Court of Appeal for Ontario

Date: 2017-07-24 Docket: C63065

Judges: Sharpe, Lauwers and Roberts JJ.A.

Between

Sonia Preiano and Gianluca Preiano Plaintiffs (Appellants)

and

Giuseppe Cirillo, the Estate of Giuseppe Cirillo and Antonia Cirillo Defendants (Respondents)

Counsel

Michael Freeman and Vusumzi Msi, for the appellants

Ben Hahn, for the respondents

Heard: July 19, 2017

On appeal from the order of Justice Kofi N. Barnes of the Superior Court of Justice, dated November 10, 2016.

Reasons for Decision

[1] The appellant purchasers sued the respondent vendors for specific performance of an Agreement of Purchase and Sale regarding the respondents' home (the "APS"). The respondents brought a motion for the determination of a question of law under r. 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motion judge dismissed the action, leading to this appeal.

A. The Factual Context

[2] On August 20, 2013, at the time they signed the draft APS by which they offered to buy the respondents' house, the appellants delivered a $25,000 personal cheque as the deposit to Frank Finelli of Royal LePage, the respondents' real estate agent. Mr. Finelli told the appellants that the personal cheque would have to be replaced with $25,000 in certified funds if the respondents accepted the APS. On behalf of Royal LePage, Mr. Finelli retained the appellants' personal cheque although he did not attempt to deposit it.

[3] The parties reached agreement at 12:30 p.m. on August 21, 2013. The APS required the appellants to pay the deposit of $25,000 CAD within 24 hours of the acceptance, or by 12:30 p.m. on August 22, 2013. The APS stated that "time shall be of the essence". They delivered $25,000 in certified funds in the form of a bank draft to the deposit holder, Royal LePage, by 1:53 p.m. on August 23, 2013. Royal LePage provided the appellants with a receipt for their deposit.

[4] On November 14, 2013, counsel for the respondents wrote to the appellants' real estate lawyer asserting that there was no valid APS because of the late receipt of the deposit. This was six days before the scheduled closing date of November 20, 2013 set out in the APS. The letter concluded:

My clients are willing to return the sum of $25,000.00 allegedly paid by your clients, but cannot in good faith, knowing the improprieties on the part of the agent, the undue influence and pressure upon the clients to sign the document and the anomalies and inconsistencies in the document itself, proceed with this as some "valid" transaction.

(1) The Motion Judge's Approach

[5] The evidence considered by the motion judge was adduced not by means of affidavits, but by a carefully arranged sequence of demands for particulars coupled with requests to admit under r. 51 issued by the respondents. The result was a set of terse written responses with little or no possibility of explanation.

[6] The appellants point out that the respondents did not actually move for the admission of the evidence, but simply relied on it during argument. However, on his own motion the motion judge granted leave to the defendants to file evidence on the motion so that the interpretation of the APS would not occur in an "evidentiary vacuum." While r. 21.01(2)(a) permits a motion judge to admit evidence on a motion under r. 21.01(1)(a), the appellants argue that the motion judge did not exercise his discretion fairly.

[7] The result was effectively a motion under r. 20 for summary judgment without any of the carefully balanced protections to all parties provided by that rule and the jurisprudence under it.

(2) The Motion Judge's Decision

[8] The motion judge found that because the bank draft was delivered a day late, there was no APS in effect to be specifically performed and he dismissed the action on that basis. He found that the APS was "breached", although it might be more accurate to express his understanding that the APS expired by its own terms.

B. Discussion

[9] Several issues arise from these facts. First, the APS provided for a "Deposit" of $25,000 "by negotiable cheque payable to Royal LePage Realty Centre". It stated that: "the Buyer is required to deliver the deposit to [Royal LePage] within 24 hours of the acceptance of this Agreement." The appellants provided a personal cheque in that amount to the vendors' agent, Mr. Finelli, with the signed APS. Mr. Finelli believed that the cheque was capable of being cashed, although it was never presented for payment.

[10] However, based on the evidence, the admissibility of which is disputed, the motion judge found that the personal cheque was "not capable of yielding funds upon negotiation" because the record of the chequing account, which was admitted by the appellants to be authentic, did not show a balance that could accommodate payment of the cheque.

[11] With respect, the record was not sufficient for the motion judge to draw the inference that the cheque was not negotiable. The motion judge made the error of interpreting the admission that the bank statement was authentic as an admission that the appellants did not have the money to pay the cheque, so that upon presentation, it would have been dishonoured by the bank. This additional inference was not open to the motion judge: Wunsche v. Wunsche, 18 O.R. (3d) 161, at para. 19 (QL).

[12] There is no evidence that the bank would not have honoured the cheque, nor is there evidence in the record as to the appellants' financial capacity or their arrangements with the bank. There is evidence that within two days they were able to provide a bank draft in the appropriate amount.

[13] On this basis alone the order under appeal must be set aside.

[14] There is accordingly no need for us to address the issues of part performance, waiver and estoppel, and the application of the "entire agreement" clause in the APS to any possible waiver, which arose in oral argument and in the factums. These issues were not fully argued and there is no adequate evidentiary basis on which to address them.

C. Disposition

[15] The motion judge's determination that the appellants failed to pay the requisite deposit on a timely basis was made in error. The order is set aside and the action, cross-claims and third party claims are restored to the trial list.

[16] The appellants argue that the motion judge erred in not granting them leave to amend the Statement of Claim with text that would have better explained the events around the negotiation of the APS and the delivery of the deposit. The motion judge's reason for refusing leave was rooted in his finding that the deposit was not paid in time. We grant the appellants leave to amend.

[17] The respondents shall pay costs to the appellants in the amount of $15,000 inclusive of disbursements and taxes for this appeal and the motion below.

"Robert J. Sharpe J.A."

"P. Lauwers J.A."

"L.B. Roberts J.A."