Executive Summary: Key Legal and Evidentiary Issues

• Enforceability of a Buy-Back and Right of First Refusal Agreement following a conditional sale of municipal land

• Threshold relevance of affidavit evidence in determining contractual breaches

• Admissibility of lay versus expert opinion in commercial affidavit testimony

• Scope and limits of hearsay, including when statements require attribution and belief declarations

• Role of speculation and legal argument within affidavits in civil applications

• Application of Nova Scotia Civil Procedure Rules regarding evidentiary standards for affidavits

Background and procedural history

The Municipality of the District of East Hants filed a Notice of Application in Chambers seeking specific performance and damages related to an alleged breach by Lively Properties Limited of a Buy-Back and Right of First Refusal Agreement. This agreement was part of a 2019 transaction in which the Municipality sold land in the Mount Uniacke Business Park to Lively Properties, contingent on the execution of the Buy-Back Agreement. The Municipality later exercised its right under the agreement to reacquire the land, which Lively Properties refused.

The application was met with a Second Amended Notice of Contest from Lively Properties, arguing that the Municipality’s conduct gave the impression that it would not enforce the buy-back rights and should therefore be estopped from doing so. To support this position, Lively submitted an affidavit by its sole director, Mr. Arni Lively, which became the subject of evidentiary objections.

Nature of objections and legal framework

The Municipality objected to 29 of the affidavit's 82 paragraphs, citing grounds including relevance, hearsay, speculation, submissions, and inadmissible opinion evidence. Justice Glen G. McDougall analyzed these objections under Nova Scotia’s Civil Procedure Rules, particularly Rules 5.22 and 39.02–39.04, and guided by key decisions such as Waverley (Village Commissioners) v. Nova Scotia (Minister of Municipal Affairs) and King v. Gary Shaw Alter Ego Trust.

The court emphasized that affidavits should be factual, based on personal knowledge or admissible hearsay, and avoid submission-style narrative or unsupported opinions. While proportionality in evidentiary objections was recognized, especially in light of newer jurisprudence like McDonald v. Hue and Colbourne Chrysler Dodge Ram Ltd. v. MacDonald, the court maintained that improper evidence could undermine the truth-seeking function of affidavit-based proceedings.

Court's findings on the affidavit

Justice McDougall ruled in favor of redacting several paragraphs from Mr. Lively’s affidavit. These included content offering inadmissible opinion on market conditions, hearsay statements lacking attribution, speculative assumptions about third-party motives, and argumentation presented as evidence. For example, paragraphs discussing COVID-19 impacts on construction and references to global events such as the Suez Canal crisis and the Texas Freeze were struck on the basis that they lacked evidentiary foundation or expert qualification.

However, not all objections were upheld. Some paragraphs—particularly those addressing Lively's interpretation of the Municipality’s conduct in business dealings—were allowed to remain, as they were relevant to the estoppel defense and could not be ruled out as immaterial at this procedural stage.

Outcome and next steps

The ruling was limited to evidentiary admissibility within the affidavit and did not address the merits of the case or the enforceability of the Buy-Back Agreement. Justice McDougall deferred the question of costs until a final determination is made on the substantive issues. As a result, while the Municipality succeeded in striking large portions of the contested affidavit, no final ruling has yet been made on whether Lively Properties is in breach or if specific performance and damages will be ordered.