COURT OF APPEAL FOR ONTARIO
CITATION: Starport Landing Inc. v. Laurel Springs Water Corp., 2015 ONCA 772
DATE: 20151112
DOCKET: C59223
Hoy A.C.J.O., MacFarland and Lauwers JJ.A.
BETWEEN
Starport Landing Inc.
Plaintiff
and
Laurel Springs Water Corp. and J. Gordon Ross
Defendants
and
NCG Ventures Inc. and Nickolas C. Georghiades, also known as Nick Georghiades
Third Parties
Patrick Bakos, for the appellant, Starport Landing Inc.
Steven Gadbois, for the respondent, Laurel Springs Water Corp.
Heard: November 5, 2015
On appeal from the order of Justice M.A. Sanderson of the Superior Court of Justice, dated July 21, 2014, with reasons reported at 2014 ONSC 4359.
ENDORSEMENT
[1] This appeal arose out of the aborted sale of an industrial property with environmental problems. The appellant, Starport Landing Inc., asserted that it was not required to complete the purchase of the property and sued for the return of the deposit it paid. The respondent vendor, Laurel Springs Water Corp., successfully brought a motion for summary judgment dismissing the appellant’s claim.
[2] We dismissed the appellant’s appeal of that judgment, for reasons to follow. These are our reasons.
Background
[3] The respondent offered the property for sale through a tendering process. The tender package disclosed the environmental issues with the property, including an order (the “Order”) made by the Ontario Ministry of the Environment (the “MOE”) pursuant to the Environmental Protection Act, R.S.O. 1990, c. E. 19 (the “EPA”). The Order required investigation and a remedial work plan with respect to the property. Pursuant to s. 197(1) of the EPA (reproduced below), the Order also prohibited “any person with an interest in the Property from dealing with the Property in any way without first giving a copy of this Order, including any amendments, to each person acquiring an interest in the Property.” The MOE registered a Certificate of Prohibition on title to the property, disclosing this prohibition. The effect of this registration was to deem the prohibition in the Order to be directed to each person who subsequently acquired an interest in the property: s. 197(2) of the EPA.
[4] Under the tendering process, the vendor entered into an agreement of purchase and sale (the “Agreement”) with NCG Ventures Inc. The Agreement included the Ontario Real Estate Association standard form and an attached schedule, drafted by the parties. Paragraph 2 of Schedule “A” to the Agreement provided that the Agreement was conditional for a period of 30 days “upon the Buyer being satisfied, in his sole discretion, with the environmental condition of the property”. If the buyer did not waive this environmental condition within the prescribed period, the Agreement would become null and void.
[5] The conditional period was extended and was to expire on August 14, 2006.
[6] NCG had the right to assign the Agreement “to any entity financially able to complete the purchase at its sole discretion with notice to the Seller.” The Agreement provided that, once notice was given, “[t]he Seller shall agree to consent to such assignment.”
[7] On August 11, 2006, NCG assigned the Agreement to the appellant and notified the respondent of the assignment. On August 14, 2006, the appellant waived the environmental condition and, on August 30, 2006, paid the deposit required by the terms of the Agreement. The appellant’s evidence was that it knew about the Order when it paid the deposit.
[8] The standard form portion of the Agreement included, in s. 10, a condition that title to the property “is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement” and that, if the buyer makes a “valid objection to title” which the vendor is “unable or unwilling to remove, remedy, or satisfy and which Buyer will not waive”, the Agreement comes to an end and the buyer is entitled to the return of any monies it paid.
[9] The appellant asserted that, in waiving the environmental condition, it did not waive the title condition and, because the Certificate of Prohibition was registered on title, it was not required to complete the acquisition of the property. It also claimed that it had not been given a copy of the Order before it acquired an interest in the property through the assignment and was accordingly entitled to void the Agreement pursuant to s. 197(4) of the EPA (reproduced below).
[10] The motion judge concluded that there was no genuine issue requiring a trial. She found that the appellant was aware that the MOE was insisting on remediation of the property when it acquired an assignment of the Agreement and was clearly aware that there were serious unresolved environmental issues with respect to the property when it waived the environmental condition. She concluded that, having waived the environmental condition, the appellant could not demand that the respondent remove the Certificate of Prohibition from title. She also found that the appellant deposed no evidence that it had not been given a copy of the Order before acquiring an interest in the property.
Issues on Appeal
[11] The appellant argues that the motion judge erred by:
finding that the waiver of the environmental condition also constituted a waiver of the registration of the Certificate of Prohibition on title; and
finding that there was no genuine issue requiring a trial with respect to the appellant’s claim that it had not been given a copy of the Order before it acquired an interest in the property through the assignment of the Agreement or, at a minimum, erred in doing so without exercising her powers under r. 20.04(2.2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to obtain oral evidence as to whether the appellant received the tender documents or knew about the Order.
The Waiver of the Environmental Condition was a Waiver of the Title Condition
[12] We agree with the motion judge that, having waived the environmental condition, the appellant could not demand that the respondent remove the Certificate of Prohibition from title.
[13] The title condition must be construed with regard to the specifically negotiated environmental condition and the underlying factual matrix, including that the Order – which was made with respect to the very environmental problem at issue – had been disclosed to NCG. In our view, the motion judge correctly concluded that a waiver of the environmental condition effectively constituted a waiver of the appellant’s ability to object to the registration of the Certificate of Prohibition on title.
No Evidence that the Appellant was not Given a Copy of the Order
[14] The relevant portions of s. 197 of the EPA provide as follows:
A person who has authority under this Act to make an order or decision affecting real property also has authority to make an order requiring any person with an interest in the property, before dealing with the property in any way, to give a copy of the order or decision affecting the property to every person who will acquire an interest in the property as a result of the dealing.
A certificate setting out a requirement imposed under subsection (1) may be registered in the proper land registry office on the title of the real property to which the requirement relates …
A requirement imposed under subsection (1) that is set out in a certificate registered under subsection (2) is, from the time of registration, deemed to be directed to each person who subsequently acquires an interest in the real property.
A dealing with real property by a person who is subject to a requirement imposed under subsection (1) or (3) is voidable at the instance of a person who was not given the copy of the order or decision in accordance with the requirement.
[15] The appellant argues that the motion judge erred by requiring the appellant to adduce evidence that it had not been given a copy of the Order. It says that the respondent was required to prove that the appellant was given a copy of the Order before the appellant acquired an interest in the property through the assignment of the Agreement. The appellant submits that, had the motion judge not made this error, she would have: (1) determined that there was a genuine issue requiring a trial with respect to the appellant’s claim that it had not been given a copy of the Order before it acquired an interest in the property and was therefore entitled to void the Agreement in accordance with s. 197(4) of the EPA; or (2) at a minimum, ordered that oral evidence be presented pursuant to r. 20.04(2.2) as to whether the appellant had received the tender documents or the Order before determining whether there was a genuine issue requiring a trial.
[16] We reject this argument.
[17] The respondent was not required to prove that the appellant had not been given a copy of the Order. In response to the respondent’s summary judgment motion seeking the dismissal of the appellant’s claim, the appellant was required to set out, in affidavit material or other evidence, specific facts showing that there was a genuine issue requiring a trial: r. 20.02(2). The appellant was required to adduce evidence that it was not given the Order. It did not do so.
[18] The motion judge wrote, at para. 15 of her reasons:
Significantly no one from [the appellant] deposed either that he/she/they did not receive the tender documents from NCG or that no one from [the appellant] knew about the [Order] at the time it took the assignment from NCG.
[19] There is no basis to interfere with the motion judge’s finding that there was no evidence that NCG did not provide the appellant with a copy of the Order. The letter from the appellant’s counsel to the respondent taking the position that s. 197(4) of the EPA had not been complied with is not evidence that the appellant had not been given the Order.
[20] We agree with the motion judge that, in the absence of evidence from the appellant that it was not given a copy of the Order, there was no genuine issue requiring a trial with respect to the appellant’s claim that it could void the Agreement pursuant to s. 197(4). The issues of whether the respondent was required to provide a copy of the Order to the appellant and whether, if the appellant were not given a copy of the Order before it acquired an interest in the property through the assignment, it could have voided the Agreement (as opposed to the assignment) were not before us and we therefore do not address them.
[21] Rule 20.04(2.2) provides that, for the purposes of exercising any of the additional powers set out in subrule (2.1) when disposing of a summary judgment motion – namely, weighing the evidence, evaluating the credibility of a deponent, and drawing any reasonable inference from the evidence – a judge may order that oral evidence be presented by one or more parties.
[22] The motion judge wrote, at para. 55 of her reasons:
There are no factual issues requiring a trial. I reach this conclusion on the present state of the evidence. It is not necessary to consider the additional powers of trial judges granted under Rule 20.
[23] As the motion judge did not exercise the additional powers set out in subrule (2.1), there was no basis for her to have ordered that oral evidence be presented.
[24] While the motion judge did not need to draw an inference from the record before her that the appellant had been given a copy of the Order in order to conclude that there was no genuine issue requiring a trial, the record supported such an inference. It is undisputed that the respondent gave a copy of the Order to NCG before NCG acquired an interest in the property by entering into the Agreement. As noted above, the motion judge found that the appellant was aware that the MOE was insisting on remediation of the property when NCG assigned the Agreement to it and was clearly aware that there were serious unresolved environmental issues with respect to the property when it waived the environmental condition. She also noted the appellant’s evidence that it knew about the Order when it paid the deposit.
Disposition and Costs
[25] This appeal was dismissed for these reasons. The respondent is entitled to its costs of the appeal fixed at $6,500, inclusive of disbursements and HST.
“Alexandra Hoy A.C.J.O.”
“J. MacFarland J.A.”
“P. Lauwers J.A.”