COURT OF APPEAL FOR ONTARIO
RE: MISSISSAUGA TEACHERS’ RETIREMENT VILLAGE LIMITED PARTNERSHIP (Applicant/Appellant) – and – L.M.C. (1993) LTD., SEPROCK LIMITED PARTNERSHIP and TIMBERCREEK INVESTMENTS INC. (Respondents/Respondents in appeal)
BEFORE: DOHERTY, LASKIN and JURIANSZ JJ.A.
COUNSEL: C.M. Loopstra, Q.C. and Sean C. Doyle for the applicant/appellant
Allan Sternberg and Robby Bernstein for the respondents
HEARD: October 21, 2004
On appeal from the judgment of Justice Donald R. Cameron of the Superior Court of Appeal dated September 29, 2003.
E N D O R S E M E N T
1The appellant, Mississauga Teachers’ Retirement Village Limited Partnership appeals from the judgment of the application judge dismissing its application seeking declaratory and mandatory relief, and also seeks leave to appeal the costs award he made against it.
2MTRV LP is a limited partnership formed to invest in a real estate investment known as “Rockcliffe on the Park” through another limited partnership, Seprock LP. MTRV LP has a 35.93% interest in Seprock LP. The general partner, LMC Ltd., is the beneficial owner of the remaining 64.07% of Seprock LP.
3Since 1999, MTRV LP has wished to sell Rockcliffe on the Park and dissolve the partnership, and LMC has wished to retain the property and continue the partnership. On January 7, 2003 MTRV LP and LMC agreed to resolve their differences by entering into a Sale and Dissolution Agreement that Rockcliffe on the Park would be listed for sale during a six-month period, and subject to achieving a sale price and other specified terms, to sell the property and subsequently to wind up the affairs of and dissolve Seprock LP. If the property were not sold during the six-month listing period, they agreed that neither party, without the consent of the other, would take any action to sell or propose the sale of the property until December 31, 2008.
4Article 1.06 of the agreement provided in part:
In the event the Property is not sold prior to the expiry of the Listing Agreement in accordance with the terms and provisions hereof, neither LMC nor MTRV LP without the written consent of the other, shall take any action with respect to the sale or propose sale of the Property until the earlier of December 31, 2008 or the date of a material continuing breach by either LMC or MTRV LP ...
5The listing agreement expired at 11:59 p.m. on July 14, 2003.
6Timbercreek Investments Inc. offered to purchase Rockcliffe on the Park on July 14, 2003. The offer, which was conditional until August 28, upon the purchaser securing an “undertaking to insure” from CMHC and suitable financing, met the sale price specified in the Sale and Dissolution Agreement.
7LMC refused to accept the Timbercreek offer based on its view that the agreement provided that the property had to be unconditionally sold before the expiry of the listing agreement.
8MTRV LP took the position that a conditional sale within the listing met the requirements of the agreement.
9Even though LMC refused to execute Timbercreek’s offer, Timbercreek took steps toward satisfying the conditions in its offer. On July 31, 2003, Timbercreek extended the irrevocable date in its offer to September 30, 2003, and on September 10, 2003, waived the financing conditions.
10The application judge held that Timbercreek’s July 14, 2003, offer complied with the Sale and Dissolution Agreement and that LMC was not entitled to refuse to execute that offer. However, the application judge dismissed the application because:
the agreement that would have been constituted by that offer automatically became null and void unless Timbercreek either confirmed it had financing or had waived the condition by August 28, 2003. Timbercreek did not confirm the financing until September 10, 2003. By that date, the agreement that would have been constituted by the acceptance of the July 14 offer would have expired.
LMC was not obliged to agree to an offer after July 14, 2003. That would have included any offer attempting to revive or novate the expired agreement.
11MTRV LP argues that the application judge erred in law by finding that LMC was entitled to rely on the provision in the unaccepted offer that Timbercreek fulfill or waive the financing condition by August 28, 2003, and by permitting LMC to benefit from its own wrong.
12LMC defends the result on two grounds. It submits the word “sold” in the Sale and Dissolution Agreement meant an unconditional sale and, in the alternative, defends the reasoning of the application judge. We need deal only with the first ground.
13We are of the view that the word “sold” in Article 1.06 of the Sale and Dissolution Agreement means an unconditional agreement of purchase and sale. Where, as here, words of a contract can bear two constructions, the preferred meaning is the one that best promotes a sensible commercial result and advances the objective of the parties in entering the commercial transaction in the first place. See Consolidated Bathurst Export Ltd. V. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888 per Estey J. at 901, and Eli Lilly and Co. v. Novopharm Ltd. (1998), 161 D.L.R. (4th) 1, per Iacobucci J. at pg 27. As the application judge said "Preference is to be given to an interpretation which yields a fair or commercially reasonable result which could reasonably have been anticipated in the atmosphere in which the agreement was made."
14The purpose of the Sale and Dissolution Agreement was to resolve the longstanding dispute between the parties whether the property should be sold. LMC did not want to sell, but agreed to list the property for sale for a limited period. MTVR LP wanted to sell, but made the commitment that if the property did not sell during the limited period, it would standstill for five years. Exactly when the listing period expired, and MTVR LP’s standstill obligation commenced was a matter of enormous importance to the parties. In this commercial context, the parties required a clear and certain event to determine this question. Given the function of Article 1.06 to mark the end of the listing period and the beginning of the standstill agreement, we find that the word "sold" meant an unconditional sale.
15We find it unnecessary to comment on the application judge’s treatment of Timbercreek’s unaccepted conditional offer to purchase. Nor is it necessary, in view of our finding, to consider MTRV LP’s submissions that the trial judge erred by awarding costs against it after finding that LMC had breached the agreement.
16MTRV LP’s appeal and motion for leave to appeal the application judge’s award of costs are dismissed. The parties may make written submissions regarding costs of the appeal.
“D.H. Doherty J.A.”
“J.I. Laskin J.A.”
“R.G. Juriansz J.A.”