CITATION: Cary v. White, 2011 ONSC 660

DIVISIONAL COURT FILE NO.: DC-09-839-000

DATE: 20110107

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MATLOW, C. McKINNON, SHAW, J.J.

BETWEEN:

TODD MARTIN CARY

Plaintiff (Respondent)

– and –

THOMAS WHITE

Defendant (Appellant)

Paul Trenker, for the Respondent

Austin Acton, for the Appellant

HEARD: October 12, 2010 at Sudbury

MATLOW, J.:

[1]

Introduction

This appeal by the defendant, White, is allowed. The judgment in appeal is set aside and a new trial is directed to be held before a different judge. Counsel may exchange and deliver written submissions with respect to costs to this Court at Sudbury within one month from the date of these Reasons.

2By the judgment, the trial judge ordered that the plaintiff, Cary, was entitled to recover from the defendant, White, the sum of $41,743.15 paid by him pursuant to an agreement in writing made by them. It is White’s position on this appeal that the trial judge erred in making that disposition and that he was and remains entitled to keep all of the money paid to him.

[3]

Background and Facts

The facts relevant to this appeal include the following. By a written document headed “Agreement of Sale” dated June 1, 2000, Cary agreed to purchase from White what was described in the agreement as;

the whole of Lot #125 in the Jocko Point Subdivision, Lake Nipissing, in the District of Nipissing, in the Province of Ontario, as shown on Plan of record number 51531 in the Canada Lands Survey Records at Ottawa.

The agreement further provided as follows;

I (i.e. Cary) agree to show proof of house insurance and to make the Land Lease payments directly to Tom White. If Lease Payments should increase I agree to pay the increase.

I understand if I do not default in any payments the Lease will be transferred to my name June 2, 2006.

4The agreement was inexpertly drafted by White and several significant provisions in it were inserted in language that was less than clear. For example, even though the agreement appeared to provide for the sale of the subject property, what was really being sold was White’s remaining interest in a long-term lease of the property that he had obtained from the Nipissing First Nation. Pursuant to the lease White was required to pay rent to the lessor at the rate of $125.00 per month.

5There are other examples of unclear drafting as well.

6The agreement twice showed that the “principal amount” of the transaction was $30,000.00. It further showed, without much articulation, that this sum was to be paid in two components. One component, set out beneath a heading worded “Principal”, was to be paid in seventy-two monthly installments of $575.00 starting on June 1, 2000 and ending on June 1, 2006. The total payable for this component was to be, therefore, $41,400.00. There was nothing in the agreement providing for the payment of interest.

7The other component, set out under a heading worded “Balance”, was apparently to be payable in only one payment of $125.00 on June 1, 2006, the day before Crane would have been entitled to call for the assignment of the head lease to him had he made all payments without any default. Although it was not expressly set out in the agreement, this component was to compensate White for the rent he was required to continue to pay to the head lessor. The trial judge, however, at paragraph 2 of his Reasons, found that this obligation was also to be monthly over the same seventy-two months and his finding is supported by other evidence and not disputed on this appeal. On the trial judge’s finding, the total payable for this component was to be $9,000.00 and both components, taken together, would total $50,400.00.

8The agreement contained no express forfeiture provision and was otherwise silent about what would occur with the money paid by Cary if Cary were to default in making the payments that he was required to make.

9Cary lived on the property for several months and then rented it to a person named John Crane from whom he then began to receive rent.

10The trial judge found that Cary made payments to White, for the period ending December 31, 2004, in the total sum of $31,625.00. He then continued to make payments sporadically and then, in May, 2006, he stopped making them altogether. The trial judge found that, in 2005 and 2006, Cary made additional payments in the total sum of $10,050.25. The total of all of the payments made by Cary was, therefore, $41,675.25, still less than what was required regardless of whether or not the obligation to pay the second component was a recurring or a one-time obligation.

11The trial judge explicitly found that Cary was in arrears in paragraph 7 of his Reasons in which he stated the following;

It is not credible that Mr. Cary paid larger sums than those owing which, in the end, left him in a paid up position.

12Similarly, in paragraph 21 of his Reasons, he added the following;

On the evidence before me, it appears that Mr. White cancelled his contract with the Plaintiff because instalments were not being paid as required by the Agreement.

13On December 14, 2006, White sent a letter to Cary advising him as follows:

This is to notify you that your Contract with me Tom White for Rent to own on an agreement for sale will be canceled because of non payment plus lease payments plus you have not give me no Insurance Proof.

That letter, sent by registered mail, did not actually reach Cary because he failed to pick it up at the specified post office.

14On the following day White entered into an agreement with Crane and his wife for the purchase by them of his leasehold interest for the sum $43,848.00.

[15]

The Trial Decision

In arriving at his judgment the trial judge characterized the parties’ agreement as one of purchase and sale in which there was no forfeiture clause. Relying on the judgment of Lord Denning in Stockloser v Johnson, [1954] 1 Q.B. 476, he held that Cary was entitled to recover his money once White rescinded the agreement or treated it as at an end owing to Cary’s default.

16Before us, however, counsel for White sought to characterize the parties’ agreement differently and thereby distinguish the case at bar from Stockloser. In his submission, the agreement was a “rent to own” agreement rather than a simple agreement of purchase of sale. It provided, in essence, for a sublease from White to Cary for a term ending on June 1, 2006 and for the right of Cary to call for the assignment of the head lease on June 2, 2006, conditionally on his making all payments required by the agreement without any default. As Cary had failed to make many of the payments when required and was in default continuously from early 2005 to December, 2006, Cary lost the conditional right that he had obtained to call for an assignment to him of the head lease. Accordingly, all of the money paid by Cary to White was non-refundable rent and not as part of the purchase price of the assignment.

17At trial, White’s evidence was that making the written agreement was proposed by him to Cary to protect Cary in the event that he (White) might die leaving no other evidence of the parties’ oral agreement which could entitle Cary to an assignment of the lease. At page 145 of the transcript of evidence at trial, White testified as follows;

Q. Okay.

A. He didn’t want no agreement. He said it would be okay just verbally but I told him that he had no protection, that if something was to happen to me, if I was to die or something, my kids or whatever wouldn’t know and then he would be uh, he’d have no title to the property. So I said it’s better off that you make up this agreement.

Q. Okay.

A. And we discussed it and I said if you know, as long as you don’t miss no payments, it’s the same as paying rent but, uh, if you don’t make your payments, the place will automatically come back to me and he said, don’t worry, I’ll make my payments.

At page 159 of the transcript, White described the agreement as “a rent to own agreement”.

At page 210 of the transcript, White’s response to the final question put to him on cross-examination about the circumstances surrounding the preparation of the agreement as follows;

It was the rent to own agreement that we both agreed on and I kept my part of the agreement and he didn’t keep his.

And, at page 211, White followed up on the same subject in re-examination as follows;

Q. All right and I note in that letter, you say – you describe the contract as a rent to own contract?

A. Right.

Q. Was that how you saw it?

A. Yes.

18At page 238 of the transcript, the trial judge engaged counsel for White in the following dialogue about what the trial judge referred to as “unjust enrichment” and the “equities”.

THE COURT: Well what about the converse that your client, by your own accounting, has received over $40,000, turns around, sells it for $43,000, and so basically makes double recovery?

MR. BEST: Your Honour, in substance I believe is referring to the concept of unjust enrichment.

THE COURT: Well, I am not sure that unjust enrichment applies here. I am thinking of the equities between the parties and because I do not see this case being decided on the basis of unjust enrichment. At least that hasn’t been the position of counsel but I still have to look at the equities between the parties and you are saying why should he benefit from his breach of the contract? Well why should your client benefit and get double the value of the land? What entitles him to that? I mean if you have not made a claim for damages for contract, so…

19If the judge had correctly understood and considered White’s position, he might well have realized that there was no double recovery in White accepting money paid as rent from Cary and then selling the remainder of the head lease to Crane. Cary lived in the property and then rented it to Crane and received rent from Crane. Cary therefore obtained value for which he made the payments to White. When Cary defaulted in making payments to White, White was entitled to sell the head lease as at December 16, 2006, at a profit without regard to the rent payments that he had received from Cary prior to that date.

[20]

Analysis

Faced with White’s evidence, it is our view that the trial judge was obliged to consider it and give cogent reasons for his apparent decision to reject it. On White’s characterization, his counsel’s submission that White should be entitled to keep all of the money that he had received from Cary was supported by the evidence and, if accepted, could well have led to the dismissal of the action.

21Despite this obligation, there is nothing to be found in the Reasons to indicate that the trial judge considered White’s evidence. As well, there is nothing in the Reasons to explain why he declined to give effect to it.

[22]

Conclusion

This omission on the part of the trial judge constituted an error of law. As a result, it is our view that his judgment fails to meet the requisite standard of review of correctness and that we are now required to intervene.

MATLOW, J.

C. McKINNON, J.

SHAW, J.

Released: January 7, 2011.

CITATION: Carey v. White, 2011 ONSC 660

DIVISIONAL COURT FILE NO.: DC-09-839-000