COURT OF APPEAL FOR ONTARIO

CITATION: Toronto Muslim Cemetery Corporation v. Muslim Green Cemeteries Corporation, 2016 ONCA 272

DATE: 20160418

DOCKET: C61080

Weiler, Cronk and Benotto JJ.A.

BETWEEN

Toronto Muslim Cemetery Corporation

Appellant

(Respondent in application)

and

Muslim Green Cemeteries Corporation

Respondent

Sergiy Timokhov, for the appellant

John J. Longo and Patrick Copeland, for the respondent

Heard: April 11, 2016

On appeal from the judgment of Justice Thomas R. Lederer of the Superior Court of Justice, dated August 20, 2015.

By the Court:

I. Introduction

[1] The appellant, Toronto Muslim Cemetery Corporation (“TMCC”), appeals from the summary judgment granted by the application judge: i) declaring that the document signed by the parties on May 13, 2014 (the “May Agreement”) is “the ‘formal agreement’ referred to in the Memorandum of Understanding” signed by the parties’ representatives on April 13, 2014 and that it is “a contract that binds the parties”; and ii) directing that the May Agreement be rectified by the removal therefrom of clause 7(7), which read: “within 4 weeks, a formal agreement shall be made between the parties” (the “Formal Agreement Clause”).

[2] At the conclusion of oral argument on behalf of TMCC, the court dismissed the appeal for reasons to follow. These are those reasons.

II. Issues

[3] Although the appellant advanced numerous grounds of appeal in its factum, at the appeal hearing those grounds were narrowed to three:

(1) Did the application judge err by granting rectification of the May Agreement based on mutual mistake regarding the inclusion of the Formal Agreement Clause?

(2) Did the application judge err by holding that the May Agreement constitutes a final and binding contract between the parties?

(3) Did the respondent, Muslim Green Cemeteries Corporation (“MGCC”) breach the May Agreement?

III. Discussion

[4] The focus of TMCC’s oral submissions was the claim that the application judge erred by applying the wrong test for rectification of the May Agreement, namely, rectification based on mutual, rather than unilateral, mistake.

[5] With respect, this puts the cart before the horse. No issue of rectification arises, on any basis, unless it is first determined that the application judge’s central finding – that the May Agreement constitutes a binding contract – is sustainable.

[6] We have no difficulty in concluding that this core finding is amply supported by the evidentiary record. As the application judge put it, at para. 23:

In summary, the payment and acceptance of the deposit, the due diligence along with the identification and retaining of consultants, the advertising by the applicant in company with the request for its membership list and the making of the planning application paid for by the applicant and signed on behalf of the respondent establish that the parties were acting under, and in compliance with, the agreement signed on May 13, 2014. They both acted as if it was the formal and final agreement between them. [Emphasis added.]

[7] On the evidence before the application judge, these conclusions are unassailable. The conduct of the parties, both at the time of formation of the May Agreement and in its immediate aftermath, was consistent with the intended finality and binding nature of the May Agreement.

[8] The appellant contends that the application judge erred in concluding that the May Agreement was final and binding because the parties’ communications and dealings prior to its execution established that the involvement of lawyers to negotiate and prepare a formal agreement was a condition precedent to any final and binding contract.

[9] We disagree.

[10] The application judge considered and rejected this argument. While an early draft memorandum of understanding between the parties contemplated solicitor involvement in concluding a formal agreement, no such requirement anywhere appears in the May Agreement. As the application judge said, at para. 26:

The difficulty is that, while the parties upon the signing of the agreement acted in response to their obligations under it, there is nothing they did that would serve to confirm the understanding that there was no agreement and would not be until lawyers became involved. To my mind, the removal of the reference to lawyers in the April 13, 2014 version and continued in the May [Agreement] suggests that changes had been made and that lawyers were no longer needed to finalize the agreement.

[11] The application judge reviewed in detail four categories of evidence relied on by TMCC as supporting its claim that the parties intended that lawyers would prepare a formal agreement evidencing their bargain and that no binding agreement would exist until this had occurred. The application judge concluded that none of this evidence established this claim. For example, he held:

(1) There is nothing in what was said that demonstrates any agreement that lawyers were required, as part of the arrangement between the parties, to approve or review the agreement before it would become binding on them (at para. 33);

(2) Either party could review the agreement with lawyers, but it was their individual decision whether or not to do so. There was no legal obligation that this had to be done before the contract could be considered final (at para. 38); and

(3) Actions do speak louder than words. The statements relied on by [TMCC], particularly when used out of context and without concern for the circumstances in which they were made, cannot set aside the actions of the parties taken in response to the execution of the [May Agreement] (at para. 45).

[12] We agree with the application judge’s conclusion on this issue and with his reasoning in support of it. At the end of the day, he held that the language of the May Agreement and the parties’ own conduct at the time of and following the time of its execution belied the assertion that, by May 2014, solicitor involvement remained a condition precedent to the creation of a binding agreement between the parties. This holding is firmly anchored in the evidence. We see no basis for appellate interference with it.

[13] We come then, to TMCC’s argument that the application judge erred by applying the wrong test for rectification. This argument arises from the inclusion of the Formal Agreement Clause in the May Agreement. On its face, this provision is inconsistent with the notion that the parties intended the May Agreement to constitute a final and binding contract.

[14] However, the application judge reviewed the various draft memoranda of understanding between the parties and the documents entered into by them prior to execution of the May Agreement. He found, on the whole of the evidence, that the Formal Agreement Clause had been carried forward into the May Agreement from an earlier document by mutual mistake. This finding was open to the application judge. It accords with the development over time of the documents evidencing the parties’ evolving agreement. It also accords with the other terms of the May Agreement, as acted on by the parties.

[15] In these circumstances, the authorities relating to unilateral mistake relied on by TMCC are irrelevant. On the application judge’s findings, the relevant test for rectification was that applicable to mutual mistake. We see no error in his rectification order. This ground of appeal therefore fails.

[16] The final ground advanced by TMCC concerns MGCC’s alleged breach of the May Agreement. As TMCC concedes, this argument formed no part of its case or argument before the application judge. Instead, TMCC raises it for the first time on appeal. As a result, the evidentiary record on this issue is incomplete, at best. Further, this court does not have the benefit of any findings by the application judge on the issue, and MGCC has had no opportunity to respond to the breach claim or to lead evidence to address it.

[17] In these circumstances, it is not open to TMCC to advance this argument on appeal. We note, in any event, that it is wholly inconsistent with TMCC’s primary assertion that the May Agreement is neither final nor binding.

IV. Disposition

[18] The application judge reviewed the contested issues in this case and the entirety of the relevant evidence in detail. He provided clear and cogent reasons for his finding that the May Agreement constitutes a binding contract between the parties. That finding is sustainable on this record. TMCC, therefore, must live by the bargain it made.

[19] Accordingly, the appeal is dismissed. MGCC is entitled to its costs of the appeal, fixed in the total amount of $20,000, inclusive of disbursements and all applicable taxes.

Released:

“APR 18 2016” “E.A. Cronk J.A.”

“KMW” “K.M. Weiler J.A.”

“M.L. Benotto J.A.”