Supreme Court of Canada
Webb & Knapp (Canada) Limited et al. v. City of Edmonton, [1970] S.C.R. 588
Date: 1970-03-02
Webb & Knapp (Canada) Limited and Western Pacific Projects Ltd. (Plaintiffs) Appellants;
and
The City of Edmonton (Defendant) Respondent.
1969: May 2, 5, 6, 7; 1970: March 2.
Present: Cartwright C.J. and Abbott, Ritchie, Hall and Spence JJ.
ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION
Contracts—Copyright—Agreement whereby land developer to prepare plan for civic centre—Plan to become property of city if not adopted—Council rejecting plan and at same time approving commissioners’ plan—Use made of developer’s plan in preparation of commissioners’ plan—Breach of copyright—Measure of damages.
The plaintiff W (a land development company) and the defendant municipality executed an agreement under which W was to spend an estimated $100,000 on the preparation of a plan for the defendant’s proposed civic centre area. If the plan was accepted, the city was to make available to W a large area of land for private development purposes. If the city council did not adopt the plan, then the plan and the plan material were, from the time of such decision, automatically to become the property of the city. A plan, as contemplated by the agreement, was prepared and delivered to the
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city, and W incurred expenditures in its preparation which exceeded the amount contemplated in the agreement. Some three months later the plan was rejected at a meeting of the city council. At the same meeting the council approved a plan of the city commissioners, in the preparation of which use had been made of the plan and materials of W.
W brought an action claiming $2,000,000 as damages for breach of contract or in the alternative for breach of copyright, with further alternative claims in quantum meruit. The action was dismissed at trial, and, on appeal, the Appellate Division upheld, but for different reasons, the judgment of the trial judge. W then appealed to this Court.
Held: (Abbott and Ritchie JJ. dissenting): The appeal should be allowed.
Per Cartwright C.J. and Hall and Spence JJ.: The appellant was entitled to damages for breach of copyright. The city did not just elect not to adopt W’s plan. When the plan was submitted, the city instructed its commissioners to evaluate it. The commissioners proceeded to do so, but they did not merely evaluate the plan, and instead of reporting back to council recommending either adoption or rejection, they submitted a plan of their own which was substantially W’s plan in a modified form. This use of W’s plan and plan material occurred prior in time to the city’s election not to adopt W’s plan, and this was clearly a breach of W’s copyright.
The fact that the assessment of the damages was difficult was no ground for awarding nominal damages. The rule against recovery of uncertain damages was directed against uncertainty as to the cause rather than as to the extent or measure. There was no uncertainty as to cause in the instant case. The breach of copyright was beyond question and damages were assessed at $50,000.
Per Abbott and Ritchie JJ., dissenting: There could be no damages for breach of copyright. The clause in the agreement providing that the property in the plan in the event of its non-acceptance should be in the city rebutted any intention on the part of W to keep a copyright interest in the plan.
[Chaplin v. Hicks, [1911] 2 K.B. 786; Wood v. Grand Valley Railway Co. (1915), 51 S.C.R. 283; Meikle v. Maufe, [1941] 3 All E.R. 144; Messer v.
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J. Clark & Son Ltd. (1961), 27 D.L.R. (2d) 766; Kranz v. McCutcheon (1920), 18 O.W.N. 395, referred to]
APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], dismissing an appeal from a judgment of Riley J. Appeal allowed, Abbott and Ritchie JJ. dissenting.
W.H. Hurlburt, Q.C., and J.N. Agrios, for the plaintiffs, appellants.
A.F. Macdonald, Q.C., and P.M. Owen, Q.C., for the defendant, respondent.
The judgment of Cartwright C.J. and Hall and Spence JJ. was delivered by
HALL J.—This is an appeal from a decision of the Appellate Division of the Supreme Court of Alberta1 upholding, but for different reasons, the judgment of Riley J. dismissing the appellants’ action against the City of Edmonton arising out of an agreement entered into between the parties dated October 20, 1961. Although two corporations are named as appellants in these proceedings, only Webb & Knapp (Canada) Limited (hereinafter called “Webb & Knapp”) actually prosecuted the appeal.
In the spring of 1961 Webb & Knapp were in the final stages of the development of Place Ville Marie, Montreal, and were looking for new opportunities to make use of its development team. Canadian National Railways, one of the parties with whom Webb & Knapp were associated in the development of Place Ville Marie, suggested that an opportunity for development might exist in the city of Edmonton and encouraged Webb & Knapp to enter into discussions with the City of Edmonton. As a result, Mr. David S. Owen, a vice-president of Webb & Knapp, went to Edmonton and had discussions with the then mayor, Dr. Elmer Roper, and other civic officials. Following upon these discussions, Mr. Owen appeared before the Edmonton city council on August 17, 1961. Later, on August 29, 1961, he discussed with the city council a proposal that Webb & Knapp would spend $100,000 of its own funds to prepare for the City of Edmonton a plan for
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the development of the civic centre area. The city council approved in principle the proposal then put forward. A draft formal agreement was prepared by the solicitor for the City of Edmonton and considered by council on September 25, 1961. The draft, with some amendments, was approved. Subsequently and in accordance with the resolution of council, the city solicitor prepared a formal agreement dated October 20, 1961. The City of Edmonton and Webb & Knapp executed the agreement under their corporate seals. The agreement is reproduced in full in the judgment of Cairns J.A. at pp. 126-30. Certain clauses of particular importance in this litigation read as follows:
1. The Company will at its sole cost and expense within 120 days after execution of this agreement cause to be prepared a plan and plan material for the Civic Centre area of Edmonton as the said area is shown enclosed by a green line on the attached map which is hereby made Appendix A to this agreement at a cost estimated by the Company to be $100,000.
(1) The plan will include objective proposals for a balanced development of the civic centre that blends municipal, community and commercial elements along lines consistent with the general approach approved by City Council on May 13, 1961 and adopted in principle when Civic Centre Study Progress Report No. 1 dated May 31, 1961 was approved by Council.
(2) The plan will include a timed program with a sequence in which certain developments on any land made available to the Company as provided for in Section 7 of this agreement are to take place and the Company will indicate what it will contract to do within the timed program and when it will undertake the work. It is agreed that this timed program will contemplate alternatives and will necessarily have some flexibility.
2. (1) The plan above referred to will be evolved by the Company by means of planning, architectural and engineering services utilizing the services of I.M. Pei and Associates, Architects and Planners of Montreal and New York, who will utilize the services of a local Edmonton firm, and Company personnel and consultants will consult to the extent
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deemed appropriate by the City Commissioners with the City and its staff and the consultants presently employed by the City to develop the City centre plans.
3. (4) City Council may refuse to adopt the plan whether in its original form as presented or as modified after one or more discussions of the plan have been undertaken by City Council.
4. When the plan and its supporting plan material have been presented by the Company to City Council and if the Council has reached a decision that Council will not adopt the plan then the plan and the plan material will from the time of such decision automatically become the property of the City.
5. (1) If City Council votes to adopt the plan as put forward by the Company then the City will promptly initiate a Development Scheme under the powers in Sections 73 to 79 of the Town and Rural Planning Act or other applicable legislation with the object of carrying out the plan and if such plan is legally initiated the parties will abide by its terms unless by mutual consent the terms are varied.
7. (1) If the plan after discussion and possible modification is accepted by Council and the development scheme that embodies the plan is in force, then the Company will be entitled to purchase from the City and the City will sell to the Company at a price which is, in the opinion of the Council, based upon professional appraisals, the fair actual value thereof, or in the case of expropriation, at not less than the total cost thereof to the City, sufficient lands within the plan area to enable the Company to build thereon up to 50 percent of the floor space of buildings of a non-public character as shown in the plan, provided always, however, that if the Company so purchases the said lands it shall agree to carry out construction of a type and at a time or times provided by the accepted plan.
8. Nothing in this agreement is intended nor shall it be construed as granting any rights to the Company to undertake any developments within the Edmonton civic centre area unless and until two conditions precedent have been accomplished by the parties, namely acceptance of the plan by the City and successful introduction of a development scheme of the type contemplated by the Town and Rural Planning Act of the Province of Alberta.
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Clause 8 quoted above is of importance in determining the rights of the parties in the light of the events which subsequently took place.
Under the agreement Webb & Knapp were to spend an estimated $100,000 on the preparation of a plan for the civic centre. The plan was by para. 2 to include a timed program of development of the lands which would indicate what Webb & Knapp would contract to do within the timed program and when it would undertake the work.
Subsection (4) of clause 3 which reads:
City Council may refuse to adopt the plan whether in its original form as presented or as modified after one or more discussions of the plan have been undertaken by City Council.
provided that the city could refuse to adopt the plan and in this connection it will be noted that the word “adopt” is used in reference to the plan in clauses 3, 4 and 5(1) and the word “accept” is used in clause 5(2). In the context in which they were used in the agreement, these words are synonymous. Clause 5(1) required the city, if it adopted the plan, to promptly initiate a development scheme under the powers in ss. 73 to 79 of The Town and Rural Planning Act, R.S.A. 1955, c. 337, or other applicable legislation. It was, accordingly, only after the plan had been adopted within the meaning of clause 5(1) that the city became obligated to initiate the development scheme.
As will be noted under clause 4, if the city council did not adopt the plan, then “the plan and the plan material will, from the time of such decision, automatically become the property of the City.” This stipulation becomes of importance on the alleged breach of copyright aspect of the case which will be dealt with separately.
Webb & Knapp prepared a plan and materials as contemplated by the agreement between the parties and delivered the plan and materials to the city on March 15, 1962, the 120-day period provided for in clause 1 of the agreement having been extended by the city.
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Webb & Knapp contends that the plan was in accordance with the agreement and fulfilled all the requirements of the agreement. The city says that the plan was deficient in that the timed program contemplated by clause 1(2) was not included.
It is common ground that Webb & Knapp incurred out-of-pocket expenses of $138,484.90 in preparation of the plan plus an additional amount of $24,585.81 which is called “management expense”.
At a meeting on March 22, 1962, the city council instructed the city commissioners to evaluate the plan as submitted. Pursuant to these instructions, the commissioners, with the assistance of their experts and I.M. Pei, referred to in clause 1(2) of the agreement, spent about three months reviewing the plan and the whole subject-matter of the development of a civic centre. The commissioners came to the conclusion that the plan as submitted by Webb & Knapp was not economically feasible. Their report, which was given to council on June 25, 1962, was very long and detailed (ex. 16 at the trial). The report included the following paragraph:
As the City’s examination of the plan proceeded, it became apparent that certain of the proposals could not be economically justified, and several modifications seemed warranted. As mentioned earlier, it is clear that Webb & Knapp has submitted its “final” plan. A program of adoption and implementation by the City will have to be based upon a specific plan, and, as mentioned, the plan to be recommended will not be that submitted by Webb & Knapp. Adoption of any plan other than that submitted by Webb & Knapp will not legally involve any further special obligation to that Company even though the new plan might contain most of the important concepts of the originally submitted plan.
(Emphasis added.)
In their report, the commissioners made the following recommendation, amongst others, to the city:
For all the reasons set forth above, your Commissioners recommend that the City of Edmonton does
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not officially adopt the plan submitted by Webb & Knapp (Canada) Limited pursuant to the Memorandum of Agreement dated October 20th, 1961.
Having reviewed the matter to this point in time, Cairns J.A. said in his judgment that:
It appears clear that the City through Council by not officially adopting the plan did in fact reject it. This was their right under the contract and at this point the contract came to an end, it having been terminated strictly pursuant to the terms thereof.
Cairns J.A. had earlier in his reasons said:
What was the obligation of the City? In para. 7(1) it was provided that if the City “accepted” the plan the Company was to be entitled to purchase sufficient lands to build thereon up to 50% of the floor space of buildings of a non-public character as shown on the plan.
Another very important provision in the Agreement is contained in para. 4 to the effect that if the City reached a decision not to “adopt” the plan, the plan material from the time of such decision should become the property of the City.
Then we have a most important clause, namely, clause 8, where it is provided that two conditions must be fulfilled before the Company obtained any rights under the contract to undertake any development within the civic centre. Firstly the acceptance of the plan by the City and, secondly, successful introduction of a development plan contemplated by The Town and Rural Planning Act, ss. 73 to 79. The whole case turns on what happened under this clause. The City argues firstly that the plan was not accepted by it, and secondly the plan was never introduced under the Planning Act as this could not be introduced because the plan or scheme was deficient in that it did not include the timed planning proposals to which I have already alluded. The Company argues that the plan was in fact accepted and that the delivery of a timed program was delayed or waived.
I deal firstly with the second condition. There is no doubt that the plan did not contain a timed program and no development scheme was presented under the Act. As I have already pointed out in answer to this, the Company says that the provision was waived by Commissioner Hamilton. It is my opinion that even if he did so there was no authority vested in the Commissioner to change the terms of
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the contract. The City did not delegate this power to him and the contract could only be changed or varied by resolution of Council as a City can only act by resolution or bylaw. Section 261 of The City Act is as follows:
261. (1) The council shall act in the exercise of its powers and duties by resolution or by bylaw.
(2) The council may exercise any of its powers and duties by resolution except where a bylaw is required by the provisions of this Act.
(3) The council may exercise by bylaw any of its duties and powers that this Act permits it to exercise by resolution.
In Rogers The Law of Canadian Municipal Corporations the learned author states at p. 224:
Councils can only exercise the powers of the corporation which they represent by action in the proper form, either by resolution or by-law passed at a regularly constituted meeting by a majority of the councillors present provided that a quorum is constituted. Like all corporations, a municipality can only be bound in the manner prescribed by law. Generally, where the municipality has a governing body, the inhabitants have no power to bind the corporation. Moreover, individual actions of council members are without any binding force unless ratified. The authorized acts done by the council as a whole are not those of its members individually but are those of the corporation. The members cannot make a decision valid and binding on the corporation by their assent individually and separately, although unanimously expressed. They must give a collective judgment as a body and not as individuals; such assent must take the form of a by-law or resolution.
As the authority for this provision the learned author cites Anderson v. The Municipality of South Vancouver (1911) 45 S.C.R. 425, and in particular the judgment of Duff J. (as he then was), at p. 442. Later the learned author states at p. 251:
Even where such powers are within the legitimate scope of its powers, the corporation can only be bound by acts of its council duly authorized in the manner prescribed by law, that is, by resolution or by-law passed at a regularly constituted meeting of the council.
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This quotation was approved by Smith C.J.A. in delivering the judgment of himself, MacDonald and McDermid JJ.A. in the Court of Appeal of the Northwest Territories in Gold Range Hotel Ltd. v. Plains-Western Gas & Electric Company Limited, 50 W.W.R. 654. Here the learned Chief Justice at p. 662 states:
I am quite satisfied that a corporation such as the municipal district of Yellowknife cannot be bound by an agreement such as the one of May 1, 1959, neither authorized nor ratified by resolution or bylaw of the council. My view is that Anderson v. South Vancouver (Mun.) (1911) 1 W.W.R. 728, 45 S.C.R. 425, 20 W.L.R. 434, reversing 18 W.L.R. 373, 16 B.C.R. 401, justifies the statement of the author of Rogers on The Law of Canadian Municipal Corporations, vol. 1, at p. 251, that: (Here follows the quotation that I have cited from Rogers).
On these authorities I am satisfied that the contract could not be amended or varied without a resolution of council, and that being so, the second condition referred to above was never fulfilled and the contract at that point became unenforceable by Webb & Knapp.
In my opinion Cairns J.A. was right on both issues. Although the evidence shows that the city did continue to negotiate with Webb & Knapp, no new agreement was ever actually arrived at. Accordingly the appellant’s action under the agreement for the damages as claimed cannot succeed.
However, that does not terminate the whole matter in issue between these parties. In its statement of claim, Webb & Knapp claimed in the alternative damages in the amount of $2,000,000 for breach of copyright.
On this issue of breach of copyright, counsel for the city, at the opening of his argument on this branch of the appeal, stated that in the circumstances of this case and under the terms of the agreement between the parties, while ownership of the plan and plan material prepared by Webb & Knapp passed to the city under clause 4 of the agreement, the ownership of the copyright in the plan remained with Webb & Knapp. The position of the respondent on this issue was stated by counsel to be:
1. That ownership of the copyright remained in Webb & Knapp;
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2. However, in this instance, there was in fact no breach of the copyright; and
3. That, in any event, even if their was a breach, the damages were not substantial but only nominal.
The evidence clearly establishes that the city did use the plan and materials of Webb & Knapp in the preparation of the commissioners’ plan submitted to council on June 25, 1962, which council acted upon and approved by the resolution adopted as follows:
That Council approve in principle the Civic Centre Development Plan and program dated June 25th and concur with the Commissioners’ recommendations contained therein and also instruct that the resolution be prepared as required by Sections 73 to 79 of The Town and Rural Planning Act which is necessary to implement the program.
It is to be observed that much use was made of the Webb & Knapp plan and materials prior to the date on which city council accepted the recommendation of the commissioners that the City of Edmonton should not officially adopt the plan submitted by Webb & Knapp. A perusal of the commissioners’ plan which was approved at the meeting of council on June 25, 1962, shows the extent and the degree in detail that the commissioners copied from the Webb & Knapp plan and materials which was given to the city on March 15, 1962, but not rejected until June 25, 1962.
There was a significant breach of copyright in the period between March 22, 1962, and June 25, 1962, by the city commissioners and their acts in so doing were ratified by council on June 25, 1962, when it approved the civic centre development plan and program, concurred with the commissioners’ recommendations in respect thereto and instructed that the resolution as required by ss. 73 to 79 of The Town and Rural Planning Act be prepared to implement the program. The commissioners were, of course, entitled to study and evaluate the Webb & Knapp plan and plan materials and to suggest modifications but not to use the plan and materials as the basis of a plan of their own.
What was the situation in the instant case? Webb & Knapp were necessarily taking a gamble in agreeing to spend an estimated $100,000 on
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the prospect that the city would adopt its plan. If the city did adopt the plan Webb & Knapp stood to reap substantial financial benefits. If the plan was not adopted Webb & Knapp stood to lose the sum of $138,484.90 it actually expended in the preparation of the plan. Had the city merely exercised the right it had under the contract not to adopt the plan that would have been the end of the matter. The plan and the plan material would, under clause 4, have become the property of the city. It would then have had the property rights but not the copyright in the plan.
But the city did not just elect not to adopt the plan. It instructed its commissioners at the meeting on March 22, 1962, to evaluate the plan. The commissioners proceeded to do so, but they did not merely evaluate the plan, and instead of reporting back to council recommending either adoption or rejection, they came to the meeting on June 25, 1962, with a plan of their own which was substantially the Webb & Knapp plan in a modified form. This use of the Webb & Knapp plan and plan materials occurred prior in time to the city’s election not to adopt the Webb & Knapp plan, and, as stated, this was clearly a breach of the Webb & Knapp copyright. The city, in accepting and acting upon the recommendations of its commissioners, was purporting to accept without compensation the entire benefit of the expenditure made by Webb & Knapp and eliminating Webb & Knapp from the picture by not adopting the plan but still utilizing the ideas and overall scheme of development which the plan envisaged.
Webb & Knapp are, therefore, entitled to damages for this breach of copyright. The amount to be awarded presents a question of difficulty. The leading case dealing with the assessment of damages in an analogous situation where compensation is difficult to arrive at appears to be Chaplin v. Hicks[2]. Regarding this case, Davies J. in this Court, in Wood v. Grand Valley Railway Co.[3], said at p. 289:
An attempt was made to minimize the extent and meaning of that judgment of Chaplin v. Hicks, but
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the weight to be attached to it not only consists in the exact point there decided, but also in the personnet of the court and the reasoning by which they supported their conclusion.
In Chaplin v. Hicks, Vaughan Williams L.J. said at p. 792:
In early days when it was necessary to assess damages, no rules were laid down by the Courts to guide juries in the assessment of damages for breach of contract; it was left to the jury absolutely. But in course of time judges began to give advice to juries; as the stress of commerce increased, let us say between the reigns of Queen Elizabeth and Queen Victoria, rule after rule was suggested by way of advice to juries by the judges when damages for breach of contract had to be assessed. But from first to last there were, as there are now, many cases in which it was difficult to apply definite rules. In the case of a breach of a contract for the delivery of goods the damages are usually supplied by the fact of there being a market in which similar goods can be immediately bought, and the difference between the contract price and the price given for the substituted goods in the open market is the measure of damages; that rule has been always recognized. Sometimes, however, there is no market for the particular class of goods; but no one has ever suggested that, because there is no market, there are no damages. In such a case the jury must do the best they can, and it may be that the amount of their verdict will really be a matter of guesswork. But the fact that damages cannot be assessed with certainty does not relieve the wrong-doer of the necessity of paying damages for his breach of contract.
and Fletcher Moulton L.J. said at p. 794:
The Common Law Courts never enforced contracts specifically, as was done in equity; if a contract was broken, the common law held that an adequate solatium was to be found in a pecuniary sum, that is, in the damages assessed by a jury. But there is no other universal principle as to the amount of damages than that it is the aim of the law to ensure that a person whose contract has been broken shall be placed as near as possible in the same position as if it had not. The assessment is sometimes a matter of great difficulty.
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On the specific question of the measure of damages for breach of copyright, Uthwatt J., in Meikle v. Maufe[4], said at p. 153:
In Chabot v. Davies, [1936] 3 All E.R. 221, a case of infringement of an architectural work, Cross-man, J., after stating that presumably damages were to a certain extent at large, proceeded on the basis of considering what sum might fairly have been charged for a licence to use the copyright for the purpose for which it is used. It appears to me that the consideration on which Crossman, J., proceeded is a sound basis from which to begin, but that one is entitled to take into account all the surrounding circumstances in exactly the same way as one is entitled to do in the case of the invasion of a common law right of property.
The fact that assessment is difficult is no ground for awarding nominal damages: Messer v. J. Clark & Son Ltd.[5] The broad general rule is that damages which are uncertain, contingent and speculative in their nature cannot be made a basis of recovery; but this rule against recovery of uncertain damages is directed against uncertainty as to the cause rather than as to the extent or measure: Kranz v. McCutcheon[6]. There is no uncertainty as to cause in the instant case. The breach of copyright is beyond question. The commissioners did not use the Webb & Knapp plan and plan materials to evaluate them but as the base and ground material upon which to construct a plan and program of their own, and the city, by resolution of council, approved what they had done and proposed.
The degree to which members of council must have been aware that in adopting the commissioners’ plan and program the city was actually using the substance of the Webb & Knapp plan is manifest from the record of the proceedings at the June 25, 1962, meeting of council. Cairns J. summarizes the various resolutions dealt with at that meeting in his judgment at p. 134. After quoting the resolution:
That Council approve in principle the Civic Centre Development Plan and program dated June 25th
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and concur with the Commissioners’ recommendations contained therein and also instruct that the resolution be prepared as required by Sections 73 to 79 of the Town and Rural Planning Act which is necessary to implement the program.
he continued:
An amendment was then moved by which it was proposed that the words “based on the Webb & Knapp (Canada) Limited plan” be inserted after the words “Civic Centre Development Plan” in the motion just quoted. An amendment to the amendment was then moved to insert the words “resulting from the Webb & Knapp (Canada) Limited Plan” after the words “Civic Centre Development Plan”. Both these motions were lost. Then an amendment was moved that the matter be deferred until the next meeting and that the commissioners ascertain whether the representatives of Webb & Knapp (Canada) Ltd. were thoroughly familiar with the city’s proposal. The motion for the proposed deferment was also lost. The resolution quoted above was then carried.
Furthermore, immediately after the meeting of June 25, 1962, the president of Webb & Knapp complained to the city commissioners and had a meeting with Commissioner G.C. Hamilton following which the commissioners reported to council on July 3, 1962, the report being Report No. 45. That report contained two paragraphs on p. 1 thereof, being the last two paragraphs on that page. These paragraphs were taken from a telegram from Webb & Knapp to the commissioners and read as follows:
As you are aware our Company issued this statement following discussions with you in which the reasons for the actions of the Edmonton City Council were explained to us.
We were advised that the Plan which was adopted was in effect the Webb & Knapp Plan and that such Plan would continue to be so identified and that further The City of Edmonton would ensure that our Company would suffer no loss or prejudice in this matter notwithstanding the course of action taken.
Council, in dealing with Report No. 45, adopted a resolution which was moved by Alderman Prudham and seconded by Alderman Weinlos as follows:
That Commissioners’ Report 45 be received as information and that Council confirm and support
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the statements of understanding attributed to our Civic Officials as outlined in the last two paragraphs on page one of the report.
CARRIED.
Council’s action was immediately communicated to Webb & Knapp by telegram from G.S. Docherty, the city clerk. The fact that the plan of the city commissioners which was approved at the June 25, 1962, meeting of council was in effect the Webb & Knapp plan is, accordingly, beyond dispute.
In all these circumstances Webb & Knapp are entitled to substantial damages for breach of copyright. With a full appreciation of the difficulty in arriving at a proper measure of compensation and in view of the undoubted and beneficial use the city made of the plan and plan material, I would assess the damages for breach of copyright at $50,000.
As to costs, Webb & Knapp failed in its main claim for damages, but recovers substantial damages for breach of copyright. I would, accordingly, direct that there be no costs to either party at trial and that Webb & Knapp should have its costs here and in the Appellate Division.
The judgment of Abbott and Ritchie JJ. was delivered by
ABBOTT J. (dissenting)—The facts as to which there is now little dispute are set out in detail in the judgments below and in the reasons of my brother Hall which I have had the advantage of reading.
For many years prior to 1961, the City of Edmonton had been considering plans and schemes for the development of a civic centre area all of which contained, as a key feature, some twenty acres of land owned by the city and lying south of the Canadian National Railway.
The appellant Webb & Knapp (Canada) Limited (hereinafter referred to as Webb & Knapp) is a land developer and promoter which in 1961 had just completed a large project in Montreal and, at the suggestion of the Canadian
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National Railways, it entered into negotiations with the city respecting the latter’s proposed civic centre.
Webb & Knapp sent planners, economists and architects to Edmonton in early 1961, to evaluate the real estate development potential of the city, and on August 28 of that year submitted to the city manager a draft memorandum of its proposals. Following discussions with the city authorities, an agreement was prepared and executed by Webb & Knapp and the city on October 20, 1961.
That agreement, which forms the basis of appellant’s claim, is set out in full in the reasons of Cairns J.A. in the Court below[7]. Under its terms, Webb & Knapp undertook to expend an estimated $100,000 in the preparation of a plan and plan material for the civic centre area. If the plan was accepted, the city was to make available to Webb & Knapp a large area of land for private development purposes.
The agreement, however, contained the following clause:
City Council may refuse to adopt the plan whether in its original form as presented or as modified after one or more discussions of the plan have been undertaken by the City Council. (Clause 3(4)).
Another clause, which follows immediately after the one I have just quoted, reads:
When the plan and its supporting plan material have been presented by the Company to City Council and if the Council has reached a decision that Council will not adopt the plan then the plan and the plan material will from the time of such decision automatically become the property of the City. (Clause 4).
A plan, as contemplated by the agreement, was prepared and delivered to the city, and Webb & Knapp incurred expenditures in its preparation which exceeded the amount contemplated in the agreement.
What followed is described in detail in the judgments below and need not be repeated. There are concurrent findings that the Webb & Knapp plan was rejected by the city, and I agree with my brother Hall that, although the evidence shows
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that the city did continue to negotiate with Webb & Knapp, no new agreement was ever actually arrived at.
In its action, Webb & Knapp claimed $2,000,000 as damages for breach of contract or in the alternative for breach of copyright, with further alternative claims in quantum meruit.
In his reasons, Cairns J.A. dealt with these claims as follows:
It is my conclusion that as the original contract provided that it could be terminated by the City by the non-acceptance of the plan and that this was done on June 25th in accordance with the terms of the contract by a clear resolution of the City, the rights of the Company under this contract and the obligations of the City thereunder came to an end irrespective, as I have pointed out, of what happened after the 25th of June, and consequently there can be no action for specific performance or for breach of contract as there was in fact no breach. The City acted strictly within its rights under the contract and the obligations of the City ceased when it rejected the plan, and these obligations were not revived by the subsequent conduct of the parties. Furthermore there can be no claim for quantum meruit where the City acted according to its rights under the contract.
As to the claim for unjust enrichment the same reasons apply. There is no doubt that Webb & Knapp spent some money in preparing the plan, but it was agreed that if the plan were not accepted it would be the property of the City. Although the City may have been somewhat enriched as a result of the monies spent by the appellant, there was nothing unjust about it as it was done according to a contract giving the City exactly what it got.
There can be no damages for breach of copyright as the agreement provided, as I have already stated, that the property in the plan in the event of its non-acceptance should be in the City. This property or ownership of the plan includes the right to use it to whatever extent the City may have done.
I am in respectful agreement with those conclusions and I adopt them.
Since I have the misfortune to differ with my brother Hall as to the validity of a claim in damages for breach of copyright, I should perhaps
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state briefly why, in my opinion, appellant is not entitled to recover under this head.
This matter of copyright is not dealt with in the reasons of the learned trial Judge and the only reference to it in the Court below is contained in the last paragraph of that portion of the reasons of Cairns J.A. which I have quoted. At the invitation of the Court, it was discussed briefly on the argument before us.
Counsel for respondent did not challenge the general proposition that copyright in the plan, for what it might be worth, remained with Webb & Knapp. As Duff C.J. said in Massie & Renwick Limited v. Underwriters Survey Bureau Lid. et al.[8], at p. 229:
It is clearly settled now, by the authority of In re Dickens, [1935] Ch. 267, that the author, in transferring the property in his manuscript, does not thereby necessarily assign the incorporeal right.
However, as Mr. Fox in the 2nd edition of his work The Canadian Law of Copyright and Industrial Designs points out at p. 287, such a separation of rights “is not regarded a natural intention of the parties”. Therefore “slight evidence” may be accepted to prove that with the passing of property, there was also an equitable assignment of the copyright.
Counsel for respondent submitted, of course, that in the circumstances of this case and in view of the terms of the agreement between Webb & Knapp and the city, there was in fact no breach of copyright. I agree with that submission.
The commissioners’ plan approved in principle on June 25, when the city council resolved not to adopt the Webb & Knapp plan, was in many respects similar to the Webb & Knapp plan. For that matter, every city centre plan considered over the years contained features from its predecessors which is not surprising since all dealt with a relatively small geographical area. However the city centre development, ultimately decided upon, de-
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parted materially from both the Webb & Knapp plan and the commissioners’ plan. The learned trial judge moreover made the following findings:
I repudiate any suggestion that Mayor Roper, Commissioner Hamilton, Commissioner Menzies and Commissioner Tweddle “the men who appraised the Webb & Knapp plan” were guilty of quibbling, dishonesty, bad faith and like epithets. I do believe that the defendant City was somewhat worried about the land obligations to Webb & Knapp which flowed from the original agreement but one must look at (a) Ex. 16 which shows in the clearest terms just how unworkable the plan was that Webb & Knapp put forward, and (b) the Commissioners’ desire to work out slowly and across a period of time a series of developments—not the grandiose scheme of Webb & Knapp but a scheme in which the defendant wanted a realistic program. The City did not ever repudiate Webb & Knapp in spirit or in principle. I think that the City desired Webb & Knapp as partners. I think they thought Webb & Knapp could contribute in the Civic Centre area. I do not think the City adopted the Webb & Knapp plan nor did it accept that plan.
Webb & Knapp prepared the plan and supporting material pursuant to the agreement of October 20, 1961. Any claim they may have must flow from that agreement. They clearly entered into the agreement as a gamble. The agreement provided that the preparation of the plan would be at their “sole cost and expense” and it was not stipulated that Webb & Knapp should be reimbursed for that expense if the plan was rejected.
Both Courts below have held that the intention of the parties, as evidenced by their conduct and their agreement, was that, if the Webb & Knapp plan was not accepted, Webb & Knapp would receive nothing for their efforts. I agree with that finding. To paraphase what was said by Uthwatt J. in Meikle v. Maufe[9], at p. 154, copyright was not the sickle with which Webb & Knapp sought to reap a profit.
The plan was a special purpose plan with application exclusively to a special area in the city
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of Edmonton and of no use elsewhere. In my view, the clause in the agreement, which I have quoted, rebuts any intention on the part of Webb & Knapp to keep a copyright interest in that plan. In my opinion, Cairns J.A. correctly characterized the intention of the parties in the passage I have quoted, when he said:
There can be no damages for breach of copyright as the agreement provided, as I have already stated, that the property in the plan in the event of its non-acceptance should be in the City. This property or ownership of the plan includes the right to use it to whatever extent the City may have done.
I would dismiss the appeal with costs.
Appeal allowed with costs, ABBOTT and RITCHIE JJ. dissenting.
Solicitors for the plaintiffs, appellants: Hurlburt, Reynolds, Stevenson & Agrios, Edmonton.
Solicitors for the defendant, respondent: A.F. Macdonald and Field, Hyndman, Field, Owen, Blakey & Bodner, Edmonton.