Court of Appeal for Ontario

Date: 2018-01-15 Docket: C63761

Judges: Simmons, Roberts and Nordheimer JJ.A.

Between

Robert Grabarczyk Applicant (Respondent in appeal)

and

2198802 Ontario Limited, Mohammad Reza Esmaeili, and AB Corporation Respondents (Appellants)

Counsel

Julian Binavince, for the appellants

Jonathan Rosenstein, for the respondent

Heard and released orally: January 15, 2018

On appeal from: the order of Justice Andra Pollak of the Superior Court of Justice, dated April 19, 2017.

Reasons for Decision

[1] The appellant, 2198802 Ontario Limited (the "appellant"), offered to purchase real property from the respondent under an offer that was accepted on October 10, 2015. The offer stipulated that it was conditional on the appellant satisfying itself of certain matters and that unless the appellant gave notice in writing "not later than 11:59 p.m. thirty (30) days after acceptance, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned" (the "due diligence clause"). The 30 day period elapsed on November 9, 2015. The appellant did not deliver notice in writing that the condition was satisfied by that date. Nonetheless, the appellant submitted an Amendment to Agreement of Purchase and Sale to the respondent that was accepted on November 14, 2015. The Amendment purported to delete the due diligence clause from the original agreement and to substitute an identically worded due diligence clause, save that "sixty (60)" was substituted for "thirty (30)".

[2] The application judge concluded that even though the original agreement had become null and void, the amendment reflected an intention to create a new agreement incorporating all the terms of the original agreement, but modifying the original due diligence period from 30 days to 60 days from the date of acceptance of the original offer.

[3] While holding that there was a new agreement, the application judge's interpretation treats it, in effect, as a resurrection of the original agreement. This was an error. The application judge failed to turn her mind to the distinction between resurrection of a prior agreement; creation of a new agreement; the parties' intentions in that regard; and the parties' intentions had they turned their minds to the fact that the original agreement had become null and void.

[4] In our view, the record before us does not sufficiently address the parties' intentions had they turned their mind to the fact that their original agreement had become null and void. This lacuna creates an issue requiring an action rather than an application.

[5] Accordingly, the appeal is allowed. The application judge's order is set aside and an order is substituted directing that the matter is to proceed by action, with the parties to deliver pleadings accordingly. The costs of the appeal are to the appellants in the amount of $6,000 on a partial indemnity scale inclusive of disbursements and all applicable taxes.

"Janet Simmons J.A."

"L.B. Roberts J.A."

"I.V.B. Nordheimer J.A."