Juol Sands Inc. v. Humberplex Developments Inc., 2009 ONCA 469
CITATION: Juol Sands Inc. v. Humberplex Developments Inc., 2009 ONCA 469
DATE: 20090611
DOCKET: C49487
COURT OF APPEAL FOR ONTARIO
Winkler C.J.O., Goudge and Feldman JJ.A.
BETWEEN
Juol Sands Inc., Rener Investments Inc., 596117 Ontario Limited, 652996 Ontario Limited, 807634 Ontario Limited, 868040 Ontario Limited, and 1047230 Ontario Limited
Applicants
and
Grand Sheppard Building and Development Corporation, Gary Bensky, Vendrain Inc., Pasquale Pillitteri also known as Pat Pillitteri and Humberplex Developments Inc., and Wycliffe Humberplex Limited
Respondents (Respondent/Appellant)
Alan J. Lenczner, Q.C. and Nadia Campion, for the appellant Wycliffe Humberplex Limited
Alistair Riswick, for the respondent Humberplex Developments Inc.
Heard: June 8, 2009
On appeal from the order of Justice Sarah E. Pepall of the Superior Court of Justice (Commercial List), dated September 10, 2008.
Winkler C.J.O.:
[1] The appellant, Wycliffe Humberplex Limited, appeals from part of an order made by Pepall J., dated September 10, 2008, in which she ordered that the respondent, Humberplex Developments Inc., is not required to pay to the City of Vaughan and the Regional Municipality of York certain development charges due on certain lots now owned by the appellant. Both Wycliffe and Humberplex, respondents in the original application, were the moving party and respondent respectively in the motion before Pepall J. That motion is the subject of this appeal.
[2] For the reasons that follow, the appeal is allowed.
Background
[3] The respondent is the developer of 170 lots in Kleinberg, Ontario. On October 16, 2003, the appellant purchased 88 of the Kleinberg lots from the respondent.
[4] The parties recognized that, in order to develop the lots, development charges would have to be paid to the City of Vaughan (the “City”) and the Regional Municipality of York (the “Municipality”). Pursuant to s. 6.1(b) of the Agreement of Purchase and Sale, the parties agreed to pay the development charges as follows:
The vendor shall…
(b) Levies - Pay or provide appropriate security for payment of levies, all development charges, capital contributions and imposts (collectively called the “Levies”) prerequisite to obtaining the registration of the Plan of Subdivision (excluding education development charges, GO Transit development charges, building permit fees, damage, grading or occupancy deposits or inspection fees relating to construction or occupancy which are all the responsibility of the Purchaser) as required to be paid pursuant to the Subdivision Agreement equivalent to the amount of such levies, as of the date of acceptance of this Agreement. The Purchaser shall be responsible for the payment of the increase of such levies and/or the whole amount of any new or other levy, contribution, impost or development charge, fee or assessment, the nature or amount of which was not in existence as of the date of execution of this Agreement…[emphasis added].
[5] In order to register the Plan of Subdivision, the respondent was required to enter into a Development Charge Agreement with the Municipality, which it did on June 16, 2005. The Development Charge Agreement provides for the payment of Residential Development Charges, classified into two components: (1) hard services, which include sanitary, water supply and regional road services; and (2) general services, which include police, emergency medical, long term care, public health, and public works services, capital growth studies, and transit infrastructure. The Residential Development Charges are governed by the Development Charges Act, 1997, S.O. 1997, c. 27 and By-law No. DC-0005-2003-050.
[6] Subsections 4(1) and 4(2) of the Development Charge Agreement specify the method of payment required for the Residential Development Charges. Subsection 4(1) provides that the hard services component of the development charges is due immediately upon entering into the agreement. Subsection 4(2) provides that the general services component is due upon the issuance of a building permit in respect of a lot or block of lots in the final Plan of Subdivision.
[7] Additionally, in order to get final approval of the Plan of Subdivision and to have it registered, the respondent was also required to enter into a Subdivision Agreement with the City. The Subdivision Agreement was signed on January 11, 2006, and requires, inter alia, the payment of certain development charges to the City. Schedule “I” to the Subdivision Agreement is entitled “…TO BE PAID BY THE OWNER PRIOR TO FINAL APPROVAL OF THE PLAN”. It provides that development charges and a special services area charge are payable to the City in accordance with the City of Vaughan Development Charges By-law and s. 21.1.1 of the Subdivision Agreement.
[8] The City of Vaughan Development Charges By-law lists the various types of development charges payable to the City. Section 21.1.1 of the Subdivision Agreement provides that both the engineering services and special services area components of the development charges are payable immediately upon entering into the agreement. The section further provides that the balance of the development charges is payable on the date that a building permit is issued.
[9] Upon signing both the Development Charge Agreement and the Subdivision Agreement, the respondent paid the development charges due immediately to the Municipality and the City. The Plan of Subdivision was registered on March 26, 2006.
[10] Between March 2006 and June 2008, the respondent paid the outstanding development charges in respect of 69 of the appellant’s lots for which building permits were issued. In August 2008, the appellant requested that the respondent pay the outstanding development charges on four lots totalling $22,036.00. When the respondent refused, the appellant paid the charges without prejudice to its position to seek reimbursement from the respondent. Currently, the remaining development charges on 19 lots are at issue (including the four lots for which the appellant has paid the charges), totalling $104,671.00.
Decision of the Motion Judge
[11] Before the motion judge, the parties agreed that the determination of the issue turned on the proper interpretation of the phrase “prerequisite to obtaining the registration of the Plan of Subdivision” in s. 6.1(b) of the Agreement of Purchase and Sale. In interpreting this phrase, the motion judge stated that the language must be given meaning.
[12] The motion judge reviewed the agreements and noted that both the Development Charge Agreement and the Subdivision Agreement distinguished between development charges payable as a prerequisite to registration and those payable post-registration. She also reviewed letters submitted as evidence from the City and the Municipality which suggested that both were satisfied that all payments prerequisite to registration of the Plan of Subdivision had been paid.
[13] On this basis, the motion judge concluded that the respondent was not required to pay the development charges in respect of the 19 lots. The development charges previously paid by the respondent in respect of the other 69 lots were not at issue as they had been resolved as part of an earlier settlement agreement between the parties.
Positions of the Parties
[14] The appellant submits that the motion judge erred in her interpretation of the phrase “prerequisite to obtaining the registration of the Plan of Subdivision” in s. 6.1(b) of the Agreement of Purchase and Sale. It argues that this phrase refers to the panoply of obligations assumed by the respondent in order to obtain registration of the Plan of Subdivision. Although the Development Charge Agreement and the Subdivision Agreement allowed the respondent to defer payment of some of the development charges, the Plan of Subdivision would not have been registered if the respondent had not agreed to pay those charges in full. The appellant asserts that the serialization of payments does not remove the obligation to make the payment, which always existed as a requirement to obtaining registration of the Plan of Subdivision.
[15] Further, the appellant argues that the motion judge misinterpreted the substance of the letters from the City and the Municipality. It submits that the letters can only be read as confirmation that the payments prerequisite to registration of the Plan of the Subdivision that were due immediately had been paid. The other charges prerequisite to registration of the Plan of Subdivision, due at a later date, had not been paid by the respondent.
[16] The respondent’s position is that s. 6.1(b) of the Agreement of Purchase and Sale does not require it to pay all of the development charges. However, the respondent conceded in oral argument that its original obligation to the Municipality and the City was to pay the entire amount of the development charges. Nevertheless, it submits that s. 6.1(b) of the Agreement of Purchase and Sale divides the development charges into “portions”, and that the payment structures provided for in the Subdivision Agreement and the Development Charge Agreement indicate that the respondent’s “portion” of the development charges was due immediately upon entering into the agreements, as a prerequisite to registration. Following these two initial payments, the Plan of Subdivision was registered and the respondent’s obligation under s. 6.1(b) was fulfilled.
[17] To support its position, the respondent relies on provisions in both the Development Charge Agreement and the Subdivision Agreement which state that the terms of the agreements are to be enforceable against the parties, their successors and assigns. It submits that whatever obligations the respondent had to the City and the Municipality run with the land and are binding on the appellant. Additionally, pursuant to s. 7.1(d) of the Agreement of Purchase and Sale, the appellant accepted title to the lands subject to the Subdivision Agreement and the Development Charge Agreement and agreed to comply with those agreements.
[18] The respondent also relies on the letters provided by the City and the Municipality to support its contention that both the City and the Municipality consider all charges prerequisite to registration of the Plan of Subdivision to have been paid.
Analysis
[19] The motion judge proceeded correctly on the basis of the position taken by the parties in argument before her, that is, that the case turned on the interpretation to be placed on the phrase “prerequisite to obtaining the registration” in s. 6.1(b) of the Agreement of Purchase and Sale. In my view, there are two possible meanings to be given to the word “prerequisite”. On the one hand, that word can be taken to mean that the payments must be made as a temporal condition precedent to the registration of the Plan of Subdivision. On the other hand, the term “prerequisite” can be taken to mean that the obligation to make the payments must be undertaken by the respondent prior to registration of the Plan of Subdivision.
[20] If the word “prerequisite” is to be given a temporal meaning, then the motion judge’s interpretation was correct and should not be disturbed. However, if the word “prerequisite” connotes an obligation to pay, permitting payment both before and after the registration of the Plan of Subdivision, then the interpretation advanced by the appellant must prevail.
[21] In my view, where there are two possible interpretations that can be given to the words in question, the interpretation that is consistent with the language of the document when read as a whole ought to prevail. In Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24, the Court of Appeal stated the principle as follows:
…a commercial contract is to be interpreted,
(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective
[22] The Agreement of Purchase and Sale provides in s. 6.1(b) that “[u]nless otherwise required under the Subdivision Agreement, the Vendor shall not be required to pay for its portion of such levies, capital contributions, development charges or imposts except within three (3) business days after it has been notified by the Purchaser that the Purchaser has applied for a building permit”. If the temporal meaning of the word “prerequisite” is accepted then this “three day clause”, which permits payment after registration but prior to the issuance of a building permit, can have no possible meaning. Conversely, if effect is to be given to the “three day clause”, then the word “prerequisite” cannot be read temporally. In order to give effect to s. 6.1(b) in its entirety without rendering one or more of its terms ineffective, I prefer the interpretation advanced by the appellant.
[23] In my view, the motion judge erred in principle in her interpretation of the words “prerequisite to obtaining the registration”. Read in the context of the agreement as a whole, they require the respondent to make the contested payments. The letters in evidence before the motion judge cannot be dispositive of this issue. Accordingly, I would allow the appeal, set aside the order of the motion judge, and issue an order declaring that the respondent is obliged to make the contested payments.
[24] The appellant will have its costs of this appeal fixed in the amount of $7,500 inclusive of G.S.T. and disbursements.
RELEASED: June 11, 2009 “WKW”
“W. K. Winkler C.J.O”
“I agree:
S.T. Goudge JA”
“I agree:
K. Feldman JA”