Executive Summary: Key Legal and Evidentiary Issues

• The case concerns whether 10031695 Manitoba Ltd. (1003) validly exercised an option to purchase property under an agreement with 72230 Manitoba Ltd. (722).

• A key issue was whether the pending litigation order (PLO) and caveat filed by 1003 against the property should be discharged to allow its sale.

• The Court considered whether damages would adequately protect 1003’s interests instead of specific performance.

• Jurisdictional limits under The Real Property Act prevented discharge of the caveat once litigation had commenced.

• The motion appeal judge’s reliance on the caveat as a reason not to discharge the PLO was challenged.

• Leave to appeal was denied because the grounds lacked sufficient merit or importance to justify review by a full panel.

Facts of the case

10031695 Manitoba Ltd. (1003), owned by Bonnie West, and 72230 Manitoba Ltd. (722), owned by Glenn Karr, were parties to agreements regarding a property owned by 722. In 2020, while West and Karr were married, 722 leased the property to 1003 for five years and granted 1003 an option to purchase the property for $850,000 at any time during a valid lease if 1003 was not in default. In April 2021, 1003 made an offer to purchase the property under this option agreement. The validity of this offer and whether 722 complied with the option’s terms are central to the litigation. West and Karr separated in June 2021 and divorced in June 2022.

After renovations, 1003 took possession in June 2021. In March 2023, 1003 vacated the premises. The parties disputed whether 1003 defaulted on rent and abandoned the property or whether 722 locked 1003 out. 722 terminated the lease on March 17, 2023. On March 24, 2023, 1003 filed a caveat against the property claiming an interest under the option agreement. On April 3, 2023, 1003 filed a statement of claim and obtained a PLO through an ex parte motion on April 4, 2023.

722 applied to discharge the PLO, but the senior associate judge dismissed the motion, finding full and fair disclosure at the ex parte hearing. The motion appeal judge agreed with this finding but concluded that specific performance was not appropriate because damages could adequately protect 1003’s interests. He suggested that 50% of the sale price could be held in trust during litigation. Despite this, he declined to discharge the PLO, as the caveat still prevented the sale. He also found he lacked jurisdiction to discharge the caveat under section 163 of The Real Property Act once a statement of claim had been filed, absent abuse of process.

Discussion of policy terms and clauses at issue

The dispute centered on the lease and option agreement made in 2020. The first option agreement allowed 1003 to purchase the property for $850,000 provided 1003 held a valid lease and was not in default. The key issue was whether 1003 validly exercised this option through its April 2021 offer and whether 722’s termination of the lease affected 1003’s rights under the agreement. The PLO and caveat were protective measures filed by 1003 to safeguard its claimed interest during litigation.

Outcome

The Court of Appeal dismissed 722’s motion for leave to appeal. It found that the motion appeal judge correctly concluded he lacked jurisdiction to discharge the caveat because litigation had commenced. The Court held that 722’s proposed grounds of appeal lacked sufficient merit or importance to warrant review by a full panel. The Court also found no novel or unsettled point of law or broader significance to other disputes. Costs of the motion were awarded to 1003, and the parties were encouraged to proceed toward trial scheduled for March 2026.

There was no monetary award or damages granted in this decision.