Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20230331 DOCKET: C70805

Lauwers, Paciocco and Thorburn JJ.A.

BETWEEN

Fiona Halliday-Shaw and Hamish Shaw Plaintiffs (Respondent)

and

Thomas John Grieco Defendant (Appellant)

Counsel: David Vaillancourt, for the appellant Adam Huff, for the respondents

Heard: March 29, 2023

On appeal from the order of Justice John Krawchenko of the Superior Court of Justice, dated May 16, 2022, with reasons at 2022 ONSC 3303.

Reasons for Decision

[1] The appellant, Thomas Grieco, as vendor, and the respondents, Fiona Halliday-Shaw and Hamish Shaw, as purchasers, entered into an agreement of purchase and sale (“APS”) relating to a lakefront property in Niagara-on-the-Lake, Ontario. Pending closing, issues arose relating to land access to the property, and the Shaws’ potential liability as purchasers for non-resident taxes that Mr. Grieco might owe. The Shaws issued requisitions to Mr. Grieco, requiring a transfer of an interest in the private road that services the property (the “road access requisition”) and demanding either a Clearance Certificate from the Canada Revenue Agency, or a solicitor’s undertaking to holdback 25% of the gross sale proceeds pending receipt of a Clearance Certificate (the “holdback requisition”). Mr. Grieco’s responses did not satisfy the Shaws, and the transaction did not close, despite a brief one-day extension from June 10, 2021, to June 11, 2021. On June 14, 2021, Mr. Grieco took the position that by not closing the Shaw’s had repudiated the contract, and he purported to accept the repudiation, putting an end to the APS.

[2] The Shaws sued on June 21, 2021, and on May 4, 2022, sought summary judgment and other relief. The motion judge held that the requisitions were valid, neither party was ready to close, and the APS was not repudiated but remained in force, with time no longer being of the essence. He granted summary judgment and ordered, among other things, that Mr. Grieco specifically perform his obligations under the APS.

[3] Mr. Grieco argues that the motion judge erred in: (1) finding the purchaser requisitions were valid; (2) finding Mr. Grieco was not ready, willing and able to close; and (3) ordering specific performance. At the end of oral argument, we dismissed Mr. Grieco’s appeal for reasons to follow. These are our reasons.

[4] We do not find it necessary to address the motion judge’s holding relating to the road access requisition. That issue was resolved prior to this appeal. Moreover, if the motion judge was entitled to find that the holdback requisition was valid, Mr. Grieco was not in a position to treat the Shaws’ insistence on that requisition as a repudiation of the contract, even if the road access requisition was invalid. We will therefore focus in these reasons on the motion judge’s decision relating to the holdback requisition.

[5] We see no error in the motion judge’s decision that the holdback requisition was valid. He was entitled, on the evidence, to make this determination, and he provided adequate reasons for decision.

[6] In his reasons, the motion judge quoted the relevant provision from section 17 of the APS, providing that, absent delivery to the buyer of a Clearance Certificate, “if the Seller is a non-resident … the Buyer shall be credited towards the Purchase Price with the amount, if any, necessary for Buyer to pay to the Minister of National Revenue to satisfy Buyer’s liability in respect of tax payable by Seller under the non-residency provisions of the Income Tax Act by reason of this sale.”

[7] In determining whether the requisition was valid the motion judge was entitled to proceed on the basis that this provision applied to Mr. Grieco. He had before him a letter from Mr. Grieco’s real estate lawyer affirming information Hamish Shaw attested to having received that Mr. Grieco was a non-resident. Mr. Grieco’s belated and unsupported denial that he is a non-resident, made before us, is immaterial.

[8] It was also reasonable for the motion judge to reject, as inadequate, Mr. Grieco’s response to the holdback requisition. Through his real estate lawyer Mr. Grieco made clear he would holdback only 1% of the purchase price, based on a trust declaration he attached that showed that, although he was the legal owner of the property, he had a 1% beneficial interest in the property.

[9] The motion judge’s reasons relating to the holdback requisition are pithy, but complete, accurate as to the operation of s. 116 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), (the “ITA”), and reasonable:

On the issue of the holdback, this was a term of section 17 of the APS as set out in section 116 of the Income Tax Act. Absent a Clearance Certificate or other form of comfort from the CRA setting out the appropriate holdback, the purchaser would be at risk of being required to pay 25% of the cost of the property, in this case an additional $505,000.00, a much greater sum than the $8,700.00 the vendor had offered to hold back on the basis of his own calculations and not those of CRA.

[10] The motion judge was not required to set out s. 116 of the ITA or analyse its meaning overtly in his decision. It is clear that he considered the provision. Nor was expert evidence or other proof required to show that Mr. Grieco’s tax liability would be more than the 1% he offered to hold back. It was enough to justify the requisition that the Shaws were at risk of having to pay Mr. Grieco’s taxes. The motion judge’s decision that they were at risk was entirely reasonable and supported in the record. We see no error in the motion judge’s finding that holdback requisition was valid.

[11] Nor do we see any error in the motion judge’s finding that Mr. Grieco was not ready, able and willing to close. An innocent party, the non-repudiating party, can accept a repudiation, putting an end to the contract: Ching v. Pier 27 Toronto Inc., 2021 ONCA 551, 33 R.P.R. (6th) 117, at para. 26. But Mr. Grieco was not an innocent party because he refused to abide by article 17 of the APS. Without compliance, he was not ready, able and willing to close.

[12] Nor did the motion judge err in awarding specific performance, or in explaining his decision to do so. The ultimate test for specific performance is whether “a plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties”: Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, 25 RPR (6th) 117, at para. 71. The motion judge clearly came to this conclusion, holding that on the facts before him, “specific performance of the contract is the most appropriate remedy, given the unique characteristics of the subject Property.”

[13] In his reasons for decision, the motion judge explained why the property was unique by expressing his acceptance of the respondents’ evidence and that of their real estate broker, evidence that leaves no reasonable room for disputing the finding that the property is unique. Mr. Grieco nonetheless argues that the motion judge erred by failing to expressly address all of the factors “typically” considered by judges considering specific performance, namely, “(i) the nature of the property involved, (ii) the related question of the inadequacy of damages as a remedy, and (iii) the behaviour of the parties, having regard to the equitable nature of the remedy”: Lucas, at para. 71. Mr. Grieco argues that he committed a legal error by considering only factor (i). We do not accept this submission. The typical factors considered are non-exhaustive, overlapping factors, and not all need to be present to support a finding of specific performance. Moreover, judges are presumed to know the law and are not required to deal explicitly in their reasons with every factor they consider. A judge’s reasons must be read in the context of the evidentiary record as a whole. The evidentiary record in this case burgeoned with reasons supporting the motion judge’s decision to grant specific performance.

[14] We therefore dismissed the appeal.

[15] We order Mr. Grieco to pay costs in this appeal to the Shaws in the amount of $19,000, inclusive of disbursements and applicable taxes.

“P. Lauwers J.A.”

“David M. Paciocco J.A.”

“J.A. Thorburn J.A.”