Erie Sand and Gravel Limited v. Seres' Farms Limited et al.

[Indexed as: Erie Sand and Gravel Ltd. v. Seres' Farms Ltd.]

97 O.R. (3d) 241

Court of Appeal for Ontario,

Cronk, Gillese and R.P. Armstrong JJ.A.

October 13, 2009

Contracts -- Formation of contract -- Statute of Frauds -- Part performance -- Plaintiff and S agreeing orally on all essential terms of sale of land by S to plaintiff -- Land being subject to right of first refusal in favour of T -- S asking plaintiff to give it written offer reflecting agreed-upon terms for presentation to T and telling plaintiff that it would get property unless T matched its offer -- Plaintiff doing so -- T's offer not matching plaintiff's but S accepting T's offer -- Valid and binding agreement existing between S and plaintiff -- Doctrine of part performance operating to exclude operation of s. 4 of Statute of Frauds -- Acts of both parties to alleged oral agreement may be considered in determining if sufficient acts of part performance take alleged agreement outside operation of statute of frauds -- Statute of Frauds, R.S.O. 1990, c. S.19, s. 4.

Sale of land -- Specific performance -- Defendant breaching agreement to sell land to plaintiff -- Land containing large amount of aggregate -- Aggregate being essential to plaintiff's business -- No other land containing aggregate for sale in area -- Land unique to plaintiff's needs -- Damages not adequate remedy -- Trial judge not erring in ordering specific performance.

E Ltd. was in the business of mining sand and stone aggregate. It wanted to buy property from S Ltd. because the property contained aggregate, and E Ltd.'s business depended on having an adequate supply of aggregate. It was aware that the property was subject to a right of first refusal in favour of T Inc. and that giving S Ltd. an offer could trigger its operation. The parties agreed orally on the acreage to be sold, the price per acre and the closing date. S Ltd. asked E Ltd. to give it a written offer that reflected that agreement and said that E Ltd. would get the property unless T Inc. matched its offer. T Inc. did not match the offer. Nevertheless, S Ltd. accepted T Inc.'s offer. E Ltd. immediately brought an action for specific performance of its agreement with S Ltd. The agreement between S Ltd. and T Inc. closed, and T Inc. was added as a defendant in the action. The trial judge granted judgment in favour of E Ltd. and ordered T Inc. to transfer the property to E Ltd. T Inc. appealed.

Held, the appeal should be dismissed.

An agreement existed between E Ltd. and S Ltd. Where, as here, parties have agreed to all the essential terms to be incorporated into a formal document and they intend the agreement to be binding, a valid and binding agreement exists. S Ltd. was precluded from relying on s. 4 of the Statute of Frauds to excuse it from performance of its obligations under the agreement, and T Inc. could not stand in a better position than S Ltd. There were sufficient acts of part performance to take the agreement outside s. 4 of the Statute of Frauds. The trial judge found that the following were unequivocal acts of part performance: E Ltd. prepared the offer and delivered it to S Ltd.; the offer reflected the material terms, the parties, the property and the price; E Ltd. delivered a certified cheque for the full purchase price, together with the offer; E Ltd. knew and expected that delivery [page242] of the offer would trigger T Inc.'s right of first refusal; S Ltd. delivered the offer to T Inc.; and the T Inc. offer was a virtual mirror image of the offer, subject only to the differences in the amount of the deposit and the closing date. The doctrine of part performance is not limited to a consideration of the acts of the plaintiff. The acts of both parties to an alleged oral agreement may be considered when a court is called upon to determine if sufficient acts of part performance take an alleged agreement outside the operation of the Statute of Frauds. It was open to the trial judge to find that the acts of part performance on which he relied were referable to some dealing with the land, such that the evidence of the oral agreement was admissible for the purpose of explaining those acts. As there was no valid exercise of T Inc.'s right of first refusal, given the terms of the agreement between S Ltd. and E Inc., S Ltd. was not entitled to accept the T Inc. offer, and breached its agreement with E Ltd. in doing so.

The trial judge did not err in ordering specific performance. E Ltd.'s financial existence depended on it having an adequate supply of aggregate. Aggregate was in short supply in the area in question, and 50 per cent of the remaining aggregate not under E Ltd.'s control was located on the subject property. No other lands in the area containing aggregate were for sale. The land in question was unique to E Ltd.'s needs, and damages were an inadequate remedy.

APPEAL from the judgment of Tausendfreund J., [2008] O.J. No. 3405, 2008 43583 (S.C.J.) for the plaintiff in an action for specific performance of an agreement for the sale of land.

Cases referred to Hill v. Nova Scotia (Attorney General), 1997 401 (SCC), [1997] 1 S.C.R. 69, [1997] S.C.J. No. 7, 142 D.L.R. (4th) 230, 206 N.R. 299, J.E. 97-295, 68 A.C.W.S. (3d) 666, apld Deglman v. Brunet, 1954 2 (SCC), [1954] S.C.R. 725, [1954] S.C.J. No. 47, [1954] 3 D.L.R. 785; Haskett v. O'Neil, 1939 310 (ON CA), [1939] 4 D.L.R. 598, [1939] O.W.N. 573 (C.A.); Levine v. Davies (1998), 1998 3606 (ON CA), 37 O.R. (3d) 252, [1998] O.J. No. 140, 76 A.C.W.S. (3d) 1012 (C.A.), consd Cotterhill v. Parkway Development Corp. Ltd., 1982 ABCA 110, [1982] A.J. No. 857, 39 A.R. 398 (C.A.), affg [1981] A.J. No. 745, 29 A.R. 222 (Q.B.), not folld Other cases referred to 1110049 Ontario Ltd. v. Exclusive Diamond Inc. (1995), 1995 524 (ON CA), 25 O.R. (3d) 417, [1995] O.J. No. 2690, 83 O.A.C. 391, 57 A.C.W.S. (3d) 748 (C.A.); 1252668 Ontario Inc. v. Wyndham Street Investments Inc., [1999] O.J. No. 3188, 27 R.P.R. (3d) 58, 90 A.C.W.S. (3d) 624 (S.C.J.); Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 2734 (ON CA), [1991] O.J. No. 495, 79 D.L.R. (4th) 97, 53 O.A.C. 314, 26 A.C.W.S. (3d) 350 (C.A.); Booth v. Knibb Developments Ltd., [2002] A.J. No. 957, 2002 ABCA 180, 312 A.R. 173, 115 A.C.W.S. (3d) 895; Brownscombe v. Vercamert Estate, 1969 86 (SCC), [1969] S.C.R. 658, [1969] S.C.J. No. 35, 5 D.L.R. (3d) 673, 68 W.W.R. 483; Colberg v. Braunberger Estate, 1978 ALTASCAD 307, [1978] A.J. No. 575, 8 Alta. L.R. (2d) 73, 12 A.R. 183 (C.A.); Fitzgerald v. 545880 Ontario Ltd., [2004] O.J. No. 2815, 22 R.P.R. (4th) 263, 132 A.C.W.S. (3d) 44 (S.C.J.); Greenspoon v. Tsambalieros, 1999 1448 (ON CA), [1999] O.J. No. 4247, 126 O.A.C. 352, 92 A.C.W.S. (3d) 518 (C.A.), affg [1998] O.J. No. 2442, 68 O.T.C. 268, 80 A.C.W.S. (3d) 419 (Gen. Div.); John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 2003 52131 (ON CA), 63 O.R. (3d) 304, [2003] O.J. No. 350, 223 D.L.R. (4th) 541, 186 O.A.C. 252, 34 B.L.R. (3d) 12, 10 R.P.R. (4th) 98, 120 A.C.W.S. (3d) 692 (C.A.), affg (2001), 2001 28012 (ON SC), 56 O.R. (3d) 341, [2001] O.J. No. 4397, [2001] O.T.C. 803, 46 R.P.R. (3d) 239, 109 A.C.W.S. (3d) 528 (S.C.J.) [Leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 145]; Kang Corp. v. KRTT Group Ltd., [2007] O.J. No. 1500, 56 R.P.R. (4th) 278, 156 A.C.W.S. (3d) 1200 (S.C.J.); Kramaruk v. Kushnir, 1956 159 (ON CA), [1956] O.R. 392, [1956] O.J. No. 542, 2 D.L.R. (2d) 452 (C.A.); McKenzie v. Walsh (1920), 1920 72 (SCC), 61 S.C.R. 312, [1920] S.C.J. No. 68, 57 D.L.R. 24, [1921] 1 W.W.R. 1017; McNeil v. Corbett (1907), 1907 45 (SCC), 39 S.C.R. 608, [1907] S.C.J. No. 73; [page243] Mount Sinai Hospital Centre v. Quebec (Minister of Health and Social Services), [2001] 2 S.C.R. 281, [2001] S.C.J. No. 43, 2001 SCC 41, 200 D.L.R. (4th) 193, 271 N.R. 104, J.E. 2001-1280, 36 Admin L.R. (3d) 71, 106 A.C.W.S. (3d) 182; Peters v. Euloth, 1976 2042 (PE SCAD), [1976] P.E.I.J. No. 33, 11 Nfld. & P.E.I.R. 109, 22 A.P.R. 109, [1977] 1 A.C.W.S. 85 (C.A.); Semelhago v. Paramadevan, 1996 209 (SCC), [1996] 2 S.C.R. 415, [1996] S.C.J. No. 71, 136 D.L.R. (4th) 1, 197 N.R. 379, 91 O.A.C. 379, 3 R.P.R. (3d) 1, 63 A.C.W.S. (3d) 973; Steadman v. Steadman, [1976] A.C. 536, [1974] 2 All E.R. 977, [1974] 3 W.L.R. 56, 29 P. & C.R. 46 (H.L.); Tavares v. Tavares, [2002] O.J. No. 241, 48 R.P.R. (3d) 8, 111 A.C.W.S. (3d) 624 (C.A.); Thompson v. Copithorne Estate, 1973 161 (SCC), [1974] S.C.R. 1023, [1973] S.C.J. No. 116, 39 D.L.R. (3d) 408, [1973] 6 W.W.R. 746; UBS Securities Canada, Inc. v. Sands Brothers Canada Ltd. (2009), 95 O.R. (3d) 93, [2009] O.J. No. 1606, 2009 ONCA 328, 248 O.A.C. 146, 58 B.L.R. (4th) 60; Wade v. Trpin, [2004] O.J. No. 1302, 6 E.T.R. (3d) 311, 18 R.P.R. (4th) 50, 130 A.C.W.S. (3d) 189 (S.C.J.) [Leave to appeal to C.A. refused [2004] O.J. No. 4760] Statues referred to Statute of Frauds, R.S.O. 1990, c. S.19, s. 4 [as am.] Public Highways Act, R.S.N.S. 1954, c. 235, s. 21(1)(a) Authorities referred to Di Castri, V., The Law of Vendor and Purchaser, looseleaf, vol. 1 (Toronto: Carswell, 1998) Fridman, G.H.L., The Law of Contract in Canada, 5th ed. (Toronto, Carswell, 2006) Waddams, S.M., The Law of Contracts, 5th ed. (Aurora, Ont.: Canada Law Book, 2005)

Myron W. Shulgan, Q.C., for appellant Tri-B Acres Inc. Claudio Martini, for respondent. No one appearing for Seres' Farms.

The judgment of the court was delivered by

[1] GILLESE J.A.: -- Two parties agreed on certain terms relating to the purchase and sale of farmland. Did their discussions amount to an agreement or merely an "agreement to agree"? If there was an agreement, were there sufficient acts of part performance to take the agreement outside the requirements of s. 4 of the Statute of Frauds, R.S.O. 1990, c. S.19? If so, was specific performance properly ordered? This appeal depends on the answers to those questions.

Overview

[2] Erie Sand and Gravel Limited ("Erie") bought land from Seres' Farms Limited ("Seres' Farms") that lay to the north of County Road 18 in the County of Essex (the "north side [page244] property"). It wanted to buy other land that Seres' Farms owned on the south side of that road (the "south side property"). [^1] Erie wanted the south side property because it contained aggregate and Erie's business depended on having an adequate supply of aggregate. Seres' Farms told Erie that it was willing to sell the south side property to it on the same terms as it had sold the north side property.

[3] Erie knew that the south side property was subject to a right of first refusal in favour of Tri-B Acres Inc. ("Tri-B"). It had a copy of the right of first refusal and recognized that giving Seres' Farms an offer for the south side property could trigger its operation.

[4] Erie and Seres' Farms met to discuss the purchase and sale of the south side property. Erie told Seres' Farms that because of the right of first refusal, it wanted to have all the terms agreed to before it gave Seres' Farms a written offer. Over the course of four meetings, the parties agreed that Erie would buy the south side property, consisting of 54.231 acres after allowing for the severance of a 180 ft. by 200 ft. piece of property on which the Seres' family home stood, at a price of $22,000 per acre, with a closing date of April 11, 2003. Seres' Farms asked Erie to give it a written offer that reflected their agreement and said that Erie would get the south side property unless Tri-B matched its offer.

[5] Erie prepared an offer in accordance with the agreed-on terms and delivered it to Seres' Farms. Seres' Farms took the offer to Tri-B and Tri-B made an offer for the property that did not match the Erie offer. Despite Seres' Farms promise to Erie, it accepted the Tri-B offer.

[6] Erie immediately brought an action for specific performance of the agreement it had with Seres' Farms and filed a certificate of pending litigation over the south side property. Seres' Farms called Tri-B about the lawsuit and Tri-B said it would take care of it for Seres' Farms. At Tri-B's suggestion, the agreement between Seres' Farms and it for the purchase and sale of the south side property was closed. Tri-B was then added as a defendant in the action.

[7] By judgment dated September 3, 2008 (the "Judgment"), among other things, Tri-B was ordered to transfer the south side property to Erie. [page245]

[8] Tri-B appeals. Seres' Farms took no part in the appeal.

[9] For the reasons that follow, I would dismiss the appeal.

Background

[10] Erie is a family corporation whose current principals are two brothers, Allan Koop ("Allan") and Randy Koop ("Randy"). Erie employs between 40 and 50 people. It is in the business of mining sand and stone aggregate.

[11] Erie mines in Essex County, an area scarce in aggregate supply. It is estimated that the south side property holds 50 per cent of the total quantity of aggregate available in Essex County, an amount that would satisfy Erie's needs for between five and ten years. If Erie is unable to purchase the south side property, it will not be able to replace the aggregate with other aggregate. Without aggregate, Erie will be out of business.

[12] The Koop family has owned Erie since 1977. The Koop family and the Seres family have been neighbours for over 30 years.

[13] In the early 1990s, Seres' Farms owned and farmed approximately 135 acres of land in Essex County. When their father died in 1988, Mike Seres ("Mike") and Frank Seres ("Frank") inherited Seres' Farms. They are the principals of Seres' Farms. At trial, Frank was found to have both actual and ostensible authority to bind Seres' Farms in discussions with Erie about the purchase and sale of the south side property.

[14] Peter Brunato is the principal and directing mind of Tri-B, a company involved in agricultural and greenhouse endeavours. He, too, is a neighbour of the Seres family and has known them for many years.

[15] In 1996, Tri-B purchased approximately 50 acres of property from Seres' Farms. At that time, Seres' Farms gave Tri-B a right of first refusal over the south side property. The right of first refusal states that on presentation of an offer by Seres' Farms, if Tri-B wishes to exercise the right of first refusal, it must deliver to Seres' Farms a signed offer to purchase on the same deposit, terms and conditions.

[16] The salient part of the right of first refusal reads as follows:

If the Vendor [Seres' Farms] receives a bona fide arms length Offer to Purchase the said adjoining lands which the Vendor is willing to accept, the Vendor shall provide the Purchaser [Tri-B] with a copy of the Offer to Purchase, and the Purchaser shall have five (5) banking days following receipt to purchase the property by delivering to the Vendor a signed Offer to Purchase with the same deposit, terms and conditions, which the Vendor shall accept immediately. [page246]

[17] At various times since 1994, Erie has discussed with Seres' Farms the possibility of buying its lands. These discussions led to a written agreement in April 2002 for the purchase of the north side property, under the terms of which Erie purchased approximately 25 acres of land from Seres' Farms. The agreed price for the north side property was $22,000 per acre, with a severance for the house and surrounding one acre that was retained by Mike. Following Erie's purchase of the north side property, the south side property was Seres' Farms sole remaining landholding.

[18] Once an agreement had been reached for the purchase and sale of the north side property, Frank -- on behalf of Seres' Farms -- told Erie that he would be willing to sell the south side property on the same terms as the north side property.

[19] After the sale of the north side property was concluded, Erie began discussions with Seres' Farms about the purchase of the south side property. Erie had a copy of the right of first refusal in favour of Tri-B. It knew that a written offer would trigger Tri-B's right of first refusal and that was Erie's main concern. Because of this concern, Erie wanted to come to a verbal agreement with Seres' Farms on all terms of the purchase and sale of the south side property before it gave Seres' Farms a written offer.

[20] In December 2002 and January 2003, Erie and Seres' Farms had four meetings to discuss Erie's possible purchase of the south side property. The trial judge recited, in detail, the significant evidence given about those meetings, including who was in attendance and what was discussed. There is no need to repeat that evidence except to note three things.

[21] First, in the meetings, Erie made it clear that because of the Tri-B right of first refusal, it would not give Seres' Farms a written offer until all terms of the purchase and sale had been agreed to.

[22] Second, Seres' Farms made it clear -- during the meetings -- that it needed a written offer, prepared by Erie, to present to Tri-B and that Tri-B would have to match the offer to get the south side property. The written offer was a formality so that Seres' Farms would have something to take to Tri-B.

[23] Third, by the end of the final meeting on January 8, 2003, the parties agreed on a purchase price of $22,000 per square acre and a closing date of April 11, 2003. They reviewed the amount of acreage to be purchased and agreed on 54.231 as the total acreage, after allowing for the severance of a 180 ft. by 200 ft. piece of property for the Seres' family home. They further agreed that (1) unless Tri-B matched the agreement, the south [page247] side property would be sold to Erie; and (2) all other conditions to be included in the offer to purchase the south side property would be the same as in the agreement for the purchase and sale of the north side property. Following the final meeting on January 8, 2003, Allan and Frank shook hands and agreed that they had a deal.

[24] Frank acknowledged the agreement with Erie both in the final meeting on January 8, 2003 and in testimony at trial. He understood that Erie and Seres' Farms had a deal unless Tri-B matched the terms that had been agreed on.

[25] On January 9, 2003, Erie delivered a written offer to Seres' Farms' lawyer (the "Offer"), along with a certified cheque for the entire purchase price of $1,193,082. The Offer provides, in part, as follows:

The Vendor [Seres' Farms] shall, on the day of acceptance of this Offer, deliver a copy of this Offer to Tri-B Acres and this Offer is conditional upon Tri-B Acres failing to exercise its right of first refusal within five banking days of receipt of a copy of this Offer. If Tri-B Acres purchases the property by delivering to the Vendor a signed Offer to Purchase with the same deposit, terms and conditions which the Vendor has accepted then this Offer shall become null and void and the purchaser's deposit shall be returned to the purchaser [Erie] without penalty, interest or deduction.

[26] The Offer reflected the terms that Erie and Seres' Farms had agreed to over the course of their four meetings: Seres' Farms would sell the south side property to Erie at a price of $22,000 per acre for 54.231 acres, subject to the severance of a 180 ft. by 200 ft. residential lot, with a closing date of April 11, 2003, subject to Tri-B exercising its right of first refusal. It also provided that if the Offer was not accepted by 4:59 p.m. on January 10, 2003, the Offer would become null and void and the deposit returned.

[27] Seres' Farms then delivered a copy of the Offer to Tri-B (Brunato). When Frank delivered a copy of the Offer to Brunato, he told him the Offer was acceptable and that he had to match the Offer or he would sell the property to Erie.

[28] On January 10, 2003, Tri-B prepared an offer to purchase the south side property (the "Tri-B Offer"). The Tri-B Offer is the same as the Offer in all respects except that the deposit was $25,000 -- as opposed to $1,193,082 -- and the closing date was May 1, instead of April 11. The Tri-B Offer was later amended to provide for a further payment of $75,000, in addition to the $25,000 deposit, with the balance to be secured by a mortgage.

[29] Despite the fact that the Tri-B Offer did not match the Offer, on January 10, 2003, Seres' Farms accepted it. [page248]

[30] Erie immediately started the present action and filed a certificate of pending litigation against the south side property. Frank called Brunato about the lawsuit and Brunato offered to take care of the lawsuit for him. Brunato told Frank that he would pay Seres' Farms' legal fees, file a defence on its behalf and use a single lawyer to defend the action on behalf of both Seres' Farms and Tri-B. At Brunato's suggestion, the agreement between Seres' Farms and Tri-B for Tri-B's purchase of the south side property was closed.

The Trial Decision

[31] The trial judge found that as of January 8, 2003, Erie and Seres' Farms had agreed on price, acreage and terms -- including the closing date -- for the purchase and sale of the south side property. He also found that the parties agreed that Erie would get the property unless Tri-B matched the Offer. He noted that Frank Seres acknowledged the agreed terms and confirmed his understanding that the only way that Erie would lose the south side property was if Tri-B matched or bettered the Offer.

[32] The trial judge observed that the doctrine of part performance has been held to exclude the operation of s. 4 of the Statute of Frauds. After stating that this doctrine requires that the acts "must unequivocally refer to and support the alleged agreement and be amenable to no other interpretation", he found that the following were such unequivocal acts of part performance: (1) Erie prepared the Offer on January 8 and delivered it to Seres' Farms on January 9; (2) the Offer reflected the material terms, the parties, the property and price; (3) Erie delivered a certified cheque for the full purchase price, together with the Offer; (4) Erie knew and expected that delivery of the Offer would trigger the Tri-B right of first refusal; (5) Frank Seres delivered the Offer to Tri-B; and, (6) the Tri-B Offer is a virtual mirror image of the Offer, subject only to the differences in the amount of the deposit and closing date. [page249]

[33] The trial judge found, based on the testimony of Allan Koop and Frank Seres, that the parties had reached an agreement on the terms contained in the Offer. He further found that the Offer was a "sufficient note or memorandum" and a statement of the essential terms of the contract, sufficient to satisfy s. 4 of the Statute of Frauds.

[34] The trial judge also found that Tri-B did not match the Offer as required by the right of first refusal. Accordingly, he found that by accepting the Tri-B Offer, Seres' Farms breached the agreement it had with Erie.

[35] The trial judge then referred to Erie's testimony that the south side property was unique to its needs for, at least, the following reasons: (1) Erie's financial existence depends on an adequate supply of aggregate; (2) aggregate is in scarce supply in Essex County; (3) 50 per cent of the remaining aggregate in Essex County, not under Erie's control, is located on the south side property. No other lands in the County of Essex containing aggregate are for sale; and, (4) the aggregate on the south side property represents a five to ten-year supply for Erie's needs.

[36] The trial judge concluded, at para. 36 of his reasons:

This evidence was not contradicted or challenged by the defendants. I find that the subject property is unique to Erie's needs and that Erie shall, for that reason, be entitled to specific performance.

[37] The trial judge held, alternatively, that if he were incorrect in holding that Erie was entitled to specific performance, he would have found Erie entitled to damages from Tri-B for inducing Seres' Farms to breach its agreement with Erie. He recited the legal elements necessary to prove a claim for inducing breach of contract, also referred to as the tort of conspiracy, and for interference with contractual relations. He held that the necessary elements had been proven based on the following findings: Brunato had a copy of the Offer; Frank told Brunato that the Offer was acceptable to Seres' Farms and that Tri-B would have to match the Offer if it wished to purchase the property pursuant to the right of first refusal; Tri-B was unwilling or unable to match the Offer but prepared its own offer and encouraged Seres' Farms to accept it; and Tri-B provided Seres' Farms with an indemnity agreement in respect of [page250] the present lawsuit and arranged to defend it on its own behalf and for Seres' Farms.

The Issues

[38] Tri-B argues that the trial judge erred in finding: (1) that Erie and Seres' Farms reached an oral agreement for the purchase and sale of the south side property; (2) there were sufficient acts of part performance to take that agreement outside of s. 4 of the Statute of Frauds; (3) Tri-B could not purchase the south side property unless it was on the same terms and conditions as those in the Offer; (4) Tri-B induced Seres' Farms to breach its agreement with Erie; and, (5) Erie was entitled to specific performance of the agreement with Seres' Farms.

Was there an Agreement between Erie and Seres' Farms?

[39] Tri-B accepts that by January 8, 2003, Erie and Seres' Farms had come to an agreement on certain terms respecting the purchase and sale of the south side property. It argues, however, that the agreement was no more than an "agreement to agree". It contends that the discussions between the parties were merely negotiations and that the intention was that Erie would draft a written offer reflecting the agreed terms and present it to Seres' Farms for acceptance. Thus, it says, an executed written document was necessary in order for a binding agreement to exist between Erie and Seres' Farms. Further, it argues that the terms of the Offer, which provide for Seres' Farms acceptance, demonstrate that acceptance of a written offer was required for legal obligations to arise between the parties.

[40] In light of the findings of the trial judge, this ground of appeal cannot succeed.

[41] Tri-B made the same argument below. In rejecting it, the trial judge stated, at para. 24 of his reasons:

I find that as of January 8, 2003, the parties agreed on price, acreage and terms, including the closing date. Frank Seres acknowledged as much and confirmed his understanding that the only way Erie would not get the property required Tri-B to either match or better the Erie offer under the terms of the Tri-B right of first refusal. In fact, he acknowledged that he made that very point with Brunato when he met with him on January 10, 2003. [page251]

[42] In finding that an agreement had been reached, the trial judge relied on Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 2734 (ON CA), [1991] O.J. No. 495, 79 D.L.R. (4th) 97 (C.A.). In Bawitko, this court held that where parties have agreed on all the essential provisions [^2] to be incorporated into a formal document and they intend the agreement to be binding, a valid and binding agreement exists -- the existence of the agreement does not depend on the formal written document. The fact that a formal written document is to be prepared and signed does not alter the binding validity of the original contract.

[43] The same issue was recently considered by this court in UBS Securities Canada, Inc. v. Sands Brothers Canada Ltd. (2009), 2009 ONCA 328, 95 O.R. (3d) 93, [2009] O.J. No. 1606 (C.A.). In UBS Securities, the parties had discussions about the purchase and sale of 100,000 shares of the Bourse de Montréal Inc. The trial judge found that a binding oral agreement for the sale of shares was made in a telephone call in which the essential terms of the agreement -- number of shares, price per share and settlement date -- were settled. She held that an objective, reasonable bystander would conclude, in all the circumstances, that the parties had intended to contract. In finding that a binding agreement was reached in the oral discussions between the parties, the trial judge rejected the appellant's contention that the discussions were only negotiations and that a written share purchase agreement was necessary for the formation of a contract.

[44] On appeal, this court upheld the trial decision. It held that the trial judge made a finding of fact when she determined that the parties did not intend a written agreement to be a condition of the bargain. Consequently, such a determination is not to be reversed absent palpable and overriding error: see UBS Securities, at paras. 60 and 71.

[45] In the present case, it cannot be said that the trial judge made a palpable and overriding error in finding that as of January 8, 2003, Erie and Seres' Farms had come to an agreement. There was no suggestion by either Erie or Seres' Farms that they intended that a written document was necessary in order for a binding agreement to come into existence. To the contrary. The witnesses for both Erie and Seres' Farms testified that an agreement had been reached for the sale of the south side property by January 8, 2003, and that Erie would lose the property [page252] only if, on presentation of the Offer, Tri-B exercised the right of first refusal. Indeed, Seres' Farms' statement of defence admits the agreement.

[46] Further, not only did both Erie and Seres' Farms testify that they understood an agreement had been reached by January 8, 2003, both acted on the basis of that agreement. As Erie promised, it prepared the Offer in accordance with the agreed terms and delivered it to Seres' Farms. As Seres' Farms promised, it took the Offer to Tri-B and made it clear that the property would be sold to Erie unless Tri-B matched the Offer.

[47] I wish to conclude on this issue by reiterating the terms of the agreement, as found by the trial judge. The agreement was not simply that Seres' Farms would sell the south side property, consisting of 54.231 acres, to Erie at a price of $22,000 per acre and a closing date of April 11, 2003. The agreement was that Erie would present Seres' Farms with a written offer containing those terms and that Seres' Farms would sell the south side property to Erie on those terms, unless Tri-B validly exercised its right of first refusal. [^3] When I refer to the "Agreement" hereafter, I am referring to this broader set of obligations that Erie and Seres' Farms undertook. As will become evident below, it is important to keep in mind the full terms of the Agreement between Erie and Seres' Farms.

Were there Sufficient Acts of Part Performance to Take the Agreement Outside s. 4 of the Statute of Frauds?

[48] To be enforceable, s. 4 of the Statute of Frauds requires that an agreement for the sale of lands (or some note or memorandum thereof) be in writing and signed by the party to be charged. Section 4 reads as follows:

4. No action shall be brought to charge any executor or administrator upon any special promise to answer damages out of the executor's or administrator's own estate, or to charge any person upon any special promise to answer for the debt, default or miscarriage of any other person, or to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought, or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party. (Emphasis added)

[49] The purpose of s. 4 of the Statute of Frauds is to prevent fraudulent dealings in land based on perjured evidence. However, [page253] Equity will not allow the Statute of Frauds to be used as an "engine of fraud". It created the doctrine of part performance to prevent the Statute of Frauds from being used as a variant of the unconscionable dealing which it was designed to remedy: see Hill v. Nova Scotia (Attorney General), 1997 401 (SCC), [1997] 1 S.C.R. 69, [1997] S.C.J. No. 7, at para. 10. The requirements in s. 4 of the Statute of Frauds must give way in the face of part performance because the acts of part performance fulfill the very purpose of the written document -- that is, they diminish the opportunity for fraudulent dealings with land based on perjured evidence. [^4]

[50] In the present case, the trial judge found that the Offer was a "sufficient note or memorandum" to meet the writing requirement in s. 4 of the Statute of Frauds. [^5] However, the second requirement in s. 4 -- that the "party to be charged" sign the written document -- was not fulfilled because Seres' Farms never signed the Offer. Accordingly, the trial judge considered whether the doctrine of part performance operated to exclude the operation of s. 4.

[51] Tri-B submits that the trial judge erred in three ways in concluding that there were sufficient acts of part performance to exclude the operation of s. 4. First, it contends that Erie has not suffered a detriment such that it would be unconscionable to allow Tri-B to set up s. 4 of the Statute of Frauds. Second, it says that only acts of the plaintiff (Erie) can be considered when determining whether there are sufficient acts of part performance. Consequently, it submits that the trial judge erred by considering acts of Seres' Farms, in addition to those of Erie. Third, it argues that the acts in question are not "unequivocally referable to dealings in land" and, therefore, cannot amount to sufficient acts of part performance.

[52] As Hill v. Nova Scotia largely resolves this ground of appeal, a full examination of that decision is warranted before addressing Tri-B's three submissions.

Hill v. Nova Scotia

[53] The Province of Nova Scotia (the "province") wanted to build a controlled access highway. To achieve this, it expropriated land which bisected a farm belonging to Ross Hill. The issue for the courts was whether, at the time of expropriation, the province granted Mr. Hill an equitable interest in the expropriated land [page254] which permitted him to move people, cattle and equipment back and forth across the highway. [^6]

[54] At first instance, the application judge found that the province had granted Mr. Hill an equitable easement and made an order accordingly. A majority of the Nova Scotia Court of Appeal held that Mr. Hill had retained no interest in the expropriated land and set aside the order. On further appeal, the Supreme Court of Canada allowed the appeal and restored the order of the application judge.

[55] Cory J., writing for the court, found that at the time of expropriation, the province (in the guise of the Department of Transport) promised Mr. Hill that he would have access to the highway so that he could move people, equipment and cattle back and forth across it. He found that the province acted on that promise -- "[t]he Department of Transport by its actions in constructing fences, gates and ramps and maintaining them over 27 years recognized and confirmed its representation that Hill had an interest in land that enabled him to move cattle and equipment across the highway". [^7]

[56] In Cory J.'s view, the actions of the province were extremely telling: "The actions of the province speak louder than any written document." [^8]

[57] Justice Cory found that Mr. Hill relied to his detriment on the province's promise because consideration for his expropriated land would have been higher had there been a need to compensate him for injurious affection. [^9] He refused to permit the province to rely on the absence of writing [^10] saying, at para. 9:

Where the terms of an agreement have already been carried out, the danger of fraud is averted or at least greatly reduced. To borrow a phrase from the law of tort, the thing speaks for itself. In the present case, for example, it does not matter so much what was said. What is critical is what was done; and what was done was the construction and maintenance of access ramps. There is no mistaking the purpose for which those ramps were constructed: it was to allow Mr. Hill a way of reaching and crossing the highway. Accordingly, in this instance strict adherence to the literal terms of the writing [page255] requirement would not serve the purpose for which it was devised. Fraud would not be prevented; rather, the appellants [the Hill family] would be defrauded.

[58] In para. 10 of Hill, Cory J. explains why Equity created the doctrine of part performance. He does so by quoting the following from Steadman v. Steadman, [1976] A.C. 536, [1974] 2 All E.R. 977 (H.L.), at p. 558 A.C.:

[This doctrine] was evoked when, almost from the moment of passing of the Statute of Frauds, it was appreciated that it was being used for a variant of unconscionable dealing, which the statute itself was designed to remedy. A party to an oral contract for the disposition of an interest in land could, despite performance of the reciprocal terms by the other party, by virtue of the statute disclaim liability for his own performance on the ground that the contract had not been in writing. Common Law was helpless. But Equity, with its purpose of vindicating good faith and with its remedies of injunction and specific performance, could deal with the situation. . . . Where, therefore, a party to a contract unenforceable under the Statute of Frauds stood by while the other party acted to his detriment in performance of his own contractual obligations, the first party would be precluded by the Court of Chancery from claiming exoneration, on the ground that the contract was unenforceable, from performance of his reciprocal obligations; and the court would, if required, decree specific performance of the contract. Equity would not, as it was put, allow the Statute of Fraud "to be used as an engine of fraud." This became known as the doctrine of part performance -- the "part" performance being that of the party who had, to the knowledge of the other party, acted to his detriment in carrying out irremediably his own obligations (or some significant part of them) under the otherwise unenforceable contract. (Citations omitted)

[59] After noting that Equity recognizes as done that which ought to be done, Cory J. stated that a verbal agreement which has been partly performed will be enforced. [^11]

[60] In concluding that the doctrine of part performance operated to prevent the province from relying on the writing requirement, Cory J. stated, at para. 16:

As the decision of the House of Lords in Steadman, supra, makes clear, the very purpose of the doctrine of part performance is to avoid the inequitable operation of the Statute of Frauds. . . . The writing requirement is specifically required to give way in the face of part performance or estoppel by conduct, because the part performance or conduct fulfils the very purpose of a written document.

[61] With these principles in mind, I turn now to consider Tri-B's arguments on the sufficiency of the acts of part performance. [page256]

Is it unconscionable to allow Tri-B to take the benefit of s. 4?

[62] Tri-B's first argument is that Erie has suffered no detriment that would render it unconscionable for it (Tri-B) to set up s. 4 of the Statute of Frauds and retain the ensuing benefit, namely, receipt of the south side property.

[63] In my view, Hill is a full answer to this argument.

[64] Hill stands for this principle: if one party to an otherwise unenforceable agreement stands by while the other party acts to its detriment by performance of its contractual obligations, the first party will be precluded from relying on the requirements in the Statute of Frauds to excuse its own performance. As I will explain, application of this principle leads to the conclusion that Seres' Farms is precluded from relying on s. 4 of the Statute of Frauds to excuse it from performance of its obligations under the Agreement. Further, in the circumstances of this case, Tri-B cannot stand in a better position than Seres' Farms.

[65] Recall the terms of the Agreement: Erie agreed to provide Seres' Farms with a written offer for the purchase and sale of the south side property on the agreed terms. Seres' Farms agreed it would present the Offer to Tri-B and, unless Tri-B matched it, Seres' Farms would sell the south side property to Erie on the agreed terms.

[66] What happened? Erie carried out its obligations under the Agreement -- it prepared and delivered to Seres' Farms a written offer that reflected the agreed terms. Seres' Farms did nothing to prevent this -- that is, it "stood by" as Erie performed its part of the Agreement. Seres' Farms took the benefit of Erie's performance because it got what it wanted, namely, a written offer for the purchase of the south side property which it could put to Tri-B, pursuant to the right of first refusal. Seres' Farms also took the ultimate benefit of the Agreement because Erie's performance is what enabled Seres' Farms to sell the south side property at a price of $22,000 per acre.

[67] But, Seres' Farms only partly fulfilled its obligations under the Agreement. As promised, it took the Offer to Tri-B. However, it did not sell the property to Erie when Tri-B failed to match the Offer, a matter on which more is said below. Despite that, and in breach of its obligations under the Agreement, Seres' Farms sold the south side property to Tri-B rather than to Erie.

[68] I reject the suggestion that Erie suffered no detriment because it got its deposit back. That suggestion ignores reality: Erie's real detriment is loss of the south side property, which it desperately wants because it contains the aggregate Erie needs [page257] to carry on its business. Erie acted to its detriment in performing its obligations under the Agreement because had it not delivered the Offer, Seres' Farms would have been unable to use the right of first refusal to provoke an offer from Tri-B. As Erie performed its obligations under the Agreement to its detriment while Seres' Farms stood by, Equity will not permit Seres' Farms to rely on the Statute of Frauds to excuse it from performing its obligations under the Agreement.

[69] In these circumstances -- where Tri-B was fully aware that Seres' Farms would sell the property to Erie if Tri-B did not match the Offer, and Tri-B did not match the Offer -- Tri-B cannot stand in a better position than Seres' Farms. To permit Tri-B to set up s. 4 to defeat the Agreement would have the effect of excusing Seres' Farms from performance of its obligations under the Agreement and, as I have explained, Equity will not permit that.

[70] In conclusion, Equity will intervene because it would be unconscionable for the Statute of Frauds to be used when Erie acted to its detriment by irremediably carrying out its obligations under the otherwise unenforceable contract. Equity devised the doctrine of part performance to remedy precisely this kind of situation -- it will not stand by and allow the Statute of Frauds to be used as "an engine of fraud".

Is the doctrine of part performance limited to a consideration of acts of the plaintiff?

[71] Tri-B says that to constitute part performance, the acts relied on must be the acts of the plaintiff [^12] alone (the "Proposition"). Based on the Proposition, Tri-B argues that the trial judge erred because he considered the acts of Seres' Farms, as well as those of Erie, in finding that there were sufficient acts of part performance to take the agreement outside of s. 4 of the Statute of Frauds.

[72] Again, Hill is a complete answer to this argument. In Hill, the plaintiffs [^13] were Mr. Hill's sons, the successors in title to his farmland. The respondent -- that is, "the party to be [page258] charged" [^14] -- was the province. In finding that the requirements of the doctrine of part performance had been met, the Supreme Court relied primarily on the acts of the province in constructing and maintaining the access ramps, rather than on acts of the plaintiffs. In fact, the only act of the plaintiffs that is referred to is Mr. Hill's reliance on the province's promise.

[73] In the present case, Seres' Farms is "the party to be charged". As such, it stands in the same position as that of the province in Hill. Given that the Supreme Court considered the province's acts when determining whether the doctrine of part performance had been satisfied, it cannot have been an error on the part of the trial judge to have considered the acts of Seres' Farms in addition to those of Erie, the plaintiff.

[74] Mount Sinai Hospital Centre v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281, [2001] S.C.J. No. 43 provides additional support for rejecting the Proposition. At para. 13 of Mount Sinai Hospital, Binnie J., in concurring reasons, states: [^15]

Our Court [in Hill] concluded that there had been "part performance" by the province, and "[q]uite simply equity recognizes as done that which ought to have been done. A verbal agreement which has been partly performed will be enforced". (Emphasis added)

[75] In sum, it appears to me that given the decision of the Supreme Court in Hill, it is now settled law in Canada that the acts of both parties to an alleged oral agreement may be considered when a court is called on to determine if sufficient acts of part performance take an alleged agreement outside the operation of the Statute of Frauds. I am fortified in this conclusion by two considerations.

[76] First, in Levine v. Davies (1998), 1998 3606 (ON CA), 37 O.R. (3d) 252, [1998] O.J. No. 140 (C.A.), this court took an approach similar to that in Hill -- it did not limit itself to a consideration of the acts of the plaintiff alone when determining whether there were acts of part performance that took the matter outside the operation of s. 4 of the Statute of Frauds. The relevant facts in Levine are these. Levine entered into a lease with Davies as tenant and Canadian Educational Alternatives Ltd. ("CEA") as guarantor. [page259] Under the terms of the lease, Davies had the right to assign it to a non- profit corporation authorized to operate a private school. West Island Schools of Ontario Inc. ("West Island"), a non- profit corporation authorized to operate a private school, took possession of the leased property and operated a school. However, the lease was never formally assigned. Levine sued Davies and CEA for rent for the unexpired term of the lease.

[77] At first instance, Davies and CEA were held liable because the lease had not been validly assigned. On appeal, the trial decision was reversed in part. This court held that the trial judge had erred in failing to consider whether there were acts of part performance that could support an equitable assignment of the lease and take it outside the operation of the Statute of Frauds. The following conduct was found to be sufficient part performance: West Island took possession of the property; Davies never paid rent personally; Levine accepted rent cheques from West Island; and Levine sent correspondence concerning the property not to Davies but to West Island. [^16] Accordingly, Davies was released from his obligations under the lease although CEA, as guarantor, remained liable. Because it was Davies who relied on the alleged oral agreement, if the Proposition were law, the court would have been precluded from considering the acts of anyone but him. However, as we have seen, this court did not take such a restrictive view. Instead, it considered the acts of West Island and Levine in addition to those of Davies.

[78] Second, in my view, there is nothing in the rationale for the doctrine of part performance that would limit the court to a consideration of the acts of the plaintiff alone. As Hill makes clear, the doctrine exists to prevent a person from relying on the Statute of Frauds to excuse performance of an agreement when that person stood by while the other party to the agreement performed, to his or her detriment. It is self- evident that the party maintaining that it performed to its detriment (while the other stood by) has the burden to prove that it so acted. That is, in order to bring itself within the doctrine, the party attempting to rely on an alleged oral agreement must prove its acts of performance of the alleged agreement and it must also prove that the other party "stood by". It is the performance by one party, coupled with the standing by of the other party, which would make it inequitable for the other party to rely on the Statute of Frauds to be relieved of its obligation to perform. However, while [page260] the rationale for the doctrine requires proof of detriment, it does not limit the party to proving detriment solely by reference to its own acts.

[79] Furthermore, in my view, the Proposition flows from the conflation of two distinct, albeit related, aspects of the doctrine of part performance. The first aspect is detrimental reliance which, as has been noted, requires a party to prove its acts of performance. Without detrimental reliance there can be no inequity in relying on the Statute of Frauds, thus, it is the first hurdle to be met. The second aspect of the doctrine, however, relates to Equity's requirement that the acts of part performance sufficiently indicate the existence of the alleged contract such that the party alleging the agreement is permitted to adduce evidence of the oral agreement. This latter requirement is discussed in the following section. For the purpose of this discussion, it is significant to note that these two aspects of the doctrine are not synonymous. The former is a matter of substantive law based on the rationale for the doctrine of part performance, whereas the latter is primarily evidentiary in nature. [^17]

[80] A brief comment about the cases that recite the Proposition as a statement of law is in order. I begin with Cotterhill v. Parkway Development Corp. Ltd., [1981] A.J. No. 745, 29 A.R. 222 (Q.B.), at p. 226 A.R., affd 1982 ABCA 110, [1982] A.J. No. 857, 39 A.R. 398 (C.A.), the decision on which Tri-B relies for its submission that the Proposition is good law. [^18] Cotterhill falls within the group of cases that pre-date Hill. For the reasons already given, those cases have been overtaken by Hill and are no longer good law. [page261]

[81] Of the Ontario cases that have been decided post-Hill, some offer no authority for the Proposition, [^19] others refer to English texts or English case law, and yet others rely on decisions at first instance. [^20] Accordingly, it will be apparent that none of the cases are binding on this court. In any event as I have explained, I cannot reconcile the Proposition with Hill.

Are the acts of part performance unequivocally referable to dealings in land?

[82] Relying on Deglman v. Brunet Estate, 1954 2 (SCC), [1954] S.C.R. 725, [1954] S.C.J. No. 47, Tri-B submits that the acts of part performance, as found by the trial judge, are insufficient to take the matter outside the operation of s. 4 of the Statute of Frauds because they do not "unequivocally refer to dealings with [the] land under the provisions of a pre-existing oral agreement". [^21] Specifically, Tri-B says that: the Offer cannot be viewed as unequivocal evidence of a pre-existing contract because it contemplated written acceptance by Seres' Farms; payment of money is inherently equivocal and, consequently, Erie's delivery of the cheque with the Offer is of little or no consequence; and delivery of the Offer by Seres' Farms to Tri-B is insufficient because it was not an act of the plaintiff, a matter discussed above.

[83] Close examination of Deglman is the starting point for addressing this submission. The facts of Deglman are these. Both George Constantineau and his aunt lived in Ottawa. When he was about 20 years of age, he attended a technical school and, for approximately six months of the school year, lived with his aunt, Laura Constantineau Brunet, at No. 550 Besserer Street. Ms. Brunet owned both No. 550 and the adjoining property, No. 548. While Mr. Constantineau lived with his aunt, he did chores on both properties. He claimed that during this period, his aunt promised to leave him No. 548 in her will if he would do the things she asked of him from time to time. [page262]

[84] When the school term ended, Mr. Constantineau returned to his mother's home. He never again lived at No. 550 and at no time did he live at No. 548. He did continue to help his aunt, however, by taking her on trips to Montreal and elsewhere, doing odd jobs at the two houses and running her personal errands.

[85] Ms. Brunet died intestate. Mr. Constantineau brought an action against the estate in which he sought title to No. 548 based on the alleged oral agreement. The trial judge ordered that the oral agreement be enforced. That judgment was affirmed on appeal. On further appeal, however, the Supreme Court of Canada set aside the judgment and, instead, awarded him damages on a quantum meruit basis.

[86] Two judgments were rendered by the Supreme Court of Canada in Deglman. Rand J., writing on behalf of himself, Rinfret C.J.C. and Taschereau J., would have allowed the appeal because he viewed Mr. Constantineau's acts as "wholly neutral" in that they were not connected to either property. He observed that there must be a connection between the acts of performance and a dealing with the land, stating that the acts must be "referable only to the contract alleged" [^22] (the "Rand test").

[87] Cartwright J. delivered the majority judgment. [^23] Like Rand J., he found that none of Mr. Constantineau's acts had a connection to No. 548 Besserer Street or to any dealing with that land. However, he took a different view of what connection had to exist between the acts of part performance and the alleged oral agreement. Where Rand J. would have required the conduct to be referable only to the specific contract that had been alleged, Cartwright J. held that it was sufficient if the acts were "unequivocally referable in their own nature to some dealing with the land" (the "Deglman test"). In reaching this view, he relied on the following quotation from Duff J. in McNeil v. Corbett (1907), 1907 45 (SCC), 39 S.C.R. 608, [1907] S.C.J. No. 73, at pp. 611-12 S.C.R.:

[A] plaintiff who relies upon acts of part performance to excuse the non-production of a note or memorandum under the Statute of Frauds, should first prove the acts relied upon; it is only after such acts unequivocally referable in their own nature to some dealing with the land which is alleged to have been the subject of the agreement sued upon have been proved that evidence of the oral agreement becomes admissible for the purpose of explaining those acts. (Emphasis added) [page263]

[88] Thus, the question becomes: are the acts of part performance as found by the trial judge "unequivocally referable in their own nature to some dealing with the [south side property]"?

[89] In answering this question, the first step is to determine whether the acts of part performance are connected to the land. In this regard, the conduct in the present case stands in marked contrast to that in Deglman. In Deglman, it will be recalled, the acts of performance consisted of Mr. Constantineau doing chores on two properties, driving his aunt about and doing her personal errands -- those acts are not referable to any particular piece of property. In this case, however, each act of part performance relates directly to the south side property. The Offer recites that it is for the south side property; the deposit, on which more is said later, is tied to the Offer; and the reason that Seres' Farms took the Offer to Tri-B is the right of first refusal over the south side property. Thus, it is undeniable that each of the acts of part performance relates to the south side property. Put another way, the conduct is unequivocally referable in its own nature to the south side property.

[90] However, it is not sufficient that the conduct is unequivocally referable to the property in question; the conduct must also, in and of itself, indicate that there had been "some dealing with the land".

[91] While there are a number of cases which make reference to this requirement, [^24] little guidance can be found on the analytical approach to be taken to this aspect of the requirement. Haskett v. O'Neil, 1939 310 (ON CA), [1939] 4 D.L.R. 598, [1939] O.W.N. 573 (C.A.) pre-dates Deglman but, nonetheless, provides some assistance in this regard.

[92] In Haskett, as in the present case, the question was whether acts of part performance took an oral agreement outside the operation of the Statute of Frauds. Because the case predated Deglman, this court followed English law and applied the Rand test. [^25] It will be recalled that the Rand test is significantly more stringent than the Deglman test because the Rand [page264] test would require the acts to be referable only to the alleged contract and no other, whereas the Deglman test requires only that the acts be referable to "some dealing with the land".

[93] In applying the more stringent Rand test in Haskett, Robertson C.J.O., on behalf of the court, stated, at p. 601 D.L.R.:

To determine whether or not the acts relied upon in any particular case are within this description, one must have regard to all relevant circumstances in order to determine their true character. . . . . .

It is not necessary for respondent [plaintiff] to show acts of part performance that could not by any stretch of the imagination be referred to some other title than a contract such as that alleged. I think one must have regard to the way in which reasonable people carry on their affairs and if the acts relied on are of such a character that, judged by the standards in accordance with which reasonable people commonly act, they would not be done except in part performance of a contract such as is alleged, that is sufficient part performance to avoid the operation of the statute.

[94] There is much to be said for the commonsensical approach taken in Haskett. Based on that but modified to reflect the less stringent Deglman test, in my view, the proper approach to making such a determination is this. Begin by determining the context (or the "relevant circumstances" to use Haskett terminology). Then consider the acts of part performance having regard to the way in which reasonable people carry on their affairs. Indeed, although not stated explicitly, based on a full reading of the trial judge's reasons, he followed such an approach.

[95] What, then, were the relevant circumstances within which the trial judge viewed the acts of part performance? Erie established that it had a copy of the right of first refusal and knew that delivery of an offer to Seres' Farms could trigger its operation. It had also established that the south side property was critical to its financial viability because it contained a large store of aggregate, there were no other available properties in Essex County with aggregate and its financial existence depended on an adequate supply of aggregate.

[96] It is within this context that the trial judge considered the acts of part performance to determine whether to admit evidence of the oral agreement. I will not recite those acts again but they begin with Erie delivering the Offer to Seres' Farms along with a "deposit" in the form of a certified cheque for $1,193,082, the full purchase price for the south side property. The Offer specifically provided that on the date of acceptance of the Offer, a copy [page265] would be delivered to Tri-B. [^26] This provision mirrors but is not identical to the provision in the right of first refusal which required Seres' Farms to deliver a copy of an offer to Tri-B only if the offer was acceptable to it. By taking the Offer to Tri-B, Seres' Farms demonstrated that it had accepted the Offer. Seres' Farms indicated precisely that, stating that unless Tri-B matched the Offer, "it was gone to Koop [Erie]".

[97] I accept that delivery of an offer to purchase land, with a deposit, will not normally amount to part performance. It happens every day and is not suggestive of a pre-existing agreement in respect of the land. In fact, it suggests the opposite -- namely, that the offeror is hoping to be able to enter into an agreement to purchase the property. But that is not this case. In this case, to the knowledge of all, there was a right of first refusal over the property. The right of first refusal is critical because it dictated that acts be performed in a particular sequence. Further, the Offer was not in standard form and the "deposit" was not a deposit in the ordinary sense of the word as it was for the full purchase price. In these circumstances, judged by the standards on which reasonable people act, was the trial judge entitled to conclude that the conduct reflected that there had been "some dealing" in the land? In my view, it was open to the trial judge to find that the acts were referable to "some dealing with the land", such that evidence of the oral agreement was admissible for the purpose of explaining those acts.

[98] The purpose of the doctrine of part performance is to avoid the inequitable operation of s. 4 of the Statute of Frauds. As I have explained, Erie acted to its detriment in reliance on the Agreement. It also proved acts of part performance sufficiently referable to some dealing with the land such that it would make it inequitable for the defendants to rely on s. 4 of the Statute of Frauds to avoid performance. That is especially true in this case where Seres' Farms openly and repeatedly acknowledges the Agreement and it is Tri-B that seeks to invoke the Statute of Frauds to render the Agreement unenforceable. Accordingly, I would not give effect to this ground of appeal.

Could Tri-B Purchase the Lands on Terms Different from Those in the Offer?

[99] Tri-B argues that even if the trial judge was correct in concluding there were sufficient acts of part performance to give [page266] rise to an enforceable contract, that contract remained subject to its right of first refusal to purchase the south side property. It says that it exercised the right of first refusal by entering into an agreement with Seres' Farms. It contends that if Seres' Farms thought the Tri-B Offer was better than the Offer, Seres' Farms was entitled to accept the Tri-B Offer.

[100] I see nothing in this argument. The right of first refusal is clear: if Seres' Farms received a bona fide offer that it was willing to accept, it had to present the offer to Tri-B. Tri-B then had five days within which to purchase the property by delivering to Seres' Farms a signed offer to purchase "with the same deposit, terms and conditions". [^27]

[101] Seres' Farms was prepared to accept Erie's bona fide offer and duly presented the Offer to Tri-B. However, as the trial judge found, Tri-B did not match the Offer. Tri-B delivered a deposit of only $25,000 with its offer, whereas Erie gave the full purchase price of approximately $1.1 million on delivery of the Offer. Further, Tri-B's closing date was later than that in the Offer. Therefore, Tri-B did not give Seres' Farms an offer "with the same deposit, terms and conditions", as the right of first refusal required. Because there was no valid exercise of the right of first refusal, given the terms of the Agreement between Seres' Farms and Erie, Seres' Farms was not entitled to accept the Tri-B Offer.

Did Tri-B Induce Seres' Farms to Breach the Agreement?

[102] In light of my conclusions on the other issues, it is unnecessary to deal with this ground of appeal.

Did The Trial Judge Err in Ordering Specific Performance?

[103] Tri-B submits that as a result of breach of the Agreement, Erie will suffer only one type of harm, namely, loss of future profits. It argues that because loss of future profits is compensable in damages and specific performance can be awarded only where damages are inadequate, it was not open to the trial judge to order specific performance. As support for this argument, Tri-B points to the fact that the trial judge made no finding that damages were inadequate. Thus, it says, the order for specific performance must be set aside.

[104] I would reject this submission for two reasons. [page267]

[105] First, given the findings of the trial judge, the premise on which this submission is based (i.e., that the only harm Erie will suffer, if the Agreement is breached, is loss of future profits) cannot stand.

[106] It will be recalled that the trial judge accepted the uncontradicted, uncontested evidence led by Erie that: its financial existence depends on it having an adequate supply of aggregate; aggregate is in scarce supply in Essex County; 50 per cent of the remaining aggregate in Essex County not under Erie's control is located on the subject property; no other lands in the County of Essex containing aggregate are for sale; and the aggregate on the south side property will supply Erie with sufficient aggregate to meet its needs for a period of between five and ten years.

[107] On these findings, the clear inference is that Erie needs to purchase the south side property so that it will have sufficient aggregate to continue in business. There is no evidence on the record to suggest otherwise.

[108] The Koop family has owned and run Erie since 1977. In my view, it is self-evident that loss of a family business represents far more than merely the loss of whatever profits would have been made had it been able to continue in business. For that reason, I reject the foundation on which this ground of appeal rests, namely, that Erie's only harm, should it not be awarded the south side property, is the loss of future profits.

[109] Second, and in any event, although the trial judge did not utter the words "damages are inadequate", he made the determinations necessary to justify the order for specific performance.

[110] I agree that specific performance is not to be ordered for breach of contract unless damages are inadequate. However, recent decisions show that the concepts of inadequacy of damages, uniqueness of the subject matter of the agreement, and the requirement of a "fair, real and substantial claim" to specific performance are interrelated and all bear on whether a plaintiff has met the requirements for specific performance.

[111] When damages are found to be inadequate, it is generally because of the unique nature of the property bargained for. It is on that basis that the remedy has historically been granted in cases involving the sale of real property -- real property being presumed unique: see 1110049 Ontario Ltd. v. Exclusive Diamond Inc. (1995), 1995 524 (ON CA), 25 O.R. (3d) 417, [1995] O.J. No. 2690 (C.A.), at pp. 418-19 O.R.

[112] However, the assumption that every piece of real property is unique and specific performance is to be granted as a [page268] matter of course for breach of agreements involving land was swept away by the Supreme Court of Canada in Semelhago v. Paramadevan, 1996 209 (SCC), [1996] 2 S.C.R. 415, [1996] S.C.J. No. 71. Sopinka J., writing for the majority, stated that while such an approach may once have been justified, it can no longer be assumed that every piece of real estate is unique.

[113] In paras. 21 to 22 of Semelhago, Sopinka J. assimilates the test for specific performance of agreements relating to land with that for agreements relating to chattels. In so doing, he makes it clear that the concepts of uniqueness, adequacy of damages and the requirement of a fair, real and substantial claim to specific performance are intertwined. He stated:

It is no longer appropriate, therefore, to maintain a distinction in the approach to specific performance as between realty and personalty. It cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases. The common law recognized that the distinction might not be valid when the land had no peculiar or special value. . . . . .

Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available. The guideline [for granting specific performance] proposed by Estey J. in Asamera Oil Corp. v. Seal Oil & General Corp., 1978 16 (SCC), [1979] 1 S.C.R. 633 with respect to contracts involving chattels is equally applicable to real property. At p. 668, Estey J. stated:

Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing to procure alternate property in mitigation of his losses, some fair, real and substantial justification for his claim to performance must be found. (Emphasis added)

[114] The test for specific performance laid down in Semelhago was considered in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 28012 (ON SC), 56 O.R. (3d) 341, [2001] O.J. No. 4397 (S.C.J.), affd (2003), 2003 52131 (ON CA), 63 O.R. (3d) 304, [2003] O.J. No. 350 (C.A.), leave to appeal to S.C.C. dismissed [2003] S.C.C.A. No. 145. In John E. Dodge, the plaintiff sought to purchase land for the purpose of building a hotel on it. When the vendor purported to terminate the agreement, the plaintiff sued for specific performance.

[115] At trial, Lax J. applied Semelhago and determined that specific performance was warranted because the land was unique to the purchaser in that there was no readily available substitute. Accordingly, in her view, the plaintiff's loss could not be adequately compensated for in damages and specific performance better served justice between the parties. [page269]

[116] On appeal, this court upheld the trial decision. Weiler J.A., writing for the court, referred to para. 23 in 1252668 Ontario Inc. v. Wyndham Street Investments Inc., [1999] O.J. No. 3188, 27 R.P.R. (3d) 58 (S.C.J.) and stated, at para. 39:

I agree that in order to establish that a property is unique the person seeking the remedy of specific performance must show that the property in question has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended.

[117] Specific performance was considered, as well, in UBS Securities. At paras. 96 and 100, this court stated:

When fashioning a remedy for a breach of contract, the object is to place the injured party in the position that he or she would have been had the contract been performed. Typically, damages are ordered. However, where damages are inadequate to compensate an injured party for its losses, specific performance may be ordered. Accordingly, specific performance may be ordered where the subject matter of a bargain is unique or irreplaceable because, in those circumstances, damages may be inadequate. . . . . .

The uniqueness of the property that is the subject of the contract is one, non-determinative factor in deciding the appropriateness of specific performance. The underlying principle is that if the property is unique, it should be delivered up because damages would not put the party in the position they would have been in but for the breach. (Emphasis added)

[118] In summary, therefore, absent evidence that the land which is the subject matter of the agreement is unique, damages will be adequate and the plaintiff will not have a fair, real and substantial claim to specific performance. However, the converse is also true. Where a plaintiff establishes that the land in question is unique, damages will often be inadequate and the plaintiff has a fair, real and substantial claim to specific performance. Land is unique if there is no readily available substitute property. One method of proving that there is no readily available substitute is to show that the land has a quality that cannot be readily duplicated and that the quality relates to its proposed use, making the land particularly suitable for the purpose for which it was intended.

[119] In this case, the trial judge did not order specific performance merely because the subject matter of the Agreement was real property. He did so because he found that the south side property was "unique to Erie's needs". In so doing, he expressly relied on the uncontradicted, unchallenged evidence led by Erie which proved that the south side property was unique. That evidence is as follows. The south side property has [page270] a particular quality, namely, the presence of aggregate. Erie's very existence depends on having an adequate supply of aggregate, thus the south side property is particularly suitable for the purpose for which Erie sought to purchase it. There is no readily available substitute property because aggregate is in scarce supply in Essex County and no other lands containing aggregate in the County are for sale.

[120] The trial judge's finding that the south side property was unique is unassailable. Damages were inadequate and the trial judge was entitled to order specific performance.

[121] Accordingly, this ground of appeal must fail.

Disposition

[122] I would dismiss the appeal with costs to the respondent fixed at $25,000, inclusive of disbursements and GST.

Appeal dismissed.

Notes

[^1]: The legal description of the south side property is Part Lot 1, Concession 3, designated as Part 3, 4 and 5 on Plan 12R-14602, County of Essex, Province of Ontario.

[^2]: The essential terms of an oral contract for the purchase and sale of real property are the parties, property and price -- see McKenzie v. Walsh (1920), 1920 72 (SCC), 61 S.C.R. 312, [1920] S.C.J. No. 68.

[^3]: See para. 24 of the reasons for decision of the trial judge.

[^4]: Hill, at para. 16.

[^5]: See para. 32 of the reasons of the trial judge.

[^6]: The applicants were Ross Hill's sons, the successors in title to his farmlands.

[^7]: At para. 6.

[^8]: At para. 5.

[^9]: At para. 6.

[^10]: The writing requirement was contained in s. 21(1)(a) of the Public Highways Act, R.S.N.S. 1954, c. 235. However, Cory J. said that it was merely a reflection of the writing requirements in the Statute of Frauds.

[^11]: At para. 11.

[^12]: The word "plaintiff" is a convenient way of referring to the party seeking to rely on the alleged oral agreement.

[^13]: The matter was taken to court by way of application so the Hills were applicants, not plaintiffs. However, as the Hills were the parties relying on the existence of the oral agreement, this is of no significance -- see footnote 12.

[^14]: Quoting from s. 4 of the Statute of Frauds. It refers to the party seeking to avoid the oral agreement.

[^15]: The majority decision does not take issue with this aspect of the judgment of Binnie J.

[^16]: At p. 255 O.R.

[^17]: The tension between the substantive and evidentiary aspects of the doctrine has been the long-standing subject of debate: see, for example, V. Di Castri, The Law of Vendor and Purchaser, looseleaf, vol. 1 (Toronto: Carswell, 1998) at para. 141; S.M. Waddams, The Law of Contracts, 5th ed. (Aurora, Ont.: Canada Law Book, 2005) at paras. 236-239; G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Carswell, 2006) at pp. 231-32.

[^18]: Although the trial judge referred to the Proposition, he made no use of it in deciding the case. Further, while the Alberta Court of Appeal affirmed the trial decision in Cotterhill, it did so on the basis that no agreement had been reached between the parties. In light of that and as the appeal decision makes no reference to the Proposition, I do not view the appeal decision in Cotterhill as having affirmed the Proposition.

[^19]: See, for example, Greenspoon v. Tsambalieros, [1998] O.J. No. 2442, 68 O.T.C. 268 (Gen. Div.), at para. 29, affd on other grounds 1999 1448 (ON CA), [1999] O.J. No. 4247, 126 O.A.C. 352 (C.A.) and Kang Corp. v. KRTT Group Ltd., [2007] O.J. No. 1500, 56 R.P.R. (4th) 278 (S.C.J.), at para. 12. It is noteworthy that at para. 16 of Kang, the trial judge considered, among other acts, acts performed jointly by the plaintiff and defendant.

[^20]: See, for example, Wade v. Trpin, [2004] O.J. No. 1302, 18 R.P.R. (4th) 50 (S.C.J.), leave to appeal to C.A. refused [2004] O.J. No. 4760 and Fitzgerald v. 545880 Ontario Ltd., [2004] O.J. No. 2815, 22 R.P.R. (4th) 263 (S.C.J.).

[^21]: Deglman, at p. 733 S.C.R.

[^22]: At p. 728 S.C.R.

[^23]: Writing for Estey, Locke, Cartwright and Fauteux JJ.

[^24]: See, for example, Brownscombe v. Vercamert Estate, 1969 86 (SCC), [1969] S.C.R. 658, [1969] S.C.J. No. 35; Thompson v. Copithorne Estate, 1973 161 (SCC), [1974] S.C.R. 1023, [1973] S.C.J. No. 116; Kramaruk v. Kushnir, 1956 159 (ON CA), [1956] O.R. 392, [1956] O.J. No. 542 (C.A.); Tavares v. Tavares, [2002] O.J. No. 241, 48 R.P.R. (3d) 8 (C.A.); Peters v. Euloth, 1976 2042 (PE SCAD), [1976] P.E.I.J. No. 33, 11 Nfld. & P.E.I.R. 109 (C.A.); Colberg v. Braunberger Estate, 1978 ALTASCAD 307, [1978] A.J. No. 575, 12 A.R. 183 (C.A.); Booth v. Knibb Developments Ltd., 2002 ABCA 180, [2002] A.J. No. 957, 312 A.R. 173 (C.A.).

[^25]: At p. 601 D.L.R.

[^26]: See para. 25 above for this term of the Offer.

[^27]: See para. 3 of the right of first refusal, set out above, at para. 16.