Court of Appeal for Ontario
Date: 2019-05-30
Docket: C66108
Judges: Doherty, Nordheimer and Harvison Young JJ.A.
Between
Heather Downey and Francesco Marchese a.k.a. Frank Marchese Plaintiffs (Respondents)
and
Douglas Alexander Arey Defendant (Appellant)
Counsel
Alan Butcher, for the appellant
Domenic Saverino, for the respondents
Heard: May 24, 2019
Appeal
On appeal from the judgment of Justice Kofi Barnes of the Superior Court of Justice, dated October 2, 2018, with reasons reported at 2018 ONSC 5832.
Reasons for Decision
Overview
[1] The motion judge granted summary judgment to the respondents enforcing an oral agreement of purchase and sale between the respondents and the appellant. He directed that the property owned by the appellant be transferred to the respondents for $750,000, pursuant to the terms of the agreement. He also ordered the appellant to reimburse the respondents for certain renovation-related costs. At the conclusion of the hearing, we allowed the appeal with reasons to follow. We now provide those reasons.
Grounds of Appeal
[2] The appellant alleges that the motion judge made several errors in arriving at his decision. First and foremost, the appellant contends that the crucial factual question, that is, whether the parties had agreed to extend the closing date of the agreement of purchase and sale when it did not close as contemplated, could not be properly resolved by way of a summary judgment motion.
[3] We agree.
Factual Background
[4] The parties entered into an oral agreement, pursuant to which the appellant agreed to sell his home to the respondents. Ms. Downey is the appellant's daughter and Mr. Marchese is Ms. Downey's partner.
[5] The agreement provided for a sale price of $850,000. There was, however, a disagreement over the actual price to be paid by the respondents. The respondents contended that the appellant had agreed to gift $100,000 to his daughter, Ms. Downey, resulting in a net purchase price of $750,000. The appellant agreed that he had offered the gift of $100,000 to his daughter, but contended that the $850,000 purchase price was the net price after the gift.
[6] The agreement for the sale of the property was scheduled to close on August 31, 2016. The respondents were not in a position to close the transaction on that date.
[7] The appellant contended that there was no agreement to extend the closing date beyond August 31, 2016. He indicated that he was initially prepared to complete the transaction on the same terms, but when the transaction did not close for several months and the value of the property increased significantly, he determined that he was no longer prepared to sell it to the respondents for $850,000, but offered to sell it at a higher price.
[8] The respondents maintained, in their pleadings and in their affidavits on the summary judgment motion, that there was a specific agreement to extend the closing date to May 31, 2017. They contended that the appellant failed to close as promised.
Motion Judge's Finding
[9] The motion judge found, at para. 33:
In considering the entire evidentiary record, including the portions referred to above, I conclude on balance, that on August 21, 2016 the parties, by oral agreement, agreed to extend the May 2016 agreement to an unspecified date. The purchase price of $850,000 (minus the $100,000 gift) remained unchanged.
Analysis: Summary Judgment and Factual Disputes
[10] The fate of the respondents' claim turned in large measure on whether there was an agreement to extend the closing date of the agreement of purchase and sale. The resolution of that question depended, to a large degree, on an assessment of the reliability and credibility of the competing versions of the relevant events put before the motion judge by the parties. As both the agreement and the alleged extension of the agreement were said to be oral, there was little by way of documentary evidence to assist in determining this crucial factual question.
[11] The motion judge, at para. 20, acknowledged that there were factual disagreements which raised genuine issues for trial. He went on, however, to hold that he could grant summary judgment using the enhanced fact-finding powers found in r. 20.04(2.1) and (2.2). It would appear that his reference to r. 20.04(2.2) is in error since the motion judge did not conduct any mini trial.
Enhanced Fact-Finding Powers
[12] Rule 20.04(2.1) identifies two fact-finding powers that could have been used by the motion judge to address the factual disputes raised on this motion. A motion judge can both evaluate credibility and draw reasonable inferences from the evidence on a r. 20 motion, unless the interests of justice require that those powers be exercised only at trial.
[13] The motion judge did not make findings of fact based on credibility determinations. His finding that there was an agreement to extend the closing date to some unspecified date in the future is inconsistent with the evidence of both the appellant and the respondents. It also runs contrary to the pleadings of both parties. On this record, the motion judge's finding that there was an agreement to extend the closing date to some unspecified date in the future, cannot be explained by reliance on any assessment, positive or negative, of the credibility of either the respondents or the appellant.
Inference-Drawing Power
[14] Turning to the second fact-finding power which permits the drawing of reasonable inferences from primary facts, it would appear that the motion judge inferred that there was an agreement to extend the closing to some unspecified future date. In our view, the evidence before the motion judge did not permit that inference. The events referred to by the motion judge as the basis for the inference, for example the payment of rent by the respondents after the first closing date passed, were essentially neutral in respect of whether there was any extension of the closing date. Those events could only support the inference drawn by the motion judge after a consideration of the very different explanations offered by the parties for those events, and a determination of the credibility of the witnesses offering those competing versions of events. As indicated above, the motion judge did not purport to make credibility assessments with respect to the explanations put forward. Nor, in our view, could he properly do so on this record.
Palpable and Overriding Error
[15] We are satisfied that this was not a case in which the motion judge could, through the inference-drawing power provided in r. 20.04(2.1), make the necessary findings to determine the claim. His finding that the parties had agreed to extend the closing date to some unspecified date in the future is not a reasonable inference on this record. It is unsupported in the evidence. The motion judge's finding constitutes a palpable and overriding error, necessitating appellate intervention.
Disposition
[16] Our conclusion that the motion judge could not properly make the factual determination he did on the motion compels the conclusion that the motion judge's order granting summary judgment must be set aside. Although the appellant also moved for summary judgment, this is equally not a case for summary judgment in favour of the appellant. This is a case for a trial.
Additional Issues
[17] Given our finding on the main ground of appeal, it is unnecessary to address the other arguments. We would, however, observe that, as the alleged agreement of purchase and sale was based on an oral agreement between the parties, there is potentially a serious issue to be considered under s. 4 of the Statute of Frauds Act, R.S.O. 1990, c. S.19. There is also a serious issue with respect to the availability of specific performance as a remedy, even if the agreement is established. Neither of these issues were addressed by the motion judge. Both issues and any other relevant issues may, of course, be raised at the trial.
Costs
[18] The appellant is entitled to his costs on the motion in the amount of $20,000, inclusive of disbursements and relevant taxes. He is also entitled to his costs on the appeal, also fixed at $20,000, inclusive of disbursements and relevant taxes.
"Doherty J.A."
"I.V.B. Nordheimer J.A."
"Harvison Young J.A."
