COURT OF APPEAL FOR ONTARIO

CITATION: Bovaird West Holdings Inc. v. Mattamy (Credit River) Limited, 2020 ONCA 445

DATE: 20200707

DOCKET: C67903

Juriansz, Rouleau and Hourigan JJ.A.

BETWEEN

Bovaird West Holdings Inc.

Applicant

(Appellant)

and

Mattamy (Credit River) Limited

Respondent

(Respondent)

Eliot N. Kolers, Patrick G. Duffy and Alexander DeParde, for the appellant

James Renihan and Sapna Thakker, for the respondent

Heard: in writing

On appeal from the order of Justice Shaun O’Brien of the Superior Court of Justice, dated December 16, 2019.

REASONS FOR DECISION

[1] In 2010, the respondent, Mattamy (Credit River) Limited (“Mattamy”), owned several parcels of undeveloped land in Brampton. It entered into an Agreement of Purchase and Sale (“APS”) to sell a portion of its lands to NA Realty Acquisition Corp., which later assigned its interest to the appellant, Bovaird West Holdings Inc. (“Bovaird”). As part of the APS, Mattamy agreed to “indemnify & save the Purchaser harmless in respect” of the “Community Cost Sharing Agreement(s).”

[2] The sale of the land to Bovaird closed on June 26, 2013. Mattamy and Bovaird entered into several related agreements as part of the closing. One such agreement was the June 25, 2013 “Agreement re Post-Closing Obligations”, in which Bovaird agreed that the property was to be “developed for district retail use” pursuant to the Official Plan.

[3] In 2016, Bovaird obtained a zoning amendment to allow residential development on a portion of the land it purchased — a change from Bovaird’s original plan to use the land for retail. This change in use triggered an additional fee of $2,825,407 for contribution toward the cost of land for schools. Bovaird paid the fee but sought indemnity from Mattamy under the APS. Mattamy took the position that it was not required to indemnify, because Bovaird breached its obligation in the Agreement re Post-Closing Obligations to develop the property for retail use.

[4] Bovaird commenced an application seeking an order that Mattamy reimburse it for the additional fees. In support of its application, Bovaird submitted that its obligation to develop the property for district retail did not require it to develop retail uses. It argued that because the Secondary Plan allows for the possibility of residential development in district retail areas, it could satisfy its contractual obligation by pursuing a residential development.

[5] The application judge rejected this argument. Based on the language of the agreements and the factual matrix, she concluded that Bovaird’s development was “specifically focused on district retail use in its usual meaning in the Secondary Plan and not on the exception for residential use in some circumstances.”

[6] Having found that Bovaird breached its obligation to develop the property for district retail use, the application judge concluded that Mattamy was not required to indemnify Bovaird. She reasoned that the indemnity provision must be read in the context of Bovaird’s agreement to develop the land for retail use and found that “the broad indemnity obligations should not allow Bovaird to profit from its own breach of contract when it decided to develop the lands for residential use.” She dismissed the application.

[7] Bovaird submits that the application judge erred in: (i) holding that it breached the Agreement re Post-Closing Obligations; and (ii) reading down Mattamy’s indemnity obligation so it was limited to cost-sharing obligations associated with developing the land for retail use.

[8] To succeed on this appeal of the application judge’s interpretation of a one-off contract, Bovaird must establish a palpable and overriding error or an extricable error of law: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co, 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 19-26.

[9] We are not satisfied that Bovaird has met its onus on the appeal. Indeed, we agree with the application judge’s thorough and careful analysis of the terms of the parties’ agreements and the surrounding factual matrix. She reached the correct result, one that is fully supported by the record and which accords with commercial sense.

[10] The appeal is dismissed. If the parties cannot agree on the costs of the appeal, they may file written submissions of no more than three pages within ten days of the release of these reasons.

“R.G. Juriansz J.A.”

“Paul Rouleau J.A.”

“C.W. Hourigan J.A.”