Executive Summary: Key Legal and Evidentiary Issues

• The Court held that the July 21, 2021 email and the August 24, 2021 letter from the City, both marked “without prejudice,” did not create a binding contract or “Amendment Agreement” between CRE and the City.

• Clause 38 of the Lease, requiring any amendment, modification, or supplement to be in writing and executed in the same manner as the Lease, was central to rejecting CRE’s argument that either the June 21, 2021 discussion or later communications amended the Lease.

• CRE’s position that the August 24, 2021 letter was an offer accepted either by its conduct in marketing the Campground or by the October 7, 2022 email was rejected; the Court found no acceptance that satisfied Clause 38 and no objective intention by the City to be bound at that stage.

• The claim that the City breached duties of good faith and honest performance failed because the Court found no “Amendment Agreement” arising from the July 21, 2021 email or the August 24, 2021 letter, and there was no allegation that the City acted in bad faith under the existing Lease itself.

• The negligent misrepresentation claim failed: the August 24, 2021 letter was not found to be an untrue statement of existing fact, and although the Mayor’s later statements that the August 24, 2021 letter was binding were misrepresentations of existing fact, the Court found no causal link between those statements and CRE’s alleged loss.

• The Court concluded that the material facts were largely undisputed, that only the legal consequences were in dispute, and that there was no genuine issue requiring a trial; the City’s application for summary dismissal of CRE’s action was granted.

Factual background and the parties’ lease relationship
Camrose Regional Exhibition and Agricultural Society (CRE) managed lands known as the Grounds, where agricultural events, rodeos, trade shows and the annual Big Valley Jamboree were hosted. The Grounds consisted of lands owned by CRE, mortgaged to Alberta Treasury Branches (ATB), and approximately 133 acres leased from the City of Camrose under a lease dated October 14, 1980, as amended effective May 15, 2007. The term of the lease of the City’s lands (the Leased Lands) expires on October 13, 2055. CRE developed a campground on approximately 18 acres of the Leased Lands, referred to as the Campground Lands.
In late 2020 and early 2021, CRE experienced what it described as “dire circumstances.” The Canada Revenue Agency advised that some of CRE’s activities were contrary to its charitable purposes and in particular that its operation of the Campground was a non-charitable activity that must cease. ATB advised that CRE’s account had been moved into its distressed assets department for rehabilitation and potential enforcement steps due to CRE’s poor financial health and performance. CRE determined that selling the Campground could address both of these problems.

Initial discussions and the “without prejudice” written communications
On June 21, 2021, CRE met with the City to discuss selling the Campground, since it was on the Leased Lands and the Lease gave the City a right of first refusal to purchase the Campground. At this meeting, City officials advised that the City would be willing to waive its right of first refusal, and CRE advised that it would be seeking to sell the Campground.
On July 5, 2021, City Administration provided a report to City Council seeking direction regarding the sale of the Campground. The report presented three options: compensating CRE for removal of the area from its lease and operating the campsite as a City-run facility; compensating CRE for removal of the area, closing the campsite, rezoning and marketing the lands for industrial use; or allowing CRE to break out a portion of the lands from its lease to sell the campsite operation to a third party, with lease conditions to be set by Council. City Administration recommended this third option, under which approximately 18 acres making up the Campground Lands and another 12 acres would revert to the City for industrial lot development.
The main individuals involved in communications between the parties were CRE’s Executive Director, Dianne Kohler, and the City’s General Manager of Community Development, Patricia MacQuarrie. On July 21, 2021, MacQuarrie emailed Kohler, stating that the message was “without prejudice” and attaching a map. The email recapped their conversation, including that the red-marked area could be removed from CRE’s lease, that the approximately 18-acre solid red area could be available to CRE’s purchaser for lease from the City, potentially at approximately $1,000 per month plus taxes, that the lease would go no longer than 2055 with all lands and improvements reverting to the City at that time, that the new owner would be responsible for all infrastructure over the tenure of the lease, and that the dashed red area would be returned to the City. The email expressly stated that all of the above would have to go through the City’s legal team and potentially require a survey to ensure the boundaries and terms were agreeable, and it referenced the likely need for cross access agreements between CRE, the new owner, and possibly the City.
On August 24, 2021, the Mayor sent CRE a further “without prejudice” letter. The letter stated that the City was waiving its first right of refusal for the purchase of the CRE Campground. It said the City was willing to allow CRE to break the lease of the northern most approximate 34 acres, which would allow CRE to transfer ownership of and responsibility for the Campground infrastructure to a third party. That third party would be required to enter into a lease agreement with the City for the approximately 18 acres that the Campground occupied, at market rate, until 2055, to align with the existing lease to CRE. The letter noted that current Council direction had estimated market rate at approximately $1,000 per month plus taxes, stated that this was an estimate only, and said the new owner would have to negotiate directly with the City for the new lease. The City would retain the remaining approximately 16 acres outlined in the lease for its own purposes. The letter attached an approximation of the leased area and indicated that any renegotiation would likely require a formal survey. It concluded by asking CRE to let the City know if CRE would like to amend the current lease agreement to reflect the contents of the letter so that the parties could “go forward from there.”

CRE’s negotiations with BVJI and renewed contact with the City
Following receipt of the August 24, 2021 letter, CRE sought a buyer for the Campground. The Court noted there appeared to be little to almost no formal communications between CRE and the City until October 2022, although CRE suggested there were informal discussions between Kohler and MacQuarrie, with no clear recollection of whether the Campground was discussed. CRE reached an informal agreement with Big Valley Jamboree Inc. (BVJI) to sell the Campground for $350,000 and part of the CRE Lands for $2,150,000. CRE provided the August 24, 2021 letter to BVJI, and BVJI was aware it would need to negotiate a lease with the City.
On October 7, 2022, Kohler emailed MacQuarrie stating that CRE was “closing in on a campground sale” and asked MacQuarrie to detail the lease agreement proposals (time, costs, etc.) by email so that CRE could educate the buyer. On October 11, 2022, MacQuarrie replied that she had run the terms past Malcolm Boyd, the City Manager, to confirm the previous terms, and that he wanted to take the matter to Council to get its confirmation, as it was a new Council. MacQuarrie said she expected to be able to provide an update the following Tuesday. Kohler responded that she was happy to attend and explain the sale to Council if Boyd wished. MacQuarrie replied that she thought it was a ratification of the previous decision but would confirm.
On October 12, 2022, City Mayor P.J. Stasko advised Kohler that there was no need to go to City Council and directed Boyd to provide to CRE the July 21, 2021 email and the August 24, 2021 letter. On November 3, 2022, CRE held a Special Meeting of its membership, at which the proposed agreement with BVJI was approved. Mayor Stasko and MacQuarrie were in attendance. In her affidavit, Kohler stated that CRE’s president, Brian Byers, confirmed to her that in meetings on November 7 and 23, 2022, the Mayor affirmed to him the binding terms and validity of the August 24, 2021 agreement.

The City’s changed position, breakdown of the BVJI deal, and CRE’s losses
On November 14, 2022, MacQuarrie advised Kohler that the City was interested in negotiating regarding certain industrial lots located on the Leased Lands. CRE described this as an abrupt change and as directly contradicting all previous correspondence between the City and CRE. At a November 21, 2022 meeting, Boyd stated to CRE that it should agree to the City’s unilateral changes to the August 24, 2021 agreement because he could “just stall the deal.”
In the following weeks, there were numerous communications between CRE and the City about terms that would be acceptable. CRE maintained that the City was bound to the terms of the August 24, 2021 letter. The City disagreed and asserted that there was no binding agreement and that the new Council could negotiate new terms. On December 23, 2022, BVJI informed CRE that it would not close its agreements with CRE because the terms then offered by the City, including a shortened lease term, were unacceptable.
CRE subsequently sold one part of the CRE Lands on February 1, 2023, and the rest of the CRE Lands on September 27, 2024. CRE also auctioned much of its assets and equipment in order to remain solvent, and CRE asserted that, as a result, it could not host income-generating events such as livestock sales events or shows. CRE commenced this action against the City on January 11, 2023, and made a minor amendment to the Statement of Claim on February 7, 2023.

CRE’s pleaded claims in contract, good faith, and negligent misrepresentation
In the Amended Statement of Claim, CRE alleged that either or both of the June 21, 2021 discussion and the August 24, 2021 letter constituted a binding contract between CRE and the City, and that the August 24, 2021 letter was an offer that CRE accepted in writing, orally, or by conduct. These alleged contractual arrangements were referred to collectively as the “Alleged Contract” or “Amendment Agreement.” CRE claimed that the City owed CRE contractual duties to perform its obligations honestly and reasonably in good faith and that it breached the Lease, the Alleged Contract, and its duty of good faith by refusing to amend the Lease in accordance with the Alleged Contract, refusing to grant BVJI a lease on those terms, and failing to exercise its discretion under sections 27 and 28 of the Lease in good faith, reasonably, and consistently with the purposes for which that discretion was granted.
CRE also advanced an alternative claim of negligent misrepresentation. It alleged that the City knew of CRE’s dire financial circumstances and that the parties were in a special relationship; that the City owed a duty of care; that the City represented that it would enable CRE to sell the Campground and would enter into a lease with a purchaser for a term aligned with the Lease; that CRE reasonably relied on these representations in marketing the Campground; and that CRE suffered damages as a result of this reliance.

Legal framework for summary dismissal under rule 7.3
The City applied for summary dismissal under rule 7.3 of the Alberta Rules of Court. The Court referred to the decision in Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, which sets out how a judge should approach such applications. The decision emphasizes that the Court must consider whether, having regard to the state of the record and the issues, the dispute can be fairly resolved on a summary basis or whether uncertainties reveal a genuine issue requiring a trial, whether the moving party has shown no merit or no defence, whether the resisting party demonstrates a genuine issue requiring trial, and whether the presiding judge is left with sufficient confidence in the record to exercise discretion to summarily resolve the dispute.
The Court found that, by and large, there was no disagreement as to the facts of the case. The disagreement concerned the legal consequences of those facts, which the Court considered capable of summary determination.

Analysis of whether the “Alleged Contract” was a contract
CRE argued that all necessary contractual terms were certain: the land to be affected by an amendment to the Lease; that a prospective purchaser’s lease with the City would be for a defined area, with a term ending in 2055, at a market rent estimated at $1,000 per month; that City Administration was authorized to complete the transaction; and that the offer was open for acceptance without a specified expiry. The City disagreed, submitting that a new Campground lease would need to be negotiated, including the rent, that a survey of the Campground Lands was necessary, and that additional agreements, including possible cross access agreements, were contemplated. The City also emphasized that both the July 21, 2021 email and the August 24, 2021 letter were marked “without prejudice,” and that the August 24, 2021 letter asked CRE whether it wished to amend the lease and stated “we will go from there,” to which CRE did not respond. Instead, some 14 months later, CRE asked the City to confirm the terms the City would be willing to agree to.
The Court noted that Clause 38 of the Lease provided that, unless otherwise specifically stated, no amendment, modification, or supplement to the Lease would be valid and binding unless set out in writing and executed by the parties in the same manner as the execution of the Lease. This provision was central in rejecting CRE’s assertion of an oral contract arising from the June 21, 2021 discussion and in assessing any alleged contract based on later writings.
The Court observed that the Amended Statement of Claim and CRE’s brief did not assert any contractual effect for the July 21, 2021 email. That email expressly recapped a conversation, was marked “without prejudice,” and stated that its contents would have to go through the City’s legal team and potentially a survey to ensure that boundaries and terms were agreeable to all parties, and it referenced the possible need for cross agreements. The Court treated the email as part of ongoing discussions, not as a concluded contract.
On the August 24, 2021 letter, CRE advanced several theories. The Court rejected the argument that CRE’s conduct in trying to find a purchaser constituted acceptance of an offer in that letter. The judge distinguished the Supreme Court of Canada’s decision in Saint John Tug Boat Co v Irving Refinery Ltd, relied on by CRE, noting that in that case the defendant received an ongoing benefit and invoices, whereas in this case the City did not receive a benefit from CRE’s marketing of the Campground and it was not clear that the City even knew of CRE’s marketing activities. The Court added that even acceptance by conduct would not overcome the express requirement in Clause 38 that any amendment be in writing and executed.
CRE also argued that the August 24, 2021 letter was an offer formally accepted by CRE on October 7, 2022, when Kohler emailed to say CRE was close to a sale and requested details of lease proposals. The Court reviewed the subsequent communications, including MacQuarrie’s statement that she expected Council to ratify the previous decision and the Mayor’s direction that there was no need to return to Council and that the earlier email and letter should be sent to CRE. CRE relied on authorities suggesting that “without prejudice” offers can, in some circumstances, be accepted.
The Court held that there is no hard and fast rule about the meaning of “without prejudice” and that it depends on the surrounding circumstances. In this case, the Court highlighted the repeated use of the phrase “without prejudice”; the July 21, 2021 email’s reference to legal review, survey work, and the need to ensure boundaries and terms were agreeable; the possible need for cross agreements; Clause 38’s formal execution requirement; the August 24, 2021 letter’s language inviting CRE to say whether it wished to amend the lease so the parties could “go forward from there”; and the fact that the new Campground lease terms, including rent, still had to be negotiated with the new owner. The Court concluded that, based on these circumstances and the binding term in Clause 38, the City did not intend to create a binding contract at that stage, and that a reasonable objective observer, including CRE, would reach the same conclusion. The Court therefore found that CRE’s position that there was a binding contract accepted on October 7, 2022, or at any other time, was not maintainable.

Duty of good faith and honest performance
CRE alleged that the City owed it a duty to perform its obligations under the Lease and the “Amending Agreement” honestly and in good faith, and that the City acted in bad faith and dishonestly by trying to negotiate a carve-out of the Industrial Lots and taking advantage of CRE’s precarious situation. CRE relied on the Supreme Court of Canada decisions in Bhasin v Hrynew and CM Callow Inc v Zollinger.
The Court held that CRE’s good faith and dishonest-performance arguments could not be maintained because it had concluded there was no “Amendment Agreement” arising out of the July 21, 2021 email or the August 24, 2021 letter. The Court acknowledged there was an existing contract between the parties in the form of the Lease, but noted that there was no allegation that the City acted in bad faith or dishonestly with respect to its obligations under the Lease itself. As a result, the duty of good faith argument, as pleaded, failed.

Negligent misrepresentation and the treatment of the City’s statements
CRE alternatively argued that the August 24, 2021 letter constituted a negligent misrepresentation by the City. The Court set out the five-part test for negligent misrepresentation from Queen v Cognos Inc and recorded that counsel for the City agreed that this was the applicable test.
The Court first considered whether there was a duty of care based on a special relationship. Referring to Cognos, the Court noted that CRE leased land from the City that was very important to its business, that CRE had fallen into dire circumstances requiring a sale of the Campground and amendment of the Lease, that the City was aware of these circumstances, and that it was reasonably foreseeable CRE would rely on the August 24, 2021 letter. The City did not argue that there was no special relationship.
On the question of misrepresentation, CRE’s position was that the City represented that the terms of the August 24, 2021 letter would be honoured and that CRE could rely on it to market the Campground, and that the City continued this misrepresentation into November 2022 when, according to Kohler’s evidence, the Mayor said the August 24, 2021 letter remained in effect and binding on the City and there was no need to return to Council. CRE said this was untrue because the new Council later changed its position by requiring additional Industrial Lots to be removed from the Lease. The City argued that, if the August 24, 2021 letter contained representations, they related to future conduct and were not actionable as negligent misrepresentations.
The Court discussed case law distinguishing representations of present fact from statements of future conduct, including decisions involving municipal bodies. It held that, in this case, it could not be said that the City’s August 24, 2021 letter contained a misrepresentation that was not true at the time it was made.
However, the Court did find that certain hearsay statements attributed to Mayor Stasko in October and November 2022—that there was no need to go to Council as the sale would be on the same terms as the August 24, 2021 letter, and that the August 24, 2021 letter was binding on the City—were misrepresentations of an existing fact and were not true. The Court referred to these as the Mayor Stasko Statements.
The Court went on to hold that, even if the Mayor Stasko Statements were negligently made and even if CRE reasonably relied on them, any loss and damage suffered by CRE could not be attributed to reliance on those statements. The Court noted that the untruth of the Mayor Stasko Statements was known within days, and that CRE’s pleaded case alleged that it had marketed the Campground based on earlier representations. In the Court’s view, there was no causal link between the Mayor Stasko Statements and the loss claimed by CRE. The negligent misrepresentation claim was therefore not made out.

Suitability for summary resolution and final disposition
Addressing CRE’s argument that there were material factual disputes requiring a trial, the Court found that there was, by and large, no disagreement as to the facts. The dispute was over the legal consequences of those facts, something the Court considered suitable for summary determination under the Weir-Jones framework. The Court concluded that the record was adequate to permit a fair and just summary determination of the case.
On that basis, the Court granted the City’s application to dismiss the action against it. The decision stated that if the parties could not agree as to costs, an application could be made in morning chambers within 45 days.