COURT OF APPEAL FOR ONTARIO
RE: PATE’S VARIETY INC. (Plaintiff/Appellant) –and– ADVANCED MANAGEMENT ENTERPRISES LIMITED (Defendant/ Respondent) –and– THE CANADA TRUST COMPANY, CANADA TRUST REALTY INC. and MIKE JAKUPI (Third Parties/ Respondents) –and– TERRY FARRELL (Fourth Party)
BEFORE: MORDEN, CATZMAN and MOLDAVER JJ.A.
COUNSEL: Elizabeth Hewitt, for the plaintiff/appellant Valerie Langs Wise, for the defendant/respondent
HEARD: July 7, 2000
On appeal from the judgment of Flinn J. dated November 23, 1998.
E N D O R S E M E N T
1The two major issues on this appeal are:
(1) whether there is any evidence which is capable of supporting the trial judge’s conclusion that the parties had agreed to a condition precedent to the coming into effect of the agreement of purchase and sale in question; and (2) whether reliance upon a condition precedent is foreclosed by the parol evidence rule.
[2] In finding that there was a condition precedent, the trial judge relied entirely upon a memorandum prepared by a solicitor in June 1989 of information given to him by Mike Jakupi. No issue is taken with the admissibility of this document as evidence of the truth of its contents.
3The salient portions of this memorandum read as follows:
Jakupi then contacted Peter Stavrou and met with Peter Stavrou on, I think, April 6th and took an offer from Peter. The next day he delivered the offer to Terry Farrell at his office. It was about two days later that he received the offer signed back with changes from Farrell.
…
On the Monday night he spoke with Farrell concerning the signed back offer and was informed by Farrell that he had not been able to get hold of Sergautis but that he knew Sergautis wanted out of that deal. It was evident to Mike Jakupi that there was no actual formal release on the Sergautis deal. There was nonetheless no condition in the signed back offer that it was subject to the Sergautis deal not proceeding and Mike Jakupi got no indication from Terry Farrell that there would be any reason to expect that the release would not be forthcoming. He then spoke with Peter Stavrou and passed along to Peter what he’d been told by Terry Farrell. In his view Peter Stavrou knew that there was no formal release of the Sergautis deal yet but there was no reason to expect any difficulty in this regard. Peter Stavrou therefore signed the counter offer and Jakupi sent it over to Farrell’s office.
…
Three or four days later after crossing telephone messages with Farrell several times, Mike Jakupi spoke with Farrell and was advised there was a problem with the release of the Sergautis deal. At this point Farrell was taking the position that we knew there was no release of the Sergautis deal and we accepted the counter offer. Mike Jakupi then informed Peter Stavrou that it looked like there was no deal because there had been no release obtained on the Sergautis deal, and he informed Peter Stavrou that the deal probably would not close.
[4] In our view, the contents of this memorandum clearly fall short of stating that there was discussion about or agreement to the suggested condition.
[5] On the submissions before us, the respondent argued that the following evidence given by Mr. Jakupi, in all of the circumstances, supported the trial judge’s conclusion:
Q. It’s fair to say that when Mr. Stavrou executed the counter offer thereby accepting it, you understood that he did it on the condition that there was no deal until you got the written release? A. I was assured that there would be mutual releases by Mr. Farrell, sir. Q. And by that you knew there had to be mutual written releases, right? A. Yes. Yes. Q. You didn’t have it in your hand? A. No, sir. Q. But you knew that you had to have the written release before this deal became operative? A. I would never have the releases, no. Q. You knew it had to exist? A. It had to exist, yes. Q. It’s fair to say then you knew that you had to have a written release in existence before this deal could be operative? A. Yes. Q. Do you believe, based upon your conversations, that that was the assumption under which Mr. Stavrou executed? A. I … Q. You can’t tell me what he thought. I’m asking you if you believe based upon your conversations with him at that time that that is the assumption on which he executed? A. I don’t know, sir. Q. But you gave him all the information that you had that led you to the conclusion that you just testified, right? A. Yes. Q. Do you know if he had any different information that would lead him to a different conclusion? A. No, sir. Q. Did you have any discussions at all with Mr. Stavrou about who was going to bear the risk associated with this deal if a written release wasn’t forthcoming and the first offer went ahead? A. No, sir. Q. Did you even think about it? A. No, sir.
[6] This is not evidence on which a finding of agreement on the suggested condition precedent could reasonably be based. The most it could be said to show is what Mr. Jakupi’s view of the matter was, and not, as he himself acknowledges in these passages, that of Mr. Stavrou.
[7] Ms. Wise submitted that this evidence should be read in conjunction with some pieces of circumstantial evidence and, when taken as a whole, it supported the trial judge’s conclusion. We do not agree. In our view, none of these pieces of evidence, taken individually or cumulatively, amount to anything more than conjecture.
[8] Because we have concluded that the evidence was not capable of supporting the trial judge’s conclusion, it is not necessary for us to deal with the second issue indicated above.
[9] The respondent sought to uphold the judgment on the basis of mutual mistake on which the trial judge, in the alternative, relied as a basis for dismissing the action. We are satisfied that there was no evidence on which a finding of mutual mistake could be made. The respondent’s position was not, as stated by the trial judge, that it thought that the Extra Realty agreement had been terminated by mutual releases. It is clear that its position was to the contrary, that is, that that agreement was alive and in difficulty, but no more.
[10] The appeal is allowed, the trial judgment is set aside, and in its place we grant judgment in favour of the appellant and declare that it is entitled to damages to be determined at a new trial confined to that question. The appellant is entitled to its costs of the trial before Flinn J. and of the appeal.
Signed: “J.W. Morden J.A.”
“M.A. Catzman J.A.” “M.J. Moldaver J.A.”