An informal agreement between two prominent land developers citing a 50/50 sharing of Calgary’s Erlton Lands was ruled to be a “preliminary understanding” but not a legally binding document in a recent judgment by the Court of Queen’s Bench.
Early in 2002, Randy Klapstein, owner of Pointe of View Marketing and Management Inc., became aware of the Erlton Lands, an area in Calgary that might be suitable for redevelopment. Klapstein approached Phil Milroy, the owner of Westcorp Inc., which in turn owns 897617 Alberta Ltd. The two men agreed they would attempt to purchase the Erlton Lands together and then develop them in some way, court documents say.
Klapstein wanted a document to show they were working together, so a realtor, Kenneth Hockenhull, hired by the men drafted the agreement.
It stated that Klapstein and Milroy would be partners in the deal, with Klapstein building the condos for sale and Milroy building the rental units, with the site shared on a 50/50 basis.
The agreement was to be formalized “as the details become clearer,” the ruling says.
While negotiations with the Erlton landowners were taking place, the two men instructed their counsel to prepare a formal agreement for their relationship. In February, 2003, Klapstein’s counsel sent a document specifying that Pointe of View and Milroy’s numbered company would enter into a joint-venture agreement.
The two men themselves were not proposed parties.
But the relationship broke down. Milroy demanded reimbursement from Klapstein for money Milroy and his companies invested in the process. Klapstein responded that until their agreement was clarified, he would not pay anything, court documents say.
Milroy asked Klapstein to confirm that their arrangements and understandings were over, and that they were free to go their separate ways. Instead, Klapstein continued to assert an interest in the Erlton Lands, including any interest that Milroy’s numbered company might obtain, court documents say.
Milroy initiated proceedings in court, hoping to prove there was no binding agreement between the two men.
The court found that the parties did reach an understanding they would pursue the Erlton Lands together, but that the informal document of October 9, 2002, did not form a legally binding agreement. The men could go their separate ways.
