CITATION: Forrester Estate v. Muzeen Estate, 2008 ONCA 640

DATE: 2008-09-23

DOCKET: C47429

COURT OF APPEAL FOR ONTARIO

O’CONNOR A.C.J.O., WATT J.A. and HACKLAND J. (ad hoc)

BETWEEN:

THE PUBLIC TRUSTEE OF THE PROVINCE OF MANITOBA, Estate Trustee of the Estate of GRACE FORRESTER, deceased and THE PUBLIC TRUSTEE OF THE PROVINCE OF MANITOBA, Estate Trustee of the Estate of DAVID BRUCE WALLACE FORRESTER, deceased

Plaintiffs (Appellants)

and

ROBERT BETTNER, Estate Trustee for the Estate of ELIZABETH RUTH MUZEEN, deceased

Defendant (Respondent)

Thomas J. Carten, for the Plaintiffs (Appellants)

Bernd M. Richardt, for the Defendant (Respondent)

Heard: April 28. 2008

On appeal from the judgment of Justice T.A. Platana of the Superior Court of Justice dated June 14, 2007 with reasons reported at [2007] O.J. No. 2435.

HACKLAND J. (ad hoc)

[1] The Appellant appeal against the trial judge’s dismissal of their claim for specific performance of a contract for the sale of land or for damages or equitable relief in the alternative.

[2] The parties to this proceeding are estate trustees of family members who enjoyed the use of a cottage property on Lake of the Woods in Northern Ontario. This usage lasted for approximately 39 years prior to the commencement of this action in 2003.

[3] The property was purchased in 1956 by James Muzeen and his wife Elizabeth for $12,500, financed by a $12,000 loan from Mr. Muzeen’s parents. There was originally one cottage on the property. Two years later Mr. Muzeen’s parents built a second cottage on the property. Mr. Muzeen’s father died a year later in 1959 and since then his widow and their daughter Grace (sister of James Muzeen), her husband David Forrester and their son have used this second cottage (the Forrester cottage). The original cottage (the Muzeen cottage) continued to be used by Mr. Muzeen and his wife Elizabeth and later by his daughter and her family.

[4] When James Muzeen’s father died in 1959 he forgave the loan to James Muzeen and expressed his wishes in a written memorandum that his daughter Grace and her husband David Forrester make arrangements with his son James Muzeen to take title to the land where the Forrester cottage was located.

[5] To date, the entire property remains in the name of James Muzeen, as the parties never arranged to convey the Forrester cottage to Grace and David Forrester.

[6] The trial judge determined on the evidence that the Muzeen family and their relatives, the Forresters, used their respective cottages from the late 1960’s to the time this action was began and that the Forresters had made substantial improvements, shared property taxes for part of that time and had otherwise conducted themselves as part owners of the land.

[7] By a letter dated February 6, 1964, to James and Elizabeth Muzeen, David Forrester proposed that a portion of the property be transferred to himself and Grace, in accordance with a metes and bounds description which he had drafted, for a price of $2,500. The Muzeens signed back the letter, stating, “agreed to, with many thanks” and the sum of $2,500 was paid to them. However, a survey and transfer were never prepared and the property was never conveyed.

[8] The main issue at trial, and on appeal, is whether this letter of February 6, 1964 constituted a valid and enforceable contract for the sale of this property. It is useful to set out the letter in full.

Re: Clearwater Bay and Parcel 20049

We have had a number of discussions concerning the new cottage at Clearwater Bay and some division concerning the lot. With full awareness of all of the circumstances concerning the building of the second cottage and the future of it, and following out the discussions which I have had with Jim, I think it would be useful to record now what I understand to be the agreement.

Firstly, I think it may be fairly expensive to have a re-survey made and probably not necessary at this time if the same result can be accomplished by this exchange of letters.

The two of you own clear title to the entire parcel. The second cottage and the garage are located on the west end of it and my understanding is that you are agreeable to a portion of it being transferred to Grace and myself but subject, of course, to reasonable compensation for the area taken, and that, without resorting to survey, the boundaries of the area would be

Commencing at the southwest corner of the parcel, thence east along the south shore a distance of one hundred feet, thence north to the southerly limit taken on a reasonable sighting basis of the roadway and parallel to the western boundary, thence west a distance of fifty feet along the course of the existing roadway, being approximately perpendicular to the western boundary, thence north parallel to the western boundary to the waters edge and thence, of course, west to the northwest limit of the parcel;

but, with the further proviso that the roadway presently crossing the above described land will remain a roadway at all times at no less than its present width for access to the remaining property. This, in effect, gives frontage on Clearwater Bay of one hundred feet and frontage on the Bay behind of fifty feet.

Part of the overall understanding, of course, is that proper compensation should be paid, and this brings into consideration not only the area involved but the effect it may have upon the remaining area. We have agreed that this is difficult to determine and, short of getting a professional evaluator, I am suggesting an overall consideration for the land of $2,500.00, and my cheque, payable to you both, for this amount is enclosed herewith, but I want it understood that this is not a final determination by any means and hope that you will feel free to discuss any larger amount if this does not have your entire agreement and blessing, and subject to that sometime in the future, we can look into the whole matter of a survey and transfer but, in the meantime, this should provide us with some established base upon which to work.

Sincerely,

"Bruce" (signature)[^1]

D.B.W. Forrester.

(Handwritten below signature)

Mar. 12 Agreed to, with many thanks

"Betty Muzeen" signature

"J.R. Muzeen" signature"

[9] The trial judge concluded that this letter did not constitute an enforceable contract for the sale of land; rather it was merely an agreement to engage in further discussions. He held that the essential terms of a contract for the sale of land are an identification of the parties, the property and the price, in accordance with McKenzie v. Walsh (1920), 1920 72 (SCC), 57 D.L.R. 24, (S.C.C.). He held that the parties to this letter agreement were “obviously clear” and that “the letter is written to, and in fact is noted as agreed to, by Betty Muzeen and J.R. Muzeen”.

[10] However, the trial judge was of the view that there was uncertainty with respect to the description of the property. The trial judge stated:

[91] With respect to the property, I am not satisfied that the description of any property to be transferred is clear. There is, of course, the metes and bounds description contained in the letter; however, that contains the provisos with respect to the roadway, and is also subject to the proviso of a survey. I do not read the letter of February 1964 as constituting a sufficiently clear description for it to be found that the essential of the property description is clear, as it leaves the issue of a survey and transfer up in the air, and refers to “some established base upon which to work”.

[11] The trial judge accepted that the appellants had established possession of part of the land and that they had made improvements, both with the respondent’s acquiescence.

[12] The trial judge referred to the evidence of the surveyor who testified that the land as described in the metes and bounds description in the letter of February 6, 1964 did not entirely fit on the property. In particular, a portion of the land contained in the metes and bounds description was in fact situate on an adjoining 66 foot Crown reserve and the Forrester cottage was totally or mainly on the Crown reserve. In addition, the access road to the property is located on the Crown reserve. This led the trial judge to conclude that due to the uncertainty surrounding the description of the land in the letter, the agreement could not be enforced.

[13] The trial judge also held that the Limitations Act barred this action as at March 12th, 1970, six years after the acceptance noted by the Muzeens on the February 1964 letter. He stated:

[110] There is no aspect of “time of the essence”; however, I am satisfied that if this letter could be considered a contract, the Limitations Act applies as at March 12th, 1970, based on the notation “March 12, agreed to with many thanks” made and signed by Elizabeth Muzeen and J.R. Muzeen.

Analysis

[14] I am of the opinion that the trial judge erred in his application of the Limitations Act. The triggering event for the running of the limitation period occurred when the cause of action arose. In the case of a breach of contract claim, this is the time at which the breach of contract occurred. Given the judge’s finding that there was no aspect of “time of the essence” in this contract and his finding that on the evidence no demand to convey the lands was made by the appellants until 2002 at the earliest, no limitation period would begin to run until that point.

[15] It is unclear from the trial judge’s reasons whether uncertainty as to the price contributed to his conclusion that the letter did not give rise to an enforceable contract. The trial judge did state that “there is nothing in the evidence to suggest that $2,500 was not a fair price”. He also found that this sum was paid to Mr. and Mrs. Muzeen and price was never discussed again by the parties, notwithstanding Mr. Forrester’s statement in the February 6, 1964 letter that he would discuss a larger amount if his proposal did not have their (the Muzeen’s) entire agreement. I am of the opinion that there was an agreement as to the price and that on reviewing the trial judge’s reasons as a whole, he seems to have reached the same conclusion.

[16] The appellants principal submission is that the trial judge erred in law in his conclusion that there was no contract due to the problems with the metes and bounds description of the land in the February 6, 1964 letter. They acknowledge the fact that the metes and bounds description, when put on a survey/reference plan, cannot fit on the parcel of land as described in the letter agreement because it included parts of the Crown reserve which is not owned by the respondent. However, they submit that this does not render the contract unenforceable. The appellants rely on the principle that purchasers may obtain specific performance even where the vendor is not able to convey the property as agreed. In particular, purchasers may choose to take whatever the vendor has, even if it is less than the property described in the agreement, as in the case at hand.

[17] I am of the opinion that the appellants’ submission on this point is correct and the trial judge should have allowed the appellants to accept a conveyance of that part of the property contained in the metes and bounds description which the respondent is able to convey. The trial judge acknowledged that in general, where a vendor cannot convey the property as agreed, the purchasers may take whatever the vendor has. He stated at paragraph 106:

[106] Mr. Carten has relied on John Beatty Farms Limited v. Stevenson Estate, Murphy v. Horne, supra, and Wilson Lumber Company v. Simpson, supra, as authority that if the vendor cannot convey the property as agreed, the purchasers may take whatever the vendor has. I clearly accept that as the law; however, those cases are distinguishable on the basis that each of those cases involved the division of a specific and easily-identifiable piece of land, where the limits were apparent. They did not deal, as this case does, with the issue of severing off a portion of lands where the dispute is focused not on how much land is being transferred, but on a description of the land itself.

[18] The trial judge correctly observed that in the three cases he referred to, the issue was a perceived shortage in the amount of land to be conveyed. Nevertheless, I am of the opinion that the same principle should apply in the circumstances of this case, particularly having regard to the appellants’ willingness to accept a conveyance of that part of the land which the respondent can convey, their long usage of the property with the acquiescence of the respondent, the sharing of property taxes and the improvements which they made to the property. This principle is stated in Donahue, D.J., P.D. Quinn and D.C. Grandilli, Real Estate Practice in Ontario, 6th ed. Toronto: LexisNexis, Butterworths, 2003, at page 304:

The purchasers may obtain specific performance even where the vendor is not able to convey the property as agreed. The purchasers may choose to buy whatever the vendor has, with an abatement of the purchase price: Goyal v. 619908 Ontario Ltd. (1987), 6 A.C.W.S. (3d) 409 (Ont.H.C.).

[19] At trial, surveyor Ross Johnson, testified as to a plan of survey which he had prepared. Part I of this survey delineated the description of the property as set out in the 1964 letter agreement as it related to the land registered to James Muzeen and excluded that part of the description which encompassed the adjoining Crown reserve. It can be concluded from the trial judge’s reasons and from the record on appeal that had the trial judge considered the letter agreement to be enforceable, he would have ordered specific performance of the agreement as it related to the lands described in Part I of the Johnson survey.

[20] In my view the trial judge erred in law in finding that the 1964 letter agreement was not an enforceable contract for the sale of land. In view of this conclusion it is unnecessary to address the appellants’ claims for equitable relief or to address certain conveyancing issues raised in argument.

[21] In the result I would allow the appeal, and make a declaration that the letter dated February 6, 1964 is a valid and enforceable contract for the sale of land. I would direct a vesting order to issue, vesting title in the joint names of the appellants as tenants in common of the property as described in Part I of the Plan of Survey of Ross Johnson dated October 20, 2006.

[22] The appellants have acknowledged in their factum the utility of having certain conditions included in the vesting order, in particular an obligation to grant an easement in the event that they, in future, purchase the Crown reserve adjacent to the lands to be conveyed in the vesting order. This responds to an issue raised at trial as to the unfairness of the appellants’ potentially purchasing part of the road allowance on the Crown reserve in such a way as to obstruct the respondent’s access to his property. The suggested conditions would obviate that problem and are clearly for the benefit of both parties. I would include the conditions set out in Part V of the appellants’ factum, as conditions of the vesting order.

[23] The respondent has sought leave to appeal the trial judge’s order as to costs. The trial judge declined to order costs of the trial. I would dismiss the respondent’s motion for leave to appeal the trial judge’s costs order. The appellants are not seeking their costs of the trial. Accordingly, I would allow the trial judge’s costs order to stand. The appellants are entitled to their costs of this appeal and I would fix costs in the amount of $7,500 inclusive of GST and disbursements.

RELEASED:

“SEP 23 2008” “Hackland J. (ad hoc)”

“DOC” “I agree Dennis O’Connor A.C.J.O.”

“I agree David Watt J.A.”