DATE: 20040608

DOCKET: C40522

COURT OF APPEAL FOR ONTARIO

WEILER, ABELLA and ARMSTRONG JJ.A.

B E T W E E N :

THE NEIGHBOURHOODS OF CORNELL INC.

Earl A. Cherniak (Q.C) and Melvyn L. Solmon for the appellant

Plaintiff (Appellant)

• and -

1440106 ONTARIO INC., SAMUEL LAM and PETER WONG

Barry H. Bresner and Noel P. Peacock for the respondent

Defendants (Respondents)

Heard: April 14, 2004

On appeal from the judgment of Justice Harvey T. Spiegel of the Superior Court of Justice dated July 16, 2003.

WEILER J.A.:

Nature of Appeal

[1] The Neighbourhoods of Cornell Inc. (“Neighbourhoods”) appeals from the Order of the Honourable Mr. Justice Harvey T. Spiegel dated July 16, 2003, made at Toronto, Ontario granting summary judgment to 1440106 Ontario Inc., Samuel Lam (“Lam”) and Peter Wong (“Wong”), dismissing Neighbourhoods’ action for specific performance of an oral agreement for the purchase of land. In dismissing the action, Spiegel J. concluded that there was no genuine issue to be tried in connection with the following:

(a) there was no oral agreement between the parties for the sale of the land, as at least two fundamental terms remained unresolved;

(b) there was no note or memorandum in writing to satisfy the requirements of s. 4 of the Statute of Frauds; and

(c) there was no part performance by Neighbourhoods that would permit it to avoid the effect of the Statute of Frauds and to lead evidence of an oral agreement for the purchase and sale of the land.

The Facts

The Parties

[2] The respondent Lam is a retired radiologist and the respondent Peter Wong is a clothing manufacturer. Lam and Wong were part of a group known as the Law Development Group (“Law Group”) who held title to nine large tracts of land in the Cornell Community in the Town of Markham (“Cornel Lands”). The appellant Neighbourhoods was incorporated in January 2002 for the purpose of acquiring Area 5 and is part of the Tribute Group of companies, which engages in the business of real estate development. Al Libfeld is the president of Tribute and Andrew Gray is the Vice-President of Real Estate Development.

Overview of the negotiations

[3] Area 5 consists of approximately 345 acres and is part of the Cornell Lands. In 1995, Law Group acquired the rights to the Cornell Lands from Ontario Realty Corp. (“ORC”). Pursuant to the terms of the agreement with the ORC, there was a prohibition against resale until March 2002. The investors of Law Group subsequently decided to divide the Cornell Lands among themselves, through a Partition Agreement that would have to be negotiated and signed by all the of the investors. Lam and Wong anticipated receiving Area 2/3 and Area 5 once a Cost Sharing Agreement (“CSA”) and the Partition Agreement was complete.[^1] The CSA concerned the cost of putting in roads, sewers and municipal services for the property. The amount in question could have been in the order of $20 million.

[4] Even though they were not in a position to sell until they finalized the Partition Agreement, Lam and Wong began in July 2001 to investigate the possibilities of a disposition of Area 5. They asked Babak Sarshar, a real estate broker and consultant, to assist them and Sarshar approached Tribute. Libfeld on behalf of Tribute initially entered into discussions with Lam, Wong and Sarshar regarding a joint venture that did not result in agreement. Subsequently, they entered into negotiations regarding an outright sale.

Neighbourhoods was incorporated by Tribute on January 23, 2002 for the purpose of purchasing Area 5. Libfeld met on three occasions with Sarshar, Lam and Wong regarding the proposed sale: January 23, 2002, February 15, 2002, and March 6, 2002. On February 17, 2002, Wong sent an email to Sarshar telling him the basic terms that needed to be met, one of which was a purchase price of $40 million. On February 19, 2002, Sarshar forwarded Wong’s e-mail to Libfeld. A revised offer of $37 million was made on March 6, 2002. Wong and Lam advised that they would sell the property for $39 million. Libfeld spoke to Sarshar by telephone on March 8, 2002, and offered $39 million. Sarshar agrees that Libfeld offered $39 million and that Sarshar congratulated Libfeld. Sarshar says however that there were still outstanding terms to be negotiated. Two of these outstanding terms involved the Developer Charge Credits and the CSA. Before the motions judge there was no issue that the CSA was an essential term. The CSA was still being negotiated by Law Group. The issue was whether Neighborhoods agreed to assume its proportionate share of those costs from the vendors.

The motion judge’s reasons in relation to the CSA

[5] In relation to the CSA, the motion judge held:

With respect to the obligations under the CSA, it is not disputed that Lam and Wong made it clear that the purchaser would have to assume all these obligations. Libfeld acknowledges that the obligations under the CSA were a significant issue, and Libfeld says he expected the purchaser would assume all of the obligations under the CSA. He says that this was not discussed at the March 6, 2002 meeting or in his telephone conversation with Sashar on March 8, 2002 but it had been agreed upon when the parties were discussing the joint venture in the summer of 2001. In my view, this is far different from saying that he had agreed on behalf of the plaintiff to assume these obligations in the agreement of purchase and sale.

[6] On March 18, 2002, Neighbourhoods’ solicitor, Arthur Shapero, emailed a letter to Sarshar and attached an unsigned draft agreement of purchase and sale (“Draft Agreement”). Section 1.2 of the Draft Agreement provided that the agreement would be void unless executed by the parties on or before 5:00 p.m. on April 2, 2002. Neighbourhoods was also to pay a $200,000 deposit by that date. Section 6.01(d) of the Draft Agreement gives the purchaser the unilateral right to refuse to assume the obligations under the CSA, to refuse to close the transaction, and to require the vendor to perform these obligations. None of the parties signed the Draft Agreement nor was the deposit ever paid.

[7] On July 16, 2002, Libfeld spoke to Sarshar, the vendor’s agent, and on July 18, 2002, Libfeld spoke to Lam. Libfeld tape-recorded both of those conversations. Neighborhoods alleges that during the conversation on the 16th Sarshar acknowledged that there was a deal for the purchase and sale of Area 5 and in the July 18, 2002 conversation, Lam confirmed that there was a deal but it was now dead and that the Draft Agreement was not what the parties had agreed to.

[8] The trial judge commented in relation to the CSA clause:

It is difficult to think of a clause that would be more inconsistent with Libfeld’s assertion that he agreed to assume all of the obligations under the CSA. In my view, the provisions in the Draft Agreement are far more consistent with Gray’s evidence that the plaintiff was not prepared to agree to absorb the CSA costs until the CSA was final and it was clear what those costs were going to be.

Earlier in his reasons the trial judge had stated:

If Libfeld had agreed, it would have been a relatively simple thing to draft a clause stating that the purchaser assumed all the obligations under the CSA subject to being satisfied within the due diligence period that the CSA did not contain any unduly onerous obligations. In the course of argument, counsel for the plaintiff properly conceded that this type of clause would likely have satisfied any concerns the vendors might have with respect to the obligations under the CSA and still have protected the purchaser.

The trial judge continued:

Libfield’s assertion that the sections in the Draft Agreement dealing with…the CSA obligations were the result of drafting errors, is in my view, a totally self-serving statement without any evidentiary support. I note that this explanation was given for the first time on the cross-examination of his affidavit in support of the motion to set aside the granting of the CPL. (Certificate of Pending Litigation) Indeed, Libfeld had not read the Draft Agreement until after the action had commenced and the CPL had been issued…..

I am fully aware that it is not the role of a judge hearing a motion for summary judgment to weigh the evidence or to assess credibility. I also acknowledge that the burden is upon the moving party to establish that there is no genuine issue for trial. However, the respondent must present, by way of affidavit or other evidence specific facts, showing that the claim has a real chance of success. In a defendant’s motion for summary judgment the plaintiff bears the evidentiary burden of demonstrating that its claim is adequately supported by the evidence. See Guarantee Company of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423 at 434-436.

Having taken a good hard look at the evidence, I have come to the conclusion that the plaintiff has failed to satisfy its evidentiary burden and that there is no genuine issue for trial on the question of whether there was an oral agreement reached between the parties.

[9] The appellant submits that the motions judge put the test too high. The appellant’s position is, further, that the evidence of Libfeld was that Neighborhoods would assume the CSA unless it was “off the wall” and that his evidence in that regard raises a genuine issue for trial involving credibility. The motions judge was not entitled to conclude that Libfeld’s evidence was self-serving. What the Draft Agreement said is of no consequence if there was an oral agreement and what was put down on paper was wrong.

[10] In Guarantee Company of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, the Supreme Court stated at pp. 434-435:

The appropriate test to be applied on a motion for summary judgment is satisfied when the applicant has shown that there is no genuine issue of material fact requiring a trial, and therefore summary judgment is a proper question for consideration by the court... Once the moving party has made this showing, the respondent must then ‘establish his claim as being one with a real chance of success’ [citations omitted].

[11] In that case Bailey, Gordon Capital’s Compliance Officer, filed an affidavit as to when Gordon Capital believed that a loss of the type covered by the Bond had occurred. The affidavit was filed after a limitation period defence had been asserted and reversed a position previously taken. Gordon Capital submitted Bailey’s affidavit raised a credibility issue sufficient to require a trial as to when discovery of the loss under the Bond occurred. O’Brien J. disagreed and granted summary judgment in favour of Guarantee Co. In the context of the proceedings and taking into account the sophistication of the parties the Supreme Court did not find his conclusion to be unreasonable and agreed with O’Brien J.’s finding. The Court stated at p. 436:

We would add that the trial judge’s ruling on this point is entirely consistent with previous decisions holding that a self-serving affidavit is not sufficient in itself to create a triable issue in the absence of detailed facts and supporting evidence [citations omitted].

The Court, at p. 439, concluded that no issue for trial had been established:

We would therefore conclude that the motions judge committed no error in determining that this was a proper case for summary judgment. Gordon has not met the evidentiary burden to show there is a genuine issue for trial.

[12] In our opinion the motions judge did not misstate the law as set out in Gordon Capital, supra.

[13] Nor did the trial judge err with respect to his finding that Libfeld’s affidavit was self-serving. The undisputed material fact is that the vendors, Lam and Wong, required that the purchaser assume the CSA unless it contained unduly onerous obligations. While Libfeld said that Neighborhoods had agreed to assume those costs, that discussion took place in the context of a proposed joint venture that did not proceed. It is undisputed that there was no specific discussion about the CSA in the three meetings that took place between the parties respecting the purchase of the property. Gray’s evidence was that Neighborhoods was not prepared to assume the CSA costs without knowing what those costs were. The objective evidence, Neighborhoods’ Draft Agreement, confirms this. Libfeld’s assertion that the sections in the Draft Agreement were the result of drafting errors is not sufficient in itself to create a triable issue in the absence of detailed facts and supporting evidence. Libfeld did not say he was prepared to assume the CSA costs unless they were unduly onerous at the time of the events in question i.e. in the subsequent telephone call that he had with Lam on July 18, 2002. Consequently, Lam’s statement that the “deal is dead” cannot be interpreted as an admission that there was an agreement on all essential terms. Libfeld’s statement is an after-the-fact reflection as in Gordon Capital, supra. It is not a statement made at the time as in Gold Chance International Ltd. v. Daigle & Hancock (2001), 10 C.P.C. (5th) 368 (Ont. Sup. Ct.) upon which the appellant relies. Nor is this a case where one party was not aware of the other’s position respecting a non-essential term that was not discussed as in Fieguth v. Acklands Ltd. (1989), 1989 2744 (BC CA), 59 D.L.R. (4th) 114 (B.C.C.A.). The motions judge did not err in holding that Libfeld’s affidavit was self-serving evidence. Neighborhoods’ claim that it had an oral agreement with Lam and Wong on all essential matters has no real chance of success.

[14] There is no genuine issue for trial.

[15] In view of our conclusion it is not necessary to address the other issues raised on this appeal.

[16] The appeal is dismissed with costs to the respondents on a partial indemnity basis fixed at $ 40, 000.

RELEASED: June 8, 2004

“KMW”

“Karen M. Weiler J.A.”

“R.S. Abella J.A.”

“Robert P. Armstrong J.A.”

[^1]: Until the Cornell Lands were partitioned and the conveyances completed, legal title to the Cornell Lands, other than Area 1, was held by the respondent 1440106 Ontario Inc. (At the time this action was commenced, 1440106 Ontario Inc. owned Area 5, but subsequently transferred it to 2011446 Ontario Inc., which holds the property as trustee on behalf of the Lam/Wong Markham Limited Partnership. The parties agreed to remove 1440106 and add 2011446 Ontario Inc. and Lam/Wong Markham Ltd. Partnership as party defendants.)