Form 11

Alberta Rules of Court

Rule 3.31

COURT FILE NO. 2001-16496 Clerk’s Stamp

COURT COURT OF QUEEN’S BENCH OF ALBERTA

JUDICIAL CENTRE CALGARY

FILED
Feb 08, 2021
PLAINTIFFS HIGHLAND PARK DEVELOPMENTS LIMITED 203333
PARTNERSHIP AND 1744228 ALBERTA LTD. by Email
DEFENDANT THE CITY OF CALGARY 1:07p.m.

DOCUMENT STATEMENT OF DEFENCE

PARTY FILING THE CITY OF CALGARY

THIS DOCUMENT

ADDRESS FOR The City of Calgary

SERVICE AND Law, Legal Services (8053)
CONTACT 12th Floor, Calgary Municipal Building
INFORMATION 800 Macleod Trail S.E.
OF PARTY FILING Calgary, Alberta T2G 2M3
THIS DOCUMENT Solicitor: Colleen Sinclair/Steve Schott
Telephone: (403) 268-8376
Facsimile: (403) 268-4634
File No. L8703

Statement of facts relied on:

1. The Defendant, the City of Calgary (“the City”) admits paragraphs 1, 2, 5, 6 and 69 of the
Statement of Claim herein but otherwise denies each and every allegation contained therein
as if each were separately set out and denied herein.

2. The City admits that it is a municipal corporation duly incorporated pursuant to the Municipal
Government Act, R.S. A. 2000, c. M-26 and amendments thereto.

3. The City states, and the fact is, that the Lands are a low-lying natural ravine that is also the
site of the convergence of two streams with varying amounts of flow depending on rainfall
events. The Lands therefore have naturally been a watercourse and a catchment for
stormwater in the area. These facts pre-date any development of the surrounding areas and
continue today.

4. The low-lying nature of the Lands and their topography have always made them unsuitable
for residential development unless solutions could be found to overcome the stormwater that
naturally flows over and saturates them during rainfall events.

5. These issues with the developability of the Lands were recognized long before the Plaintiffs
purchased the Lands. In fact, in 1959, the City entered into an agreement with the previous

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owner of the Lands to allow for the development of a golf course. In 1970, that agreement
was registered as a caveat against the Lands (the “Caveat”) which states, in part:

“Whereas this area is low-lying land not generally suitable for housing development
and is eminently suitable for use as a golf course…”

6. The Caveat also warns that the City owns a strip of land through the centre of the Lands for
use as a sewer line. It further makes provision for the City to access its sewer line through
the Lands to maintain it and prohibits the construction of any buildings or structures or the
planting of any trees or shrubs on the City’s lands.

7. The Caveat further confirms that the City is not required to provide any “drains for storm or
run-off water.”

8. Finally, the Caveat expressly granted the City

“such easements as the City may require over the said lands for its utilities and for any
underground structures or improvements required in connection therewith, both now and
in the future.”

9. The Caveat, having been registered on the title to the Lands, was notice to any potential
purchasers of the development potential of the Lands and specifically warned of the issues
that would need to be overcome to develop the Lands into anything more than a golf course.

10. The City did not make any statements to the Plaintiffs that contradicted the Caveat registered
against title to the Lands prior to or after their purchase of them.

11. Any reasonable purchaser doing their due diligence before purchasing the Lands would have
uncovered these issues concerning the development potential of the Lands.

12. As a result, the Plaintiffs knew or ought to have known prior to purchasing the Lands that there
were significant issues to be overcome in developing the Lands. Further, the purchase price
paid by the Plaintiffs for the Lands reflects the fact that more significant development of the
Lands is, and has always been, problematic.

13. After the Lands were developed as a golf course and as the surrounding lands were being
developed, the City and the previous owner entered into a series of agreements regarding
stormwater management issues. Those agreements spanned the period from 1959 to 2011
and several were registered against title to the Lands.

14. In particular, in 1974 the City and the previous owner entered into an agreement that resulted
in that owner providing a broad release to the City for any damages arising out of their
ownership of the Lands, the operation of the golf course, the City installing or maintaining any
utility services and any other work that the City may carry out in relation to such services.

15. The City denies that it has intentionally directed stormwater flow onto the Lands at any time.

16. In its early dealings with the Plaintiffs, the City was hopeful that the water issues could be
remedied, thereby making development of the Lands possible. That remedy would need to
incorporate elements of public safety (i.e. keeping residents of the new development and
those downstream of the new development safe in case of a severe storm event) and

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environmental considerations (i.e. not increasing the flow in Nose Creek). Concerns
remained, however, about whether those issues could be remedied and the costs of any such
remedy.

17. While the Plaintiffs did receive approval of their revised outline plan in 2017, that approval
came with onerous conditions that would need to be complied with before any development
could occur. In particular, no stripping or grading could commence until a Regional Drainage
Study (“RDS”) was completed and a Staged Master Drainage Plan approved. Further, the
Plaintiffs were warned that, to the extent the City would need to complete regional upgrades
as part of the drainage solution, the City had no budget for those upgrades. As a result, the
timing of any such solution was not confirmed.

18. The City retained a reputable, independent engineering firm to conduct the RDS and kept the
Plaintiffs’ engineering consultants informed of the progress of the RDS. The purpose of the
RDS was to determine the full extent of the naturally occurring water on the Lands and to
explore options to re-route it. Neither party was aware of the total volume of water nor the
cost to re-route it until the RDS was complete.

19. The City shared the preliminary findings of the RDS with the Plaintiffs on Feb. 1, 2018.

20. Upon receiving the findings of the RDS, the parties became aware that the total volume of
stormwater naturally occurring on the Lands was greater than the parties anticipated and that
the cost of re-routing it in order for the Lands to be developed as proposed was prohibitive
($370,000,000.00).

21. There were other options identified in the RDS for remedying the stormwater issues that would
have either resulted in unacceptable levels of public safety risk or required the City to expend
up to $260,000,000.00 in capital improvements. Such capital improvements were not for the
benefit of the City as a whole; they would simply have been required in order to allow the
Lands to be developed. As a result, the City determined that these improvements were not
in the public interest.

22. The City invited the Plaintiffs and their engineering consultants to propose alternative methods
of remedying the water issues that involved less investment in infrastructure while maintaining
public safety and without creating environmental issues. The Plaintiffs’ engineering
consultants were unable to do so.

23. As a result of the involvement of the Plaintiffs’ consultants in the RDS process and the City’s
efforts to collaborate with them, the City invested additional time and resources in conducting
the RDS. The City invested this additional time and resources in a good faith effort to assist
the Plaintiffs in attempting to develop the Lands.

24. The City has not affected the development potential of the Lands or the ownership interest of
the Plaintiffs. The Lands currently remain in the same condition they have always been. They
remain suitable for use as a golf course.

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Any matters that defeat the claim of the Plaintiffs:

25. The City denies that it owes any private duty of care to the Plaintiffs. Instead, the City owes
a public duty to all of the citizens of Calgary to make all decisions and take all actions in the
greater public interest. As a result, the City cannot be liable for damages to these Plaintiffs.

26. The City further states that it has taken all steps and made all decisions in its dealings with
the Plaintiffs in furtherance of its function as a development authority, in accordance with that
public duty and based on valid planning considerations and principles.

27. Further, all decisions taken by the City in its dealings with the Lands have been policy
decisions balancing economic, social and political considerations that are not reviewable by
the Court.

28. The City specifically pleads and relies upon the provisions of the Municipal Government Act,
R.S.A. 2000, c. M-26 and amendments thereto including, but not limited to, sections 528, 529,
617, 621 and 654 thereof.

29. The City denies that any of its agents made any misrepresentations to the Plaintiffs and puts
the Plaintiffs to the strict proof thereof.

30. If the City did make any misrepresentations to the Plaintiffs, which is not admitted and is
specifically denied herein, those misrepresentations were not made negligently but rather
were innocent errors made on the basis of the information available at the time.

31. Further, or in the alternative, the Plaintiffs retained reputable professionals to advise them
throughout their efforts to develop the Lands. The City and the City’s engineering consultants
provided all relevant information to the Plaintiffs’ consultants as the development process was
occurring. As a result, the Plaintiffs’ consultants were in a position to advise them throughout
the process. The City therefore denies that the Plaintiffs reasonably relied on any
representations made by any City agents about the development potential of the Lands.

32. The City denies that any act or omission on the part of the City has affected the development
potential of the Lands or the ownership interest the Plaintiffs hold in them.

33. As a result, the City has not engaged in a de facto or disguised expropriation of the Lands.
The historical use of the Lands as a golf course is unimpaired.

34. The 1959 agreement with the previous owner, which is the subject matter of the Caveat,
created a contractual easement in favour of the City over the Lands. In the alternative, by
virtue of its dealings with the previous owner and the decades of stormwater management
issues on the Lands, a public easement was created over the Lands. The City specifically
pleads and relies upon the provisions of the Land Titles Act, R.S.A. 2000, c. L-4 and
amendments thereto, including section 61(1) thereof.

35. Further or in the alternative, the history of dealings between the City and the previous owner
and the City and the Plaintiffs concerning drainage on or over the Lands means the Plaintiffs
are estopped from now claiming damages for same.

36. The City denies that it has been unjustly enriched as alleged in the Statement of Claim and
specifically denies that it has obtained a benefit or use of the Lands as a greenspace or de

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facto storage facility to the Plaintiffs’ detriment. To the extent that stormwater naturally enters
the Lands, thereby limiting their potential for development, the City states this has been the
case since at least 1959, long before the Plaintiffs purchased them.

37. Further, to the extent that stormwater entering the Lands has caused issues on the Lands,
including issues requiring the City to enter the Lands to perform work on them to support
surrounding infrastructure, the previous owner was fully compensated for any and all such
stormwater issues identified, and no new issues with stormwater entering the Lands have
emerged since the Plaintiffs purchased them.

38. The City denies that the Plaintiffs have suffered any damages as a result of any act or
omission by any City agent and puts the Plaintiffs to the strict proof thereof.

39. If the Plaintiffs have suffered any damages, which is not admitted and is expressly denied
herein, then those damages were caused by the actions and omissions of the Plaintiffs
themselves, the particulars of which include but are not limited to:

a. Failing to conduct proper due diligence prior to purchasing the Lands;

b. Failing to properly investigate the stormwater issues on the Lands either before or
after purchasing the Lands;

c. Incurring expenses related to developing the Lands prior to undertaking proper

investigation of the stormwater issues;

d. Lobbying City Council for approval of land use despite their knowledge of the
stormwater issues that were ongoing and in need of resolution;

e. Continuing to incur expenses related to developing the Lands after the extent of
the stormwater issues was apparent; and

f. Such further and other particulars as may be proven at the trial of this matter.

40. The City specifically pleads and relies upon the provisions of the Contributory Negligence Act,
R.S.A. 2000, c. C-27 and amendments thereto.

41. Further, and in the alternative, if the Plaintiffs have suffered damages as alleged, or at all,
which is not admitted and specifically denied herein, then such damages are exaggerated,
excessive or too remote to be compensable.

42. Further, and in the alternative, if the Plaintiffs have suffered damages as alleged, or at all,
which is not admitted and specifically denied herein, then the Plaintiffs have failed to mitigate
their damages and have no reason for failing to do so, the particulars of which include but are
not limited to:

a. Failing to operate the Lands in a manner consistent with their historical use as a
golf course, or other similar uses;

b. Failing to pursue alternative developments on the Lands that are consistent with
their current condition;

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c. Failing to invite and consider reasonable offers to purchase the Lands; and

d. Such further and other particulars as may be proven at the trial of this matter.

43. While the City denies that any of its actions or decisions have affected the development
potential of the Lands, all decisions made by the City regarding development of the
surrounding lands and infrastructure occurred more than 10 years before the issuance of the
Statement of Claim herein. The City specifically pleads and relies upon the provisions of s.
3(1)(b) of the Limitations Act, R.S.A. 2000,c. L-12 and amendments thereto.

44. Further, as of February 1, 2018, the Plaintiffs had full knowledge of the findings of the RDS
and therefore knew or ought to have known everything necessary to determine whether the
within claim should be commenced. Despite that, the Statement of Claim herein was not filed
within two years of that date. The City specifically pleads and relies upon the provisions of s.
3(1)(a) of the Limitations Act, R.S.A. 2000, c. L-12 and amendments thereto.

45. The City specifically denies that any of its agents have engaged in misfeasance in public
office. No City agent has intentionally engaged in unlawful conduct in its dealings with the
Plaintiffs. Further, the City will ask for elevated costs when this spurious allegation is
determined to be unfounded.

46. The City pleads and relies on the provisions of the Municipal Government Act, R.S.A. 2000,
c. M-26, the Land Titles Act, R.S.A. 2000, c. L-4, the Contributory Negligence Act, R.S.A.
2000, c. C-27, and the Limitations Act, R.S.A. 2000, c. L-12, and all amendments thereto and
regulations passed thereunder.

Remedy sought:

47. The Defendant, the City of Calgary, asks that the within claim be dismissed with costs.

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