DATE: 20020725 DOCKET: C36697
COURT OF APPEAL FOR ONTARIO
RE:
DONALD G. JONES (Applicant/Respondent in Appeal) – and TWS DEVELOPMENTS INC. (Respondent/Appellant in Appeal)
BEFORE:
ROSENBERG, SHARPE and CRONK JJ.A.
COUNSEL:
Maureen L. Whelton for the appellant
Gavin J. Tighe for the respondent
HEARD:
June 20, 2002
On appeal from the judgment of Justice Harry J. Keenan dated June 14, 2001.
E N D O R S E M E N T
[1] This is an appeal from the judgment of Keenan J. granting specific performance of an agreement of purchase and sale of a residential condominium unit.
[2] The appellant developer submits that the application judge erred i) in his interpretation of the agreement of purchase and sale; ii) in making certain factual findings that were not supported by the record; and iii) in ordering specific performance.
[3] We agree that the application judge erred in interpreting the agreement of purchase and sale. We also agree that the record did not permit the application judge to make certain factual findings or to order specific performance. For the reasons that follow, we set aside the judgment, but allow the respondent to convert the application into an action and proceed to trial on the disputed factual issues.
FACTS
- [4] The relevant portions of the agreement of purchase and sale are as follows:
4(g) “Tentative Occupancy Date” means the date in paragraph 3 of this Agreement, which is the tentative date on which the Vendor presently estimates that the Purchaser will be able and obliged to occupy the Unit (subject to any other provisions of this Agreement to the contrary) or any extension thereof pursuant to the provisions of this Agreement.
4(d) “Confirmed Occupancy Date” means the date selected by the Vendor on which date the Unit is substantially completed and the Municipality permits occupation, on which date the Purchaser is required to take occupancy of the Unit (subject to any other provision of this Agreement to the contrary). Such date shall be confirmed by written notice sent to the Purchaser no later than sixty (60) days prior to the Tentative Occupancy Date, and if no notice shall be sent, the Confirmed Occupancy Date shall be the Tentative Occupancy Date. The Confirmed Occupancy Date may be earlier or later than the Tentative Occupancy Date. Provided that if the Vendor cannot give possession of the Unit to the Purchaser by the Confirmed Occupancy Date, then the Vendor in accordance with the provisions contained in this Addendum, shall be entitled to extend the Confirmed Occupancy Date one or more times as the Vendor may require, by notice in writing and the extended date shall constitute the Confirmed Occupancy Date.
4(b) “Closing Date” or “Closing” means the date designated by the Vendor’s solicitors on which a Transfer/Deed of Land of the Unit to the Purchaser shall be delivered for registration. If no specific Closing Date is set out herein, the closing shall occur on the date established by prior written notice to the Purchaser of at least fifteen (15) days by the Vendor or the Vendor’s Solicitors, following the registration of the Condominium. Provided however that if the Condominium has been registered prior to the Confirmed Occupancy Date, then at the Vendor’s option, the Confirmed Occupancy Date shall also constitute the Closing Date under this Agreement, and the provisions of this Agreement shall then be amended accordingly to give effect to same.
If the completion of the Unit or the common elements is delayed by reasons of strikes, lock-outs, shortages of materials or labour, fire, lightning, tempest, riot, war or unusual delay by common carriers or unavoidable casualties, or by any other cause of any kind whatsoever beyond the control of the Vendor, or if the Unit is not completed to the extent that the municipality will permit occupancy, the Vendor shall be permitted reasonable extensions of time, from time to time, for completion and the Confirmed Occupancy Date or the Closing Date shall be extended accordingly, as applicable. If the Unit is substantially completed by the Vendor on or before the Confirmed Occupancy Date or the Closing Date, as applicable or any extension thereof as aforesaid, to the extent that the municipality will permit occupancy thereof, the Purchaser shall take possession on the Confirmed Occupancy Date or the Closing Date, as applicable, notwithstanding that the Vendor has not fully completed the Unit or the common elements and the Vendor shall complete such outstanding work within a reasonable time after the Confirmed Occupancy Date or Closing Date, as applicable, having regard to weather conditions and the availability of labour and materials. In any event the Purchaser acknowledges that failure to complete the common elements, on or before the Confirmed Occupancy or Closing Date, as applicable, shall not be deemed to be a failure to complete the Unit. Provided that the Purchaser shall not have any claim as against the Vendor for any damages or expenses resulting from a delay in the Occupancy Date.
Provided that if neither the Occupancy Date or Closing Date has occurred within twelve months of the Tentative Occupancy Date, the Vendor or Purchaser may thereafter terminate this Agreement by sending written notice to the other party. In this event, this Agreement shall be null and void and all deposits shall be returned to the Purchaser, and neither party shall have claim against the other.
[5] The agreement of purchase and sale specified May 31, 1999 as the tentative occupancy date. The appellant extended the tentative occupancy date once to September 30, 1999. On July 9, 1999, the appellant advised the respondent that the confirmed occupancy date was April 26, 2000. The confirmed occupancy date was later extended to May 29, 2000, then to July 12, 2000, again to September 9, 2000, and finally to October 31, 2000. The appellant offered a variety of reasons for the delay in completion including severe weather, labour disputes, unforeseen work in conversion of the building to a residential condominium, and labour and material shortages due to a construction boom.
[6] Throughout this same period, the respondent wrote numerous letters to the appellant objecting to certain design and construction changes and expressing concerns regarding the delay in completion. More than once, the respondent attempted to terminate the agreement and asked for the return of his deposit. The appellant more or less ignored the respondent’s letters but once offered to release the respondent from the agreement if the respondent could produce another purchaser. The respondent did not act on that proposal and the appellant ignored the respondent’s purported repudiations of the agreement.
[7] On January 11, 2001, the appellant purported to terminate the agreement pursuant to paragraph 25 on the ground that the unit had not been substantially completed and more than one year had passed since the tentative occupancy date. The respondent then initiated this application claiming specific performance.
[8] The application was heard on the affidavit evidence of the respondent and Sheldon Salcman, an officer of the appellant, filed shortly before the hearing date. The application judge refused the appellant’s request for an adjournment to permit cross-examination and awarded the respondent specific performance.
[9] The application judge made three crucial findings. First, he found that the appellant was not entitled to specify any of the dates as confirmed occupancy dates. He interpreted the definition of “confirmed occupancy date” to require that before the confirmed occupancy date could be set by the appellant, the unit had to be substantially completed and the municipality had to have permitted occupancy. As neither of those events had occurred, the application judge ruled that the confirmed occupancy dates specified by the appellant could only be extensions of the tentative occupancy date. As less than one year had passed from the last of those dates, the appellant was not entitled to terminate the agreement pursuant to paragraph 25.
[10] Second, the application judge found that the “long period of delay was due to causes largely within the control of the developer,” the delay was “excessive” and that the appellant should not “be permitted to invoke a termination clause relating to delay when the delay was due to its own default." He also found that the appellant had acted in bad faith, laying in wait until terminating the agreement to get rid of the respondent, who it considered a “squeaky wheel”, to resell the unit at a higher price in a rising market.
[11] Third, the application judge found that specific performance was available as the development was “very trendy”, located in a very desirable area and the respondent’s contention that it was unique and his subjective assessment of the property as unique were factors to be taken into account.
ANALYSIS
[12] In our view, the application judge erred in his interpretation of the agreement. We do not agree that the appellant could only specify the confirmed occupancy date after it had substantially completed the unit and obtained occupancy permission from the municipality. While the language of the agreement is hardly a model of clarity, we agree with the appellant’s submission that the confirmed occupancy date is the date on which the developer expects substantial completion and municipal occupancy permission. Several features of the agreement lead us to that conclusion. First, paragraph 4(d) provides that the vendor is to provide the confirmed occupancy date no later than sixty days prior to the tentative occupancy date. That requirement appears to contemplate a projected or expected date. Second, paragraphs 4(d) and 24 allow the vendor to extend the confirmed occupancy date if the vendor is not in a position to give the purchaser possession on the date specified. This is difficult to reconcile with an interpretation that would only allow the vendor to specify the confirmed occupancy date after it was in a position to give occupancy. Third, while the agreement plainly allows the vendor to extend the confirmed occupancy date, nowhere does it actually say that the vendor can extend the tentative occupancy date. This feature of the agreement makes it difficult to accept the application judge’s characterization of the extensions as being extensions of the tentative occupancy date.
[13] We also agree with the appellant’s submission that the record did not allow the application judge to make the factual findings crucial to the alternate ground for holding the appellant to be in breach of its contract and for awarding specific performance. The application judge inferred, without direct evidence, that:
i) the long period of delay was due to causes largely within the control of the vendor;
ii) the vendor lay in wait until January 11, 2001 and then attempted to invoke paragraph 25 of the agreement;
iii) the vendor elected to try to terminate the agreement to achieve two goals: get rid of a squeaky wheel and make an additional profit on the sale of the unit; and
iv) the condominium unit was unique because the type of redevelopment was trendy, the area was very desirable and Mr. Jones believed the condominium unit was unique.
[14] As it is our view that a trial is required on those issues, we will not review the evidence in detail. There was no direct evidence to support findings i), ii) and iii) and they were based entirely on inference. The appellant lead evidence to explain the delay in completion and disputed the inferences the respondent advanced. In those circumstances, the appellant was entitled to have the contested issues determined upon oral evidence. There was no evidence to support the findings that the condominium was unique and the area was very desirable. Those findings were crucial to the award of specific performance.
[15] In our view, the application judge erred in making these findings rather than directing the trial of an issue or converting the application to an action.
DISPOSITION
- [16] Accordingly, we set aside the judgment and direct that the application be converted to an action. The costs of the application and of this appeal should be reserved to the trial judge.
“M. Rosenberg J.A.”
“Robert J. Sharpe J.A.”
“E.A Cronk J.A.”