COURT OF APPEAL FOR ONTARIO
CITATION: Nordlund Family Retreat Inc. v. Plominski, 2014 ONCA 444
DATE: 20140606
DOCKET: C56215
Feldman, Epstein and van Rensburg JJ.A.
BETWEEN
Nordlund Family Retreat Inc.
Plaintiff (Respondent)
and
Ben Plominski
Defendant (Appellant)
Brian N. Radnoff and Rivka L. Birkan, for the appellant
Frederick J. Skeggs, for the respondent
Heard: November 22, 2013
On appeal from the summary judgment of Justice Edward J. Koke of the Superior Court of Justice, dated October 5, 2012, with reasons reported at 2012 ONSC 5661, and his addendum and costs decisions, both dated January 16, 2013, with reasons reported at 2013 ONSC 258 and 2013 ONSC 283.
van Rensburg J.A.:
[1] The issues on this appeal are whether the motion judge erred in granting summary judgment in favour of the respondent when he held that there was an agreement for an easement over the appellant’s lands, in directing specific enforcement of the agreement, in granting leave to amend the statement of claim, or in his costs award.
[2] For the reasons that follow, I would dismiss the appeal. I would also dismiss the motion for leave to appeal costs.
A. OVERVIEW
[3] In 2004, Donald Nordlund (a retired lawyer and U.S. resident) purchased vacation property on Basswood Lake (the “Nordlund Property”), located approximately 100 kilometres east of Sault Ste. Marie. Legal title to the Nordlund Property was initially taken in the names of Mr. Nordlund and members of his family, and in August 2007 was transferred to “The Nordlund Family Retreat Inc.” The Nordlund Property consists of approximately 2650 feet of lake frontage on Lot 9 (the south part is owned by the Crown), as well as an additional 2650 feet of frontage on the adjacent Lot 8.
[4] The Nordlund Property was accessible only by water. Road access would require the construction of a road across the properties located between Basswood Lake Road and the Nordlund Property. Some of the surrounding property was Crown land, while other parts were privately owned.
[5] In September 2004, Mr. Nordlund entered into an agreement (the “2004 Agreement”) with his neighbour Brian Hooey who then owned part of Lot 10 that abutted the Nordlund Property. Under the 2004 Agreement, Mr. Hooey agreed to grant an easement over Lot 10 to the present and future owners of Lots 8 and 9 to permit road access to their property. The 2004 Agreement contemplated a survey and construction of a road at the expense of the owners of Lots 8 and 9, the drafting of an official agreement after completion of the survey and payment of $15,000 upon completion of the official agreement.
[6] The 2004 Agreement provided that the exact route of road access would be determined by the survey and that the easement would be sufficiently wide to accommodate the bringing in of power lines.
[7] Barbara Plominski was the Nordlunds’ housekeeper. On or about November 1, 2005, her husband, the appellant Ben Plominski, together with two other individuals (Zenon Zator and his wife Krystyna Dominska), purchased Mr. Hooey’s interest in Lot 10. At the time of the purchase, Mr. Plominski, Mr. Zator, and Ms. Dominska signed two documents ‑ an agreement with Mr. Nordlund, and an “Acknowledgement re: Title” addressed to the municipality ‑ in which they agreed to assume Mr. Hooey’s obligations under the 2004 Agreement.
[8] Mr. Plominski discovered that the property that he and his co-owners had purchased from Mr. Hooey was landlocked. They had been refused continuing access over part of a road they had been using to reach their property from Basswood Lake Road. Ultimately, in February 2007 they purchased a narrow strip of land on the adjoining Lot 11. The Hooey lands and the part of Lot 11 that were purchased by Mr. Plominski and his co-owners are referred to as the “Plominski Property.” They paid a contractor to construct a new road and to make improvements to an existing road, thus providing direct road access to the Plominski Property from Basswood Lake Road.
[9] It was apparent that the easement necessary for construction of a road to the Nordlund Property had to extend not only over Lot 10 (which was contemplated by the 2004 Agreement), but also over the part of Lot 11 purchased by Mr. Plominski and his co-owners.
[10] When the Plominski Property was originally purchased the intention was for Mr. Plominski and his co-owners to build neighbouring cottages on severed lots. Their application for severance was turned down, and in 2007 Mr. Plominski purchased his co-owners’ interests in the property. Eventually Mr. Nordlund offered to attempt to sever a lakefront lot from the Nordlund Property for transfer to Mr. Plominski.
[11] In August 2007, after the necessary work had been completed to provide road access to the Plominski Property, and after Mr. Plominski had bought out his co-owners, he and Mr. Nordlund signed a document that the motion judge referred to as the “Easement Summary.” The Easement Summary states, among other things:
• The easement for a road to Lots 9 and 8 will start at Basswood Lake Rd. and run through Lots 11 and 10;
• The road to Lots 9 and 8 must connect from the existing road located on Lot 10 going east;
• The easement will be 32 feet wide to accommodate necessary turns in the road to avoid rocks and trees but the road itself will be no more than 16 feet wide;
• The cost of the survey and road construction from the split on the hill going east will be borne by owners of Lots 9 and 8;
• Maintenance of the common road including fallen tree removal (Basswood Lake Rd. to the split on the hill) will be borne evenly by the owners of Lots 8, 9 and 10 regardless of occupation and/or usage of the lots. Each lot is responsible for paying 1/3 of the maintenance costs;
• The owners of Lot 10 will not be liable for any injury or property damage which the owners of Lots 8 and 9 and/or their guests may suffer when using the aforesaid easement;
• The easement is for the present and future owners of Lots 9 and 8;
• Maintenance of the road from the split on the hill going east will be the sole responsibility of the owners of Lots 8 and 9 until a severance of 250 to 300 feet from the westernmost boundary of Lot 9 is approved and thereafter the costs from the split on the hill to the new west boundary of Lot 9 will be shared in the same manner as the costs to the split on the hill; and
• Upon signing and delivery of a valid easement agreement from Ben Plominski as the sole owner of Lot 10 and part of Lot 11, Mr. Nordlund will pay Ben Plominski US$45,000.
[12] The Easement Summary states that “this letter is not to serve as a legal agreement but as a summary of the understanding between Ben Plominski and Donald Nordlund.”
[13] Another document, referred to as the “Severance Summary”, was signed by Mr. Nordlund, Mr. Plominski and their spouses in August 2007. The Severance Summary provides that it is not to serve as a legal agreement, but rather as a summary of an understanding “regarding the proposal to try and gain approval for a severance of a part of Lot 9.” The document states that Mr. Nordlund agrees to initiate a petition on behalf of the Nordlund Family Retreat for severance of a rectangular parcel of land, that Mr. Nordlund will use his best efforts to obtain the necessary approvals, “but no guarantee is possible.” The Severance Summary provides for its own consideration if the severance and transfer are successful, namely, payment by Mr. Plominski and his wife of one third the costs of road construction from the split on the hill to Lot 9 plus US$15,000 for the severed property. The Severance Summary provides that, if and when the petition for severance is approved, Mr. Nordlund, on behalf of the Nordlund Family Retreat, will grant Ben and Barbara Plominski or the future owners of the property an easement to build a driveway to access the severed property.
[14] On September 4, 2007, Mr. Nordlund advanced $45,000 to Mr. Plominski and the parties signed an addendum to the Easement Summary which states “if for any reason whatsoever the easements across said Lots 10 and 11 for the benefit of present and future owners of Lots 9 and 8 cannot be granted by December 1, 2007, then Mr. Plominski will promptly repay the $45,000 to Mr. Nordlund.” The purpose of the payment at that time was to assist Mr. Plominski in purchasing the interests of his co-owners in Lots 10 and 11.
[15] Between 2007 and 2009 there were a number of communications between Mr. Nordlund and Mr. Plominski, which will be discussed in some detail later in these reasons, respecting the easement required for land access to the Nordlund Property, as well as the severance and transfer of a lot to the Plominskis. By the fall of 2009, when Mr. Nordlund passed away, neither had occurred.
B. PROCEDURAL HISTORY
[16] This action was commenced in November 2009 by the legal owner of the Nordlund Property, The Nordlund Family Retreat Inc., seeking to require the appellant Ben Plominski to grant an easement in favour of the respondent.
[17] The respondent claimed that the 2004 Agreement “as amended from time to time for good and valuable consideration and/or partial performance”, was a binding contract and sought specific performance or damages. The Easement Summary was referred to in the statement of claim, and a copy of the Easement Summary and other documents were attached to the pleading.
[18] The appellant’s position was that there was never a binding and enforceable agreement to provide an easement. The appellant also pleaded that any obligation to provide an easement was dependent upon a severance from the Nordlund Property and conveyance to the Plominskis of a lakefront lot. The appellant counterclaimed for specific performance and damages in relation to an alleged agreement to provide a severed lot.
[19] In March 2011, the respondent brought a motion to amend the statement of claim to include a claim for a declaration that the Easement Summary was a binding agreement and for a vesting order. At the same time, the respondent brought a motion for summary judgment on its claim and to dismiss the counterclaim. Both motions were adjourned from time to time and ultimately argued on September 20, 2012.
[20] The motions were supported by an affidavit from Sarah Nordlund, the daughter of Donald Nordlund. In response, there were affidavits from the appellant, his wife and one of his former co-owners. There were no oral cross-examinations, although Ms. Nordlund was cross-examined in writing on her affidavit. Extensive documentation that had passed between Mr. Nordlund and Mr. Plominski was appended to the pleadings, exhibited to the affidavits and otherwise produced.
[21] On October 5, 2012 the motion judge released his decision granting summary judgment on the respondent’s claim and dismissing the counterclaim. On January 16, 2013, in response to a request of counsel, the motion judge released an addendum to his reasons, specifically addressing the motion for leave to amend the statement of claim, and confirming that the motion had been granted.
C. DECISION BELOW
i. Summary Judgment
[22] In his reasons, the motion judge reviewed in detail the discussions and dealings between the parties regarding the alleged easement agreement and the alleged severance agreement, that occurred between the date the 2004 Agreement was signed and 2009, when the action was commenced.
[23] With respect to the easement, the motion judge noted that the 2004 Agreement had been acknowledged by Mr. Plominski and his co-owners at the time they purchased Lot 10 from Mr. Hooey and that they were therefore bound by its terms. He found that the Easement Summary that was signed in 2007 was intended to comprise a binding agreement between the parties. It was a preliminary agreement, in which the parties agreed that they would undertake certain steps and, assuming those steps were taken, that they would then draft a final agreement that could be registered on title. The Easement Summary contained all the required and necessary terms to constitute an agreement and was commercially reasonable with respect to the required consideration ($45,000 that was payable upon receipt of the easement). The parties had taken a number of steps that they would not have taken if they did not believe they had a binding agreement.
[24] The motion judge also found that the Severance Summary constituted a binding agreement in favour of Mr. Plominski and his wife, that required Mr. Nordlund to use his best efforts to attempt to obtain a severance of a lakefront lot. This was also a preliminary agreement, but was binding because it included all of the particulars as to the size of lot, location and mutual consideration and was acted upon by the parties.
[25] The motion judge rejected the appellant’s contention that the parties had agreed orally that the provision of a severed lot would be part of the consideration for the grant of an easement, as well as the appellant’s claim for compensation in lieu of the severed lot. The Severance Summary contained all of the terms respecting the severance and provided for its own consideration ($15,000 to be paid by the Plominskis to the Nordlunds upon the transfer). The motion judge noted that Mr. Plominski had first demanded money in lieu of a lot in January 2009 during communications Mr. Nordlund initiated in an effort to have Mr. Plominski complete the easement. This demand was firmly rejected by Mr. Nordlund. What Mr. Plominski was asserting was commercially unreasonable in any event, considering that what he had paid for the Plominski Property was less than the payment he was seeking if the lot was not severed and transferred.
[26] The motion judge concluded that the Easement Summary and the Severance Summary represented two separate and independent agreements. He concluded that the respondent was entitled to an easement over Lots 10 and 11. He also concluded that the steps taken by Mr. Nordlund with respect to the severance (submitting the application and then withdrawing it to await transfer of the approval jurisdiction to another authority which was more likely to grant approval) had been reasonable, and that the respondent remained under a continuing obligation to complete the application and to use best efforts to effect the severance.
[27] The motion judge specifically considered whether summary judgment should be granted. He noted that the parties had recorded their discussions and dealings in considerable detail, in the form of written agreements and letters. He rejected the contention that the moving party had failed to put its best foot forward, in relying on the affidavit of Mr. Nordlund’s daughter (as opposed to his widow), and in not filing an affidavit of the surveyor. He concluded that he was faced with two competing versions of what the parties intended when they signed the Easement Summary and the Severance Summary, and that, on the materials that were before him at the motion, he was able to come to a full appreciation of the evidence and the issues and to make the necessary dispositive findings in the case. He concluded that there were no outstanding genuine issues that required a trial.
[28] The motion judge concluded that the refusal by the appellant to provide the easement was a breach of his obligations. He noted that Mr. Plominski had rejected a number of concessions offered by Mr. Nordlund in order to complete the easement. As a remedy, the motion judge granted specific performance of the Easement Summary, except that he ordered an easement 12 metres (or approximately 40 feet) wide, rather than the 32 foot width called for in the agreement. He accepted that the survey already obtained provided for an easement of 12 metres to accommodate a 16 foot wide road, and that it would be unfair to impose on the respondent the cost of another survey. The motion judge specified however that the roadway which was to be constructed on the easement was not to be wider than 16 feet. He ordered specific performance and a vesting order for the easement, requiring the appellant to assist and sign any documents reasonably necessary to facilitate the vesting order.
[29] Having concluded that the Severance Summary was a valid and binding agreement and that the respondent was not in breach, the motion judge dismissed the counterclaim.
ii. Amendment of Pleadings and Costs
[30] Following the release of the summary judgment decision, counsel wrote to the motion judge noting that the reasons did not specifically address the request that the statement of claim be amended. In the absence of a specific determination, counsel were unable to settle the order.
[31] In supplementary reasons, the motion judge clarified that there was an order that the statement of claim be amended as requested by the respondent. He noted that it was implicit in his reasons that the amendments had been approved. The appellant had failed to point to any prejudice resulting from the amendment. The motion judge rejected the appellant’s argument that the amendment sought to add a claim outside the applicable limitation period, noting that the original claim was in respect of the 2004 Agreement “as amended from time to time”, and that the Easement Summary had been referred to and appended to the original statement of claim. This was not a request to commence a new and fresh claim, but a clarification and narrowing of an existing claim and cause of action. He noted that argument on the summary judgment motion had proceeded on the basis that the amendments had been or would be granted.
[32] The motion judge released his decision on costs on January 16, 2013, awarding costs to the respondent fixed at $53,261.59.
D. ISSUES ON APPEAL
[33] The appellant raises the following arguments on appeal:
The motion judge erred in finding that there was no genuine issue for trial, when there was conflicting evidence on various points.
The motion judge erred in awarding judgment in favour of the respondent on the basis of the Easement Summary, when:
a) the Easement Summary was no more than an “agreement to agree” or an agreement lacking essential terms and therefore unenforceable; and
b) the respondent was not a party to the Easement Summary and therefore could not enforce it.
The motion judge erred in awarding specific performance.
The motion judge erred in granting leave to the respondent to amend its statement of claim.
[34] The appellant also sought leave to appeal the costs award and, if leave is granted, appeals the award.
1. No Genuine Issue for Trial
[35] The appellant argued that certain of his evidence was uncontradicted because he was not cross-examined on his affidavit, and that this evidence was ignored by the motion judge. In this regard the appellant asserted that the motion judge ought to have accepted the affidavit evidence of Ben Plominski and his wife as to whether any agreement had been reached and whether it was the intention of the parties to make the obligation to provide an easement dependent on the delivery of a severed lot.
[36] By the time the motion was brought, Mr. Nordlund was deceased. The respondent relied on the affidavit of his daughter Sarah Nordlund. Because Ms. Nordlund was not directly involved in the discussions, the appellant contends that his own evidence was uncontradicted.
[37] I disagree. It is clear from the reasons for decision that the motion judge did not ignore the appellant’s evidence. On a number of points that evidence was contradicted by other evidence that the motion judge accepted.
[38] The motion judge was alive to the fact that Mr. Plominski’s account of the parties’ dealings and intentions differed from that of the respondent. He observed that the evidence provided two competing versions of what the parties intended when they signed the Easement Summary and the Severance Summary. The motion judge concluded that the extensive documents between the parties, the affidavits and cross-examinations permitted him to come to a full appreciation of the evidence.
[39] The motion judge made extensive reference to the parties’ contemporaneous written communications, as well as their conduct following the execution of the Easement Summary, to conclude that in fact they had both intended to enter into a binding agreement for the provision of an easement.
[40] The evidence included the following:
• Mr. Plominski acknowledged that the 2004 Agreement, to provide an easement over Lot 10 for a road, was binding on him when he and his co-owners purchased Lot 10. That agreement anticipated a survey and the conclusion of an “official agreement”;
• Mr. Nordlund paid Mr. Plominski the $45,000 contemplated by the Easement Summary as an advance;
• After the Easement Summary was signed, Mr. Plominski signed an authorization permitting the surveyor retained by Mr. Nordlund to act on his behalf to obtain the consent to the easement of the Ministry of Municipal Affairs and Housing;
• By letter dated September 24, 2007 to the Ministry of Natural Resources, Mr. Plominski confirmed that he had agreed with Mr. Nordlund to grant an easement across Lot 10 and part of Lot 11;
• In June 2008 Mr. Plominski signed a document called “Agreement” stating that for good and valuable consideration he agreed to convey an easement for the purpose of road access. This document set out the anticipated location of the easement and stated that “official documents evidencing the easement” would be prepared as soon as accurate legal descriptions showing exact locations were finalized. The Agreement stated that the road, together with necessary drainage ditches, would not exceed a total width of 20 feet. According to Mr. Plominski, he signed this document understanding that it was to be sent to the Ministry of Natural Resources; and
• Mr. Plominski signed an application to the Ministry of Municipal Affairs and Housing for its consent to an easement in July 2008. The easement application was accompanied by a survey indicating the proposed location of the easement. On September 22, 2008 the application was submitted to the Ministry.
[41] On a summary judgment motion the judge is entitled under rule 20.04(2.1) to weigh the evidence, evaluate the credibility of a deponent and to draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at trial. The recent decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.J. No. 7, reinforces this requirement, stating at para. 57:
On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute. A documentary record, particularly when supplemented by the new fact-finding tools, including ordering oral testimony, is often sufficient to resolve material issues fairly and justly. The powers provided in Rules 20.04(2.1) and 20.04(2.2) can provide an equally valid, if less extensive, manner of fact finding.
[42] The credibility of the appellant’s own position in this case was affected by the documents that were inconsistent with what he said in his affidavit about his intentions and whether an agreement existed. There were also inherent contradictions in the positions taken in his pleadings and affidavit that seriously undermined his account.
[43] In his statement of defence and counterclaim, the appellant pleaded that at no time was there any binding legal agreement between the parties. Indeed, he stated in his affidavit:
Donald Nordlund and I did not ever arrive at mutually agreeable terms relating to the easement and Lot 9 severance. It was always the position of Barbara and I throughout the negotiation process that the granting of an easement over Lots 10 and 11 was contingent on severance and transfer to us of a buildable part of Lot 9. The negotiation process was lengthy but, unfortunately, did not result in an agreement.
[44] Notwithstanding these assertions, the appellant’s counterclaim pleaded that the respondent was in breach of the undertaking given by its “employee, servant or agent”, Donald Nordlund, “in not living up to the terms of” the Severance Summary. The counterclaim sought the transfer and conveyance of a severed lot from the Nordlund Property, or damages in lieu of the transfer, plus exemplary, punitive and general damages.
[45] The counterclaim was premised on an enforceable obligation to convey a lot. Unless there was an agreement with respect to the severance and transfer of a lot, there would be no basis for the counterclaim. The assertion of a counterclaim based on a binding agreement to provide a severed lot is entirely inconsistent with the appellant’s contention in response to the summary judgment motion that the parties were continuing to negotiate and never reached agreement on either the easement or the severance.
[46] I turn now to the appellant’s contention that the motion judge ought to have drawn an adverse inference from the failure of the respondent to file affidavits from Donald Nordlund’s widow, Jane Nordlund, and the surveyor, Colin Trivers. Rule 20.02 provides that on the hearing of a summary judgment motion, “the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.”
[47] Mr. Nordlund, who had the majority of direct dealings with Mr. Plominski concerning the easement, was deceased. His daughter, Sarah Nordlund, also a lawyer, was the president of the respondent, and had been kept informed by her father of the progress of the easement. The respondent relied upon the detailed and contemporaneous written communications between Mr. Plominski and Mr. Nordlund, which were appended to the affidavits. The respondent did not rely on any evidence of Mrs. Nordlund, and in the circumstances, the motion judge did not err in refusing to draw an adverse inference from the failure to put forward her affidavit.
[48] With respect to the evidence of Colin Trivers, it was Mr. Plominski who asserted that the idea for an easement wider than 32 feet came from Mr. Nordlund, and not his surveyor. This is inconsistent with what Mr. Nordlund said in his letters to Mr. Plominski, in explaining why the surveyor had sought a wider easement (to accommodate the twists and turns in the road), and attempting to reassure Mr. Plominski that the road itself would be 16 feet wide or less. I agree with the motion judge’s conclusion that, if the surveyor’s evidence was considered important by Mr. Plominski, he ought to have tendered an affidavit from Mr. Trivers, or sought to have him examined as a witness on a pending motion.
[49] I would not give effect to this ground of appeal.
2. a) The Easement Summary Was Not a Binding Agreement
[50] The appellant submits that the Easement Summary was not a binding agreement because:
(i) By its terms, it is apparent that the parties did not intend the Easement Summary to have binding legal consequences;
(ii) The Easement Summary lacks the essential terms required for an enforceable or registrable easement; and
(iii) The parties’ conduct and communications after signing the document suggest that they were continuing to negotiate the material terms and therefore that they had not arrived at a binding agreement.
[51] The appellant relies on the fact that the Easement Summary stated that it was not to serve as a legal agreement but rather as a summary of an understanding. The motion judge rejected this assertion. He interpreted this language to mean that the parties contemplated the need to enter into a final agreement that could be registered against title after Ministry approval was obtained and a survey showing the exact location of the easement was completed.
[52] In Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 53 O.A.C. 314, Robins J.A. described the issue that confronts a court when deciding whether there is a binding agreement or simply an agreement to agree that lacks essential terms. He stated at paras. 20 and 21:
The parties may “contract to make a contract”, that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.
However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract…The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself…
[53] The motion judge stated at paras. 60 to 64 of his reasons:
In interpreting a document, it must be assumed that the words in the document are intended by the parties to have a meaning. In determining whether the parties intended to enter into a binding agreement it is necessary to determine what the parties meant by the term “legal agreement”.
The term must be interpreted contextually, by looking at the context in which the word has been placed in the document and the context and the circumstances in which the document was drafted.
In this case, the parties had not yet obtained a survey which could be registered against the subject lands; neither had they obtained formal approval from the Ministry for an easement. Without a survey, and without formal approval, the parties were unable to enter into a final agreement which could be registered against the property.
The final paragraph of the Summary states that Mr. Nordlund was not obligated to pay for the easement until a “valid” easement agreement had been signed and delivered from Ben Plominski. The Summary therefore contemplates that a more formal agreement would be entered into after certain steps were taken and completed. Presumably, this agreement would be an agreement which could be registered and which would provide the parties with the security to move forward with the clearing of the land and construction of the roadway.
In my view, the Easement Summary was intended to be a preliminary agreement between the parties wherein they agreed that they would undertake certain steps, and assuming these steps were successfully completed they would then draft a final agreement which was capable of being registered against the property. Notwithstanding the fact that the Easement Summary was intended to be a preliminary agreement, there is no reason to believe that it was not intended to be a binding and enforceable agreement.
[54] I see no error in this reasoning. The conclusion that the parties had entered into a binding “preliminary” agreement that enabled them to take the necessary steps that they in fact undertook in the following months, was consistent with other aspects of the evidence, including the 2004 Agreement, which Mr. Plominski acknowledged was binding notwithstanding its reference to the need for an “official agreement”.
[55] I would also reject the appellant’s argument that the Easement Summary is not a binding agreement because it does not include the essential terms of a contract for an easement. The appellant relies on cases where a binding agreement for an easement was not recognized because some essential term was missing. In Pickering v. Harper Ranch Ltd., [1997] B.C.J. No. 1038 (S.C.), a document signed by the appellant purporting to give his neighbour “permission and easement” to locate a septic field on his property was not an enforceable agreement because the dimensions and location of the easement had not been sufficiently identified. In that case, the easement the respondents sought to enforce differed from the document the parties had signed with respect to the anticipated size, location and conditions attaching to the easement. Given the evidence in that case, the court concluded that no agreement had been reached.
[56] In Georgian Windpower Corporation v. Stelco Inc., 2012 ONSC 3759, [2012] O.J. No. 6037, the court considered, among other things, whether a document referred to as a “land lease/easement agreement” constituted a binding easement agreement. Patillo J. concluded that the document lacked the essential terms necessary to constitute either an enforceable lease or easement. It failed to provide a description of the demised premises to be leased or the land over which the easement was to run, when the term of either was to commence and certain other material terms. It was also unclear whether the parties would be entering into a lease, an easement or both.
[57] Patillo J. noted at para. 124 that in order for there to be a binding contract, the parties must agree on all of the essential terms of the agreement, and that “what constitutes ‘essential terms’ depends on the subject matter of the contract and what transpired at the time of the alleged agreement.”
[58] In United Gulf Developments Ltd. v. Iskandar, 2008 NSCA 71, [2008] N.S.J. No. 317, at para. 14, Cromwell J.A. (as he then was) noted: “Determining what terms are ‘essential’ in a particular case is…more difficult than stating the principle. The sort of terms that are considered essential varies with the nature of the transaction and the context in which the agreement is made.”
[59] In this case, the motion judge concluded that the Easement Summary contained all of the essential terms to constitute a binding agreement to provide an easement. Again, I see no error in his reasoning. The parties agreed that an easement would be provided for a road to the Nordlund Property. A number of details were set out in the Easement Summary with respect to the location, construction, maintenance and legal liabilities attached to the road. While a survey was necessary to determine the exact route of the road, the parties agreed that the road would be a continuation of the road already constructed over the Plominski Property and running from the “top of the hill.” The steps that were necessary before the formal easement could be registered and the road could be extended to the Nordlund Property were contemplated in the Easement Summary, and in fact the parties undertook those steps.
[60] I also note that the appellant did not take issue, at any time in his correspondence with Mr. Nordlund or in these proceedings, with the location of the road that was shown in the drawing prepared by the surveyor. While he objected to the width of the easement that the surveyor applied for, it is apparent from his correspondence that the real concern was that the road itself should not be wider than 16 feet.
[61] Finally, on the question of whether the parties had a binding agreement, the appellant points to Mr. Nordlund’s own statements in his letters to Mr. Plominski including one in February 2009, where he referred to the “need to stop negotiating and enter into agreements so that we can move forward.” The appellant contends that these letters make it clear that the parties were continuing to negotiate and, as such, did not have an agreement.
[62] It must be recalled that, for approximately one year after the execution of the Easement Summary, the parties proceeded in their dealings with third parties and with each other, as though they had an agreement. It was only in October 2008, after he had seen the extensive clearing that had taken place for the road extension across the Crown land, that Mr. Plominski objected. As he stated in his affidavit, it looked to him like Mr. Nordlund was clearing the land to build a highway. It was this concern that prompted Mr. Plominski to contact Colin Trivers, and it was then that he discovered that the easement application provided for a 12 metre wide easement, rather than the 32 foot easement described in the Easement Summary. As a result, Mr. Plominski allowed the municipality’s provisional approval to lapse.
[63] Accordingly, as of the fall of 2008, Mr. Plominski had concerns about what had occurred, which caused him to refuse to conclude the “formal agreement” that was anticipated by the Easement Summary. The parties exchanged a number of letters that not only addressed these concerns, but in which Mr. Plominski began to make new demands as a condition for completing the easement. In response to Mr. Nordlund’s letters attempting to address his concerns, Mr. Plominski wrote in December 2008 that he had “some suggestions and proposals to negotiate.”
[64] In the exchange of letters that followed, Mr. Plominski attempted to link the granting of an easement to the provision of a severed lot, and then to obtain financial compensation if a lot could not be provided. The motion judge, correctly in my view, characterized these communications as Mr. Nordlund’s offer of concessions to Mr. Plominski and agreement to additional terms in order to secure the easement, notwithstanding Mr. Nordlund’s belief that there was a valid easement agreement in place for which he had already paid Mr. Plominski $45,000. The motion judge stated at para. 79:
These additional concessions included a promise that he would plant trees on the Crown land, he would attempt to sever a 500 foot wide lot for the Plominskis, which was almost twice as wide as that he had previously agreed to, he would accept a 12 foot wide road instead of a 16 foot road and he would obtain and pay for a second survey which would reflect these changes.
[65] The motion judge expanded upon this in his decision respecting costs at paras. 23, 24 and 27 to 31:
Clearly, there is a marked contrast in the conduct of the parties. In reviewing the correspondence between the late Donald Nordlund and Ben Plominski, one cannot help but be impressed with the generosity expressed by Nordlund to the Plominskis, and the integrity and consideration which marked his dealings.
The same cannot be said for Plominski. As far as he was concerned, there was no such thing as a final agreement. His actions suggest that in his mind an agreement existed simply as a basis for a further demand. Each time he was successful in extracting a concession from the well-meaning and increasingly desperate and frustrated Donald Nordlund, this concession just became a stepping stone to the next demand. As Plominski’s realization grew that Nordlund was completely dependent on him for access to his property, and that the easement was of vital importance to Nordlund, the more his demands increased, notwithstanding the fact that the parties had entered into an easement agreement and that Nordlund had paid in advance for this easement.
Thereafter, Plominski began the process of making continual and repeated demands for changes to the easement agreement, in what can only be interpreted as a thinly disguised attempt on his part to prevent Nordlund from obtaining access to his property and to provide Plominski with additional time and opportunity to extract additional consideration from Nordlund.
Initially, Donald Nordlund agreed to accommodate Plominski’s requests. When Plominski complained that he was cutting too many trees in constructing the roadway, Nordlund agreed to plant trees on the property. When Plominski demanded a new survey, Nordlund agreed to undertake the cost of obtaining a new survey. When Plominski requested that the frontage of the severed lot be increased to 350 feet, Nordlund agreed. No sooner did he agree than Plominski insisted that the severed lot be 500 feet wide. Nordlund again reluctantly agreed. When Plominski insisted that the width of the easement be reduced to 16 feet (the easement agreement for which Nordlund had paid $45000 provided for a 32 foot wide easement), Nordlund agreed to do so. When Plominski attempted to return the $45,000 to Nordlund, purportedly because he was afraid that Nordlund would develop his properties and use it for commercial purposes, Nordlund pointed out that the original easement agreement contained a restrictive covenant in which it was agreed that his property would never be used for commercial development. Notwithstanding this covenant, Nordlund indicated that if Plominski required further assurances he was willing to enter into an agreement that no sale of his properties could take place without the prior approval of Plominski.
The correspondence indicates that Donald Nordlund’s willingness to accommodate Plominski’s never ending demands finally ended following receipt of Plominski’s letter of February 15, 2009. In this letter Plominski requested that Nordlund put money in escrow with his lawyer in the event the application to sever a lot was unsuccessful, presumably to compensate him for the value of the lot. In this letter Plominski also informed Nordlund that he had learned that boat access to Basswood Lake may no longer be available in the future, a development which made an easement to Nordlund’s water access only lots even more imperative.
Donald Nordlund replied with a letter dated February 23, 2009 stating that time had come for an end to negotiations. He pointed out that he had agreed to everything Plominski had asked for except as he stated “for your latest addition asking for a monetary reward in the event that the petition for severance is denied. This latest addition of yours has never been in any previous discussions and is totally unreasonable. I reject it and your idea of an escrow account with your attorney.”
Nordlund concluded his letter by confirming that he continued to be prepared to use his “very best efforts” to obtain the severance and that he believed that there was a fair chance of achieving severance when the approval authority was moved. Plominski replied with a letter indicating he was not prepared to complete the easement and permit Nordlund access to his property over his land unless money for the lot was placed in escrow.
[66] I do not find any error in the motion judge’s interpretation of what was occurring in 2009. The reference to “negotiations” must be read in context. Mr. Nordlund was attempting to arrive at an agreement to meet Mr. Plominski’s continuing demands. These increasing demands reveal that he was not attempting to negotiate the specific terms of an easement agreement that had not yet been concluded, but to obtain additional consideration for the easement he had already agreed to provide. The fact that Mr. Nordlund was attempting to appease Mr. Plominski does not detract from the fact that they had a binding agreement already in place.
[67] I would not give effect to this ground of appeal.
2. b) Privity Issue
[68] The appellant asserts that the motion judge erred in permitting the respondent to enforce an agreement to which it was not a party. The appellant claims that there was no evidence to support the finding that Mr. Nordlund was acting in trust or as agent for the respondent in negotiating the easement or that Mr. Nordlund made the appellant aware of the relationship.
[69] The appellant relies on the fact that the Nordlund Property was owned by Mr. Nordlund and other members of his family and was only transferred to the Nordlund Family Retreat Inc. in August 2007. The appellant also points out that the Easement Summary was signed by Mr. Nordlund and does not make reference to the legal title to the Nordlund Property or to the Nordlund Family Retreat.
[70] The motion judge concluded that Mr. Nordlund was acting on behalf of the Nordlund Family Retreat Inc. when he contracted with Mr. Plominski and that Mr. Plominski was aware of this fact.
[71] At para. 52 of his reasons, the motion judge states:
…In my view, the documents which were filed in relation to this motion make it clear that after the lands were placed in the name of Nordlund Family Retreat Inc., Donald Nordlund made Plominski aware of the existence of the trust and that he was acting on behalf of the trust. Although the Severance Summary purports to be signed by Donald and Jane Nordlund, the Nordlunds agree in this document “to initiate a petition on behalf of the Nordlund Family Retreat”. In the final paragraph the parties agree that “Mr. Nordlund, on behalf of the Nordlund Family Retreat will grant Ben and Barbara, or the future owners of the property an easement to build a driveway to access the severed property. I note as well that in his letter to Plominski of October 30, 2008, Nordlund informs Plominski that he had no intention of selling Lots 9 and 8 since they were intended for the future enjoyment of family members and that “that is the reason title to the lots is in the name of a family retreat…” [Emphasis in original.]
[72] The various documents filed in relation to the motion (including the 2004 Agreement and the Easement Summary) state specifically that the benefit of the easement was for present and future owners of Lots 8 and 9. As such, I agree with the motion judge’s conclusion at para. 53 of his reasons that the Nordlund Family Retreat Inc. would in any event be entitled to bring the action to enforce the easement.
[73] I note that the appellant’s own statement of defence and counterclaim asserted that “Donald Nordlund was acting as agent, servant or employee of Nordlund Family Retreat Inc. at all material times”. Accordingly, there is no question that the appellant was aware of and accepted that Mr. Nordlund was contracting on behalf of the legal owner of the Nordlund Property when he secured an easement agreement from Mr. Plominski.
[74] Finally, the appellant did not explain why the identity of the person or entity holding legal title to the Nordlund Property was of any significance in the circumstances of this case. No one attempted to resile from what Mr. Nordlund had promised in his dealings with Mr. Plominski; rather it was acknowledged and understood that Mr. Nordlund spoke for the owner of the Nordlund Property. The identity of the legal owner of the Nordlund Property was, in the circumstances, immaterial.
[75] Accordingly, I would not give effect to this ground of appeal.
3. Award of Specific Performance
[76] The appellant argues that the motion judge erred in awarding specific performance when he failed to consider why damages could not compensate the respondent. There is no merit to this argument. The appellant has not offered any basis for concluding that damages would have been a sufficient remedy in the circumstances or explained how such damages could have been assessed. The easement was essential in order to provide road access to the Nordlund Property, and specific performance was warranted.
[77] The appellant also asserts that it was an error for the motion judge to order specific performance of a different agreement than what was provided for in the Easement Summary (that is, an easement 12 metres rather than 32 feet wide). This was not included as a ground of appeal in the appellant’s Amended Notice of Appeal, but was advanced in oral argument.
[78] The motion judge explained that the 12 metre width was consistent with the recommendation of the surveyor to accommodate the twists and turns in the road, and that it would be unfair to the respondent to impose on him the cost of another survey. He limited the roadway to be constructed on the easement to no wider than 16 feet, which is the width referred to in the Easement Summary.
[79] I would not interfere with the motion judge’s disposition. He gave effect to what was reasonably intended by the parties: an easement that would accommodate a road no wider than 16 feet. The essence of the Easement Summary was that, in return for a payment of $45,000 the appellant was obliged to allow the respondent to build a 16-foot wide road across the Plominski Property to permit access to the Nordlund Property from Basswood Lake Road. The fact that the easement is for 12 metres rather than 32 feet has no material effect on the parties’ bargain. In any event, the respondent is only entitled to use land necessary for the purposes of the easement, which is to build a 16-foot wide road.
4. Amendment of the Statement of Claim
[80] When the respondent brought the motion for summary judgment, it also sought to amend the statement of claim in two respects: to add a claim for a declaration that the Easement Summary was a binding contract for an easement over the appellant’s lands in favour of the respondent’s lands, and for an order vesting in favour of the respondent’s lands an easement according to the completed survey. The notice of motion to amend the statement of claim was filed in March 2011 and was adjourned on consent to be heard together with the summary judgment motion.
[81] The appellant asserts that the amendment ought to have been refused because it substantially altered the case to be met, and because he was prejudiced through the loss of a limitation period defence. The appellant contends that the respondent knew by October 30, 2008 of the alleged breach of the Easement Summary, and that the limitation period would have expired by October 30, 2010 with respect to any claim under that agreement.
[82] Rule 26.01 requires the court to grant leave to amend pleadings at any stage of an action unless prejudice would result that could not be compensated for by costs or an adjournment. However, pleadings may not be amended “to extend limitation periods by adding parties or claims after the expiry of a limitation period”: Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, 90 O.R. (3d) 401, at para. 24; see also Limitations Act, 2002, S.O. 2002, c. 24, Sch. B.
[83] In this case, the parties joined issue about the effect of the Easement Summary in their original pleadings. The Easement Summary was specifically referred to in the statement of claim as a “summary of understanding”, and a copy was attached to the pleading. In his statement of defence and counterclaim, Mr. Plominski pleaded that part of the consideration for “entering into” the “summary of understanding” was that he would receive a severed lot. The reply and defence to counterclaim alleged that the summary of understanding “confirm[ed] the easement over Lot 11 and not only over Lot 10, and the [appellant’s] intention and legal obligation to provide the easement.”
[84] This is not a case where a new cause of action was alleged at the final hour; rather, the entire litigation was directed to the legal significance of the various communications between the parties, including the Easement Summary. In these circumstances, I agree with the motion judge that the amendment did not introduce a new cause of action, that there was no limitations issue, and that given the absence of any prejudice, there was no reason to refuse the amendment.
[85] I would therefore not give effect to this ground of appeal.
5. The Costs Award
[86] Since this was a summary judgment motion, it was appropriate for the motion judge to deal with the costs of the entire action. He awarded costs of $53,261.59 to the respondent. The costs were on a partial indemnity basis except for $10,550.56 assessed on a substantial indemnity basis for costs thrown away with respect to the adjournment of the motions.
[87] The appellant seeks leave to appeal the costs award. He contends that the costs award reflects an error in principle because of the following:
• The motion judge erred in concluding that the respondent was entirely successful. The appellant says that he was successful in establishing that there was a binding agreement respecting severance (notwithstanding that the counterclaim was dismissed);
• The motion judge erred in awarding costs that exceeded the costs incurred by the appellant and that were inconsistent with the appellant’s reasonable expectations;
• The motion judge erred in awarding the respondent $10,550.56 for “costs thrown away” on a substantial indemnity basis with respect to the adjournment of the motions; and
• The motion judge erred as part of the “costs thrown away”, in awarding Ms. Nordlund, the respondent’s representative, costs for her travel, accommodation and lost wages.
[88] I begin with the principle that a trial court has wide discretion in awarding costs: see British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] S.C.J. No. 76, at para. 42. “Costs awards made by trial judges should be accorded a high degree of deference”. An appellate court may intervene “where it finds that the trial judge has misdirected himself as to the applicable law or made a palpable error in his assessment of the facts”: Walker v. Ritchie, 2006 SCC 45, [2006] S.C.J. No. 45, at para. 17; Okanagan Indian Band, at para. 43.
[89] In this case, there is no apparent error in how the judge exercised his discretion. First, he correctly applied the principle that costs follow the event. The respondent was successful in obtaining summary judgment in its favour and in having the appellant’s counterclaim dismissed.
[90] The appellant claimed specific enforcement of the severance and transfer of a lot, or in the alternative, damages. The motion judge’s conclusion that the Severance Summary was a binding agreement which required the respondent to use its continuing best efforts to sever and convey a lot did not represent partial success for the appellant. Since there was no breach, and no entitlement to financial compensation in the event that the severance could not be effected, the counterclaim was dismissed. Accordingly, there was no error in principle when the motion judge concluded that the respondent was entirely successful in the summary judgment motion.
[91] There is also no basis to interfere with the quantum of costs. The motion judge refused the respondent’s claim for substantial indemnity costs throughout, and concluded that the appellant’s conduct, although reprehensible, was not egregious. Accordingly, he assessed costs on a partial indemnity basis, except for the costs thrown away in respect of the adjournment of the motions. I reject the appellant’s contention that it was an error for the motion judge to award costs that exceeded the appellant’s own costs. While the court is entitled to take into account the costs incurred by the losing party in assessing whether the costs are proportional, the objective is to fix costs which are fair and reasonable. In my view, that objective was met in this case.
[92] Finally, with respect to the quantum of costs awarded for the adjourned motion, another judge had directed that the respondent was entitled to its costs thrown away, to be determined by the motion judge. It is not an error to award costs thrown away on a substantial indemnity basis. While it may have been unusual for the motion judge to include in the costs thrown away an amount to cover the travel expenses and lost revenues of a party’s principal, the substantial indemnity costs awarded here, when considered globally, were fair, reasonable and proportional.
[93] Accordingly, there is no reason to interfere with the motion judge’s costs award.
CONCLUSION
[94] For these reasons, I would dismiss the appeal and deny leave to appeal the costs award. I would award the respondent its costs of the appeal fixed at $15,000, inclusive of disbursements and HST, payable by the appellant to the respondent.
Released: June 06, 2014
(G.E.) “K. van Rensburg J.A.”
“I agree K. Feldman J.A.”
“I agree Gloria Epstein J.A.”