COURT FILE NO.: 756/02
DATE: 20041013
SUPERIOR COURT OF JUSTICE - ONTARIO
(Divisional Court)
RE: METROPOLITAN TORONTO CONDOMINIUM CORPORATION #1101 and METROPOLITAN TORONTO CONDOMINIUM CORPORATION #1120 (Applicants/Appellants) v. ONTARIO NEW HOME WARRANTY PROGRAM (Respondent/Respondent) v. CONCORD SQUARE LIMITED (Added Party/Respondent)
BEFORE: DUNNET, JENNINGS and C. CAMPBELL JJ.
COUNSEL: Irving Marks and Laurence A. Patillo and Barbara Green David Outerbridge for the Applicants (Appellants) for the Respondent (Respondent)
Lloyd D. Cadsby, Q.C. for the Added Party (Respondent)
HEARD: SEPTEMBER 30, 2004
S U P P L E M E N T A R Y E N D O R S E M E N T
BY THE COURT:
[1] On December 17, 2003, this Court released written reasons dismissing the appeal with costs. It was our understanding of counsel’s position that if the releases executed with Concord were enforceable, it was not necessary to make findings on the remaining issues.
[2] Following our decision, we were advised by counsel that the Court had misconstrued the appellants’ position with respect to the need to consider the issues relating to the interpretation of the releases, the May 28 letter (the Letter) and estoppel. We agreed to hear further argument and to rule on the remaining grounds of appeal.
[3] The appellants’ position is that the releases do not constitute the entire agreement and they are entitled to rely on the Letter in support of their claims against the Program for water leak repairs.
[4] The appellants state that the Letter is admissible as an exception to the parole evidence rule. The appellants submit that the Letter was prepared in lieu of an amendment to the releases as a convenience and the documents were executed simultaneously.
[5] They state that in the releases, paragraph 7(b) specifically preserves the warranty claims against the Program and Concord in respect of water leaks and that section takes priority over the remaining provisions of the releases, including paragraphs 10 and 13.
[6] Further, the appellants urge that they are not estopped from relying on the Letter in support of their warranty claims, because they made no representations to the Program. If the Program relied on reports made by Concord or the releases in order to reduce Concord’s security, they did so at their own risk.
[7] The Program’s position is that paragraph 13 contains the entire agreement clause and expressly requires that any amendment to the releases be in writing and signed by all the parties. The Letter was signed only by Concord and did not state that it amended the releases.
[8] In addition, the appellants chose not to include any reference to the water leaks in the releases, despite having the opportunity to do so, the knowledge and sophistication to understand the effect of not doing so, and the necessary legal advice.
[9] The Program submits that if paragraph 7(b) of the releases preserves the claims in respect of water leaks against the Program and Concord, then paragraphs 6 and 10 of the releases are meaningless.
[10] Further, even if the Letter did modify or supplement the releases, the Program submits that the appellants are estopped from relying on the Letter as against the Program as a result of its detrimental reliance upon the releases in relinquishing the security it held in connection with its warranty obligations. The Program required the releases as a condition precedent to relinquishing its security in connection with Concord and had no knowledge of the Letter before reducing its security.
[11] The Program therefore submits that it reasonably relied to its detriment on the appellants’ representation, through the releases, that they were pursuing no further claims against Concord or the Program in connection with the matters raised in the Medhurst Report and Schedule A to the releases.
[12] Concord supports the proposition that the release, when read in conjunction with the supporting documentation, can lead to only one conclusion: namely, the extinguishment of the water leak claim as against the Program.
[13] Mr. Cadsby on behalf of Concord submits that following execution of the releases and their delivery to the Program, any issue of water leaks was a matter solely between the appellants and Concord.
[14] We were referred to a letter between Concord and the appellants dated May 27, 1998, which enclosed changes to the releases sought by the appellants, certain monetary payments and the following reference to the Letter:
A side letter in which we undertake to make the necessary repairs to stop the known leaks which are identified in the attachment to the letter.
[15] It is urged that The Letter as a side letter is to be read according to its terms between the immediate parties to it in the context of a statutory warranty which, for non-structural repairs, had expired. The Letter in this context makes business sense. There is no reference in the Letter to the Program and the Program did not receive a copy of it.
[16] The issue here is the extent to which the Letter affects the specific language of the releases insofar as the Program is concerned. At the hearing before the Licence Appeal Tribunal, the evidence of Beryl Macleod on behalf of the appellants was that leak issue had always been dealt with as a separate entity:
Q. Was there any reference at the meeting to this (sic) specific documents that were to be signed or delivered?
A. We would sign the release agreement which had a schedule attached to it.
Q. Yes?
A. There was to be a separate letter dealing with the leak issue and it was a separate commitment by Concord Square Limited to continue to find the cause of the leaks and to repair the leaks as they occurred.
Q. Is that the letter that appears at Tab 25? The letter dated May 28th 1998.
A. That is the letter, May 28th, yes.
[17] Therefore, there was evidence before the Tribunal that the appellants never intended the Letter to impact the releases.
[18] Further, paragraph 13 of the releases connotes an entire agreement clause. The Letter is not signed by the appellants and it clearly limits the obligations of Concord to dealing with water leaks identified in Schedule 1.
[19] We are of the view that paragraph 7(b) of the releases, which was drafted by the appellants, does not override the releases provided for in paragraph 10 of the settlement agreements. Paragraph 10 specifically refers to the Medhurst Report, which among other things dealt with water leaks. We agree with counsel for Concord that the placement of the sentence “The Corporation further acknowledges that it has no further claim against the Ontario New Home Warranty Program nor the Declarant for any item referred to the Medhurst Report” immediately following the sentence excluding claims provided for in paragraph 7 can have no logical meaning other than to indicate that paragraph 7(b) does not apply to claims for items referred to in the Medhurst Report.
[20] We agree with the conclusion of the Tribunal that the circumstances of receipt of payments by the appellants and the release of security by the Program operate as an estoppel as between the appellants and the Program.
[21] Accordingly, there is no basis in law for the Program to respond to the water leaks. Whatever obligations that may arise from the Letter are matters between the appellants and Concord.
[22] The appeal on the remaining issues is dismissed with costs as agreed fixed at $7000 payable to the Program and $7000 to Concord, inclusive of fees and disbursements.
RELEASED:
DUNNET J.
JENNINGS J.
C. CAMPBELL J.