Court of Appeal for Ontario

CITATION: McKee v. Montemarano, 2009 ONCA 359

DATE: 20090501

DOCKET: C49175

COURT OF APPEAL FOR ONTARIO

Doherty, Cronk and Rouleau JJ.A.

BETWEEN:

Marvyn McKee and Paul McKee

Plaintiffs (Respondents in Appeal)

and

Saverio Montemarano, Saverio Montemarano In trust for a new company to be incorporated and Danhew Holdings Limited

Defendants (Appellants in Appeal)

Defendant (Respondent in Appeal)

Patrick J. Monaghan, for the appellants Saverio Montemarano and Saverio Montemarano, In trust for a new company to be incorporated

Geoffrey D. E. Adair and Don White, for the respondents Marvyn McKee and Paul McKee

Neil A. Kaufman, for the respondent Danhew Holdings Limited

Heard and released orally: April 15, 2009

On appeal from the judgment of Justice Peter H. Howden of the Superior Court of Justice dated July 16, 2008.

ENDORSEMENT

(1) Introduction

[1] The appellants appeal the judgment of Howden J. of the Superior Court of Justice dated July 16, 2008: (i) declaring that the agreement of purchase and sale between the appellants and the McKee respondents (the “Agreement”) became null and void on February 1, 2006 and that the appellants have no interest in the property at issue; and (ii) ordering that the appellants’ caution and Certificate of Pending Litigation registered on title to the subject property be vacated.

[2] The appellants argue that the trial judge erred in his interpretation of the provisions of the Agreement concerning the requirements for the delivery by the appellants of a notice of waiver of a due diligence condition. They contend that the delivery of their written waiver notice to the McKees’ residence and to the appellants’ real estate representative satisfied the contractual requirements for the effective waiver of the due diligence condition.

(2) The Due Diligence Condition

[3] The Agreement between the parties was expressly conditional on the performance of due diligence on the property by the appellants. Schedule A to the Agreement contained the following provision:

This Offer is conditional upon the Buyer performing due diligence on the Subject Property. Unless the Buyer gives notice in writing delivered to the Seller not later than 5:59 p.m. on the 1st day of February 2006, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full, with interest and without deduction, and the Seller and the Buyer shall both be released from any further obligations under this Agreement. This condition is included for the sole benefit of the Buyer and may be waived at its sole option by notice in writing delivered to the Seller within the time period stated herein. [Emphasis added.]

[4] The issue on this appeal is the meaning of the phrase “delivered to the Seller”, as it appears in this due diligence condition.

(3) Discussion

[5] The appellants rely on the general notice provision set out in paragraph six of the Agreement to argue that the timely delivery of a written waiver notice to the McKees’ home and the provision of a copy of the waiver notice to the appellants’ real estate representative satisfied the notice requirements under the Agreement for waiver of the due diligence condition.

[6] Under paragraph six of the Agreement, the McKees, as the “seller” of the property, appointed “the Listing Broker as Agent for the purpose of giving and receiving notices pursuant to this Agreement”. Under the same provision, the appellants, as the “buyer” of the property, appointed “the Co-operating Broker” as agent for similar purposes. The buyer’s appointment applied only if the Co-operating Broker represented the interests of the buyer in the purchase and sale transaction. In this case, no Co-operating Broker was involved in the transaction.

[7] Paragraph six of the Agreement also stipulated that “any notice shall be deemed given and received, when hand delivered to the address for service provided in the Acknowledgement below”. In the case of the seller, the McKees’ home address was listed in the Acknowledgement section of the Agreement.

[8] In light of this part of paragraph six, the appellants argue that their hand delivery of a written notice of waiver of the due diligence condition to the McKees’ home prior to 6:00 p.m. on February 1, 2006 constituted an effective waiver of the condition. The trial judge disagreed. He held that the notice requirement contained in the due diligence condition required that notice of any waiver of the condition be brought to the personal attention of the McKees. As this did not occur in a timely fashion, the delivery requirement for an effective waiver of the condition was not satisfied and the Agreement became null and void. We agree for several reasons.

[9] First, in contrast to many of the cases relied on by the appellants, the Agreement in this case contains several notice provisions. Schedule A, however, provides for a notice requirement that is specific to the due diligence condition. Schedule A is not part of the pre-prepared standard form of the Agreement. It was negotiated and prepared by the parties. Had the parties intended that the general notice provision set out in paragraph six of the Agreement apply to a notice of waiver of the due diligence condition, the specific notice requirement in Schedule A would have been unnecessary.

[10] Second, the plain language of Schedule A, in our view, contemplates the actual delivery of a waiver notice to the McKees, failing which the Agreement became null and void. The notice language used in the due diligence condition is unambiguous. In contrast to other notice provisions in the Agreement, no mention is made in this part of Schedule A to the delivery of a waiver notice to the seller’s agent or to the seller’s house. Nor does Schedule A mention the general notice provision contained in paragraph six, or provide – as paragraph six does – for the delivery of notice to the seller’s address for service set out in the Acknowledgement section of the Agreement.

[11] Third, we agree with counsel for the McKees’ submission that the evidence of the circumstances surrounding the making of the Agreement tells strongly in favour of the conclusion that the parties intended that any waiver notice be brought to the personal attention of the McKees. The trial judge found, and the record confirms, that in all matters of substance relating to the formation of the Agreement, the parties dealt with each other directly. As the trial judge put it, “[t]he parties themselves drove the deal throughout its formation, including Schedule ‘A’.” We note, as well, that Schedule A was prepared by the appellants’ solicitor, who must be taken to have been aware of the different forms of notice provisions set out in the Agreement.

[12] Finally, we reject the appellants’ assertion that the fact of RE/MAX’s dual agency role in this case permitted the effective delivery of the waiver notice to be accomplished by its delivery to the appellants’ own real estate representative. There is simply no evidence on this record that the McKees – as the seller of the property – cloaked the appellants’ representative or RE/MAX generally with any authority to receive a waiver of the due diligence condition on their behalf. Nor did the appellants’ representative so conduct himself as to suggest that he understood that he enjoyed such authority and the trial judge so found.

(4) Disposition

[13] We conclude, therefore, that the trial judge made no error in interpreting the notice requirement under the Agreement applicable to the waiver of the due diligence condition. The appeal is dismissed. As agreed by counsel, costs of the appeal are awarded to each respondent in the amount of $20,000, inclusive of disbursements and GST.

“Doherty J.A.”

“E.A. Cronk J.A.”

“Paul Rouleau J.A.”