Executive Summary: Key Legal and Evidentiary Issues

• Whether Lively Properties breached the Buy-Back Agreement by failing to develop the Property within the contractual deadlines.
   
• Interpretation of the disjunctive "or" in Clause 6 determined whether compliance with a single condition could preclude buy-back.
   
• Admissibility of 29 paragraphs of the Arni Lively affidavit was challenged on grounds of relevance, hearsay, speculation, and inadmissible opinion.
   
• Good faith conduct by the Municipality was disputed by Lively Properties throughout the proceeding.
   
• Covid-19, the Texas Freeze, and the Suez Canal blockage were raised as grounds of frustration and commercial impracticability.
   
• Specific performance and additional compensation for lost property tax revenue were sought by the Municipality as remedies.
   

Facts of the case

The Municipality of the District of East Hants sold a property described as Block U, Richard John Drive, Mount Uniacke Business Park, Hants County, Nova Scotia (PID No. 45357449) to Lively Properties Holdings Limited [also styled "Lively Properties Limited" in the case caption of the related 2025 NSSC 274 decision] under an Agreement of Purchase and Sale dated January 28, 2019. The sale was conditional on Lively Properties executing a Buy-Back and Right of First Refusal Agreement, which its President, Arni B. Lively, signed on February 1, 2019. The Application to Purchase, signed by Mr. Lively on January 4, 2019, proposed a purchase price of $46,000.00 with a $2,000.00 deposit, and identified the intended development as a maintenance garage, office, and construction yard estimated at 5,000 square feet and $350,000 in value. Lively Properties did not commence construction, defined in the agreement as the pouring of footings and foundations, within twelve months of closing, nor complete the development within twenty-four months. Instead, the company cleared trees, drained part of the land, transported fill onto the property, and carried out levelling, grading, and ditching. In November 2022, the Municipality's CAO, Kim Ramsay, sent Mr. Lively a letter and an $11,887.09 invoice invoking the "fee option" as an alternative to buy-back; Mr. Lively denied ever receiving this letter, the invoice, or a preceding phone call from Graham Scott, the Municipality's Manager of Economic & Business Development. After the fee went unpaid, the Municipality's Council resolved in March 2024 to exercise its buy-back right, and legal counsel notified Lively Properties by letter dated May 7, 2024, enclosing an Agreement of Purchase and Sale proposing a purchase price of $44,160.00. Lively Properties rejected the buy-back on July 31, 2024, and separately applied for a building permit in August 2024, which the Municipality denied. The Municipality filed its Notice of Application on October 2, 2024, and Lively Properties filed a Notice of Contest, later twice amended. In support of its defence, Lively Properties filed an 82-paragraph affidavit of Arni Lively, 29 paragraphs of which the Municipality objected to as inadmissible.

Policy and legislative provisions at issue

The Buy-Back Agreement required the development to reach a total assessed value of at least $130,434 per acre purchased in the Uniacke Business Park (Clause 2), to comply with the Municipality's Land Use By-Laws (Clause 3), to commence construction within twelve months of closing (Clause 4), and to complete construction within twenty-four months of closing (Clause 5). Clause 6 provided that if the purchaser failed to comply with Clauses 2, 3, 4, or 5, the Municipality "may buy-back the Property." Clauses 9 through 15 set out a fee option as an alternative to buy-back, allowing the Municipality, in its sole discretion, to permit the purchaser to retain ownership upon payment of a fee tied to the commercial property tax rate, payable periodically until either the development requirements were met or the Municipality elected to buy back the property. On the evidentiary side, Civil Procedure Rule 5.22 applies the rules of evidence, including hearsay, to applications, while Rule 39.02 restricts affidavits to admissible evidence and Rule 39.04 empowers a judge to strike inadmissible portions of an affidavit.

Reasoning and analysis

On the admissibility motion, Justice McDougall applied the principles from Waverley (Village Commissioners) v. Nova Scotia (Minister of Municipal Affairs), 1993 NSSC 71, that affidavits must be confined to fact and must not take on the character of a plea or submission. Measured against this standard, paragraphs raising speculation about third parties' motives, inadmissible opinion on market rates and industry-wide effects, hearsay about supplier reports and media coverage, and argumentative submissions on conflicts of interest were struck, while paragraphs bearing on the parties' course of dealing were preserved as potentially relevant to Lively Properties' waiver and estoppel arguments. On the merits, the Court applied the contractual interpretation framework from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 45, favouring a practical, common-sense reading. The Court rejected Lively Properties' submission that satisfying any single one of Clauses 2 through 5 (given the disjunctive "or" in Clause 6) would defeat the buy-back right, holding instead that failure to meet any of those clauses entitled the Municipality to exercise its option. The Court found Lively Properties had failed to commence or complete construction and had not achieved the required assessed value, since in-filling and levelling did not constitute "Development" as defined. The Court also rejected the defence of frustration or commercial impracticability, noting that Lively Properties was already in breach before the pandemic-era events of Covid-19, the Texas Freeze, and the Suez Canal blockage arose, and that no evidence quantified their actual impact on the company's performance. The Court further held the Municipality had acted in good faith, had not made any unequivocal representation waiving its rights, and was not estopped from enforcing the agreement. Lively Properties' unjust enrichment argument was dismissed for want of a proper claim and because, applying Garland v. Consumers' Gas Co., 2004 SCC 25, the existence of the Buy-Back Agreement supplied a juristic reason for any enrichment.

Ruling and overall outcome

The Municipality of the District of East Hants was the successful party. Justice McDougall held that the Municipality was entitled to specific performance requiring Lively Properties Holdings Limited to reconvey the Property, and further entitled to be paid a fee representing lost commercial property taxes from February 1, 2021 to the date of the decision. The judgment did not fix a specific dollar amount; the parties were directed to attempt to agree on the calculation, and, failing agreement, to file written submissions by August 21, 2026, so that the Court could determine the appropriate figure. Costs of the application were likewise left for the parties to resolve or, failing agreement, to address in submissions by the same date.