Court of Appeal for Ontario

Date: 2017-07-06 Docket: C63100

Judges: MacPherson, Cronk and Benotto JJ.A.

Between

Scott Andrew D'Ascenzo, 1702620 Ontario Inc. and 1686977 Ontario Inc. Plaintiffs (Respondents/Appellants by way of cross-appeal)

and

Carl Albert Nichols Defendant (Appellant/Respondent by way of cross-appeal)

Counsel

Marcus Boire, for the appellant/respondent by way of cross-appeal

Jean-François Laberge and Manou Ranaivoson, for the respondents/appellants by way of cross-appeal

Heard: July 4, 2017

On appeal from: the judgment of Justice Paul Kane of the Superior Court of Justice, dated December 6, 2016.

Reasons for Decision

Background

[1] The appellant, Carl Nichols, appeals from the judgment of Kane J. of the Superior Court of Justice granting partial summary judgment to the respondents Scott D'Ascenzo and related numbered companies. The judgment relates to two pieces of vacant land the respondents sought to purchase from the appellant. Between 2006 and 2013, the respondents made payments to the appellant totalling $168,727.74 with respect to the two properties, yet to date title to the properties remains with the appellant.

[2] The motion judge ordered rescission and damages with respect to one of the properties ("Petting Zoo") and issued a certificate of pending litigation, with a view to potential transfer to the respondents, with respect to the other property ("Lot 511").

[3] On appeal, the appellant seeks to overturn the motion judge's decision on the basis that the respondents defaulted on their debt obligation and therefore forfeited their interest in both properties. In the alternative, the appellant seeks to vary the judgment and alleges the motion judge erred in determining the appropriate remedies for both properties.

Facts

[4] In 2006, the respondents sought to purchase from the appellant (a) the appellant's shares in 1702620 Ontario Inc. ("170") which owned a commercial plaza called Buckhorn Plaza, (b) the Petting Zoo vacant land, and (c) the Lot 511 vacant land.

[5] The parties agreed on the terms of the share purchase agreement pursuant to which Nichols sold his shares in 170 to D'Ascenzo for $280,000. This transaction was completed and is not a subject of this appeal.

[6] The share purchase agreement included the terms by which Nichols was to sell the Petting Zoo and Lot 511 to D'Ascenzo. In addition to various monetary terms, the agreement contemplated that the bulk of the purchase price was to be the subject of a vendor take back mortgage. It also required that the purchase of Lot 511 would be completed simultaneously with the closing of the share purchase transaction which had a closing date of November 14, 2006. This did not happen because Nichols did not take the required steps to have Lot 511 severed pursuant to the Planning Act, R.S.O. 1990, c. P.13. No mortgage was ever registered on title to either property.

[7] The share purchase transaction closed on November 24, 2006. Since the closing, as of January 2013, D'Ascenzo had made payments to Nichols towards the purchase of the Petting Zoo and Lot 511 totalling $168,727. D'Ascenzo did not make any further payments after January 2013. After that point, D'Ascenzo demanded clear title to the Petting Zoo because he alleged he had paid for it in full, and said he would pay the remaining $27,500, owing for Lot 511, when Nichols cleared up the title issues relating to the severance of that property.

[8] Nichols refused to convey title to the Petting Zoo and informed D'Ascenzo he was "foreclosing" on Lot 511. To date, Nichols has not transferred title to either property to D'Ascenzo and Nichols only recently has sought the required severance for Lot 511. Nichols continues to be the legal owner of both properties.

[9] The respondents commenced an action and brought a motion for summary judgment which was granted in part on the terms set out above. The motion judge referred other issues on for a trial and stayed seized of the proceedings.

Issues on Appeal

[10] The appellant appeals against the partial summary judgment, essentially on four grounds.

First Ground: Appropriateness of Summary Judgment

[11] First, the appellant contends that the issues determined by the motion judge were not appropriate for resolution on a summary judgment basis; a trial was required.

[12] We do not accept this submission. There was a comprehensive record before the motion judge including all the relevant commercial documents and extensive affidavit evidence and cross-examinations thereon from the parties and their joint lawyer. As we have said, the motion judge granted summary judgment on some issues and referred others on for a trial. We see no error in his division of the various issues in this respect.

Second Ground: Breach by Respondents

[13] Second, the appellant submits that the motion judge erred by not concluding that the respondents had breached the contract by not continuing their monthly payments towards the mortgage.

[14] We are not persuaded by this submission. The reason D'Ascenzo stopped making payments in 2013 was that Nichols had taken no steps to obtain severance of Lot 511. As explained by the motion judge:

Mr. Nichols admitted on his examination for discovery that even though the plaintiffs were making monthly amortized payments of the combined purchase prices of the two properties, with interest, he failed to instruct Mr. Merla [the parties' lawyer] to proceed with the severance application as to the 511 Land.

Mr. Nichols 10 years later in October of 2016 has still not obtained the required severance of the 511 Land.

Third Ground: Rescission of Petting Zoo Agreement

[15] Third, the appellant asserts that the motion judge erred in granting rescission of the agreement to purchase the Petting Zoo. The appellant says that this component of his order is inconsistent with his order of specific performance of the purchase of Lot 511.

[16] We disagree. Although 'rescission' is probably the wrong legal term (it is evident from the motion judge's reasons that he meant repudiation), it was clearly open to the motion judge, on the question of remedy, to treat the two properties separately and to determine that D'Ascenzo, after spending so much money over many years towards the purchase of the Petting Zoo, was entitled to treat the contract as at an end and to obtain damages as restitution of monies paid.

Fourth Ground: Specific Performance of Lot 511

[17] Fourth, and relatedly, the appellant argues that the motion judge erred by granting specific performance of the Lot 511 purchase. He says that D'Ascenzo never was willing, able and ready to close this component of the transaction.

[18] We do not accept this submission. The motion judge did not order specific performance. He found that D'Ascenzo's entitlement to specific performance of Lot 511 was established except for the crucial issue of severance which he determined "will have to be established in a trial as to that issue." Accordingly, he directed that a Certificate of Pending Litigation be registered on title to Lot 511.

Conclusion

[19] In the end, we agree with the respondents' summary in their factum, at paras. 4 and 6:

The agreement for Lot 511 was supposed to close simultaneously with a share purchase agreement signed by the parties and did not do so because of the Appellant's conduct. The transaction did not close at the originally stipulated date as deficiencies on title were discovered. The Appellant was responsible for correcting the deficiencies in order to provide clear title to the Respondents. The Appellant failed to correct them in a timely manner, despite a separate agreement to extend closing being executed to provide time for same, and despite the Appellant's acknowledgement of his obligation to do so. Once the said deficiencies were corrected, title was supposed to be conveyed to Mr. D'Ascenzo. To this day, the Appellant has not fulfilled his obligations.

The Appellant's position is factually and legally incorrect and would lead to a patently and manifestly unfair result. The Appellant argues that his own breach should entitle him to the forfeiture of the monies paid by the Respondents over six years to the tune of over $168,000.00. In addition, the Appellant argues that he should also retain title to both properties.

[20] The appeal is dismissed. The respondents are entitled to their costs of the appeal fixed at $16,000, inclusive of disbursements and HST.

J.C. MacPherson J.A.

E.A. Cronk J.A.

M.L. Benotto J.A.