polajzar stated he did not want a joint venture and wanted only to sell the property pursuant to the sales contract. Mr. Polajzar further stated that Mr. Singh responded by saying he did not have the funds to complete, but that he could get the funds if granted an extension.

Correspondence between counsel and the failed completion

Email correspondence between the parties' lawyers formed part of the evidentiary record. On March 3, 2025, counsel for the plaintiff forwarded a communication marked without prejudice to counsel for the defendant, the content of which was not disclosed. On March 5, 2025, at 2:55 pm, counsel for the defendant responded, declining the plaintiff's without-prejudice offers for extensions, noting that neither proposal made commercial sense, that the defendant had no counter offer, and that the defendant remained ready, willing, and able to complete on the completion date. At 3:27 pm, counsel for the defendant also noted that all deposits had been released already per the terms of the CPS. Between March 10 and 14, 2025, the email messages between counsel indicated they exchanged at least voicemail messages. On March 14, 2025, at 3:46 pm, counsel for the defendant wrote that the defendant had no counter and was ready to complete. On March 15, 2025, at 5:11 pm, counsel for the defendant emailed counsel for the plaintiff stating that as it was now past 5:00 pm on the closing day, and the buyer had not tendered the customary completion documents or the purchase price, the seller would treat the CPS as having been breached.

The pleading deficiencies on the breach of duty claim

The court, presided over by the Honourable Justice Norell, examined whether the plaintiff's notice of civil claim adequately pleaded a breach of the duty of honest contractual performance as recognized in Bhasin v. Hrynew, 2014 SCC 71 and C.M. Callow Inc. v. Zollinger, 2020 SCC 45. The court identified two difficulties: first, the imprecise pleadings which could be read two ways; and second, the lack of sufficient material facts. If the NOCC was interpreted narrowly — that the defendant refused to negotiate a new agreement — it would not disclose a reasonable cause of action as there is no duty to negotiate a new agreement. However, the pleadings could be read more broadly as outlined in the oral submissions of plaintiff's counsel. The greater difficulty was that the NOCC did not set out the material facts except by implication. For example, paragraph 7 of the NOCC pleaded that representations were made and pleaded Mr. Singh's subjective beliefs arising from them, but did not state what the representations actually were that led to those beliefs, how those representations were dishonest, and how they were directly linked to a right or obligation of the defendant under the CPS and Addendum. The court noted that Rule 3-7(2) states that if words of a conversation are material, they must be pleaded, and Rule 3-7(18) states that if a misrepresentation or fraud is pleaded, full particulars with dates and items if applicable must be stated in the pleading.

The purchaser's lien and conflicting evidence

On the purchaser's lien claim, the defendant sought summary dismissal under Rule 9-6, arguing the transaction collapsed due to the unilateral fault of the plaintiff. The court noted that a purchaser's lien is an equitable remedy available to a purchaser who has paid all or part of the purchase price to the vendor pursuant to a valid contract, and that if the transaction "goes off" without fault on the part of the purchaser, the lien provides the purchaser with a security interest against the property to the extent of the money paid, plus interest and costs. The defendant submitted that her evidence was "incontrovertible." However, the court did not agree, noting that this argument relied on and accepted only the evidence of Mr. Polajzar while ignoring the conflicting evidence of Mr. Singh. While the communications between counsel supported the defendant's case and Mr. Singh's affidavit was sparse, Mr. Polajzar's affidavit indicated there was more than one conversation, and he had not produced the notes he stated he took of those conversations. The court found it could not engage in this type of weighing of the evidence on a Rule 9-6 application.

The ruling and outcome

Justice Norell ultimately dismissed both of the defendant's applications. On the breach of duty claim, the defendant's Rule 9-5(1)(a) application to strike paragraphs in the NOCC concerning a claim for breach of the duty of honest contractual performance was dismissed. The plaintiff was granted leave to amend its pleadings within three weeks of the date of the order, with the defendant having leave to renew the application if the plaintiff did not amend or if the defendant felt the amended pleadings still did not plead a reasonable cause of action. On the purchaser's lien, the defendant's Rule 9-6 application was dismissed, as the court found that the plaintiff's case, while appearing weak particularly upon consideration of the correspondence between counsel, could not be concluded as bound to fail, given the parties' conflicting evidence raised a triable issue. Costs of the application were ordered to be in the cause. No final determination on the merits was reached at this stage, and no specific monetary award was granted to either party; the $1.15 million in deposits remains at issue as the matter proceeds.