Court of Appeal for Ontario

Date: 2022-07-20 Docket: C69993

Before: Benotto, Zarnett and Thorburn JJ.A.

Parties

BETWEEN 1775997 Ontario Inc. Applicant (Respondent)

and

Jodamar Properties Ltd. Respondent (Appellant)

AND BETWEEN

Jodamar Properties Ltd. Applicant (Appellant)

and

1775997 Ontario Inc. Respondent (Respondent)

Counsel

Steven Pickard, for the appellant Colin Bondy and Ioana Vacaru, for the respondent

Heard: July 12, 2022

On appeal from the order of Justice Thomas J. Carey of the Superior Court of Justice dated June 14, 2021, with reasons at 2021 ONSC 6698.

Reasons for Decision

[1] In March 2017, the appellant, a real estate developer, agreed to sell land to the respondent, a home builder. The land comprised 22 blocks on which 44 semi-detached residential units could be built.

[2] In February 2021, the parties both commenced applications, which were heard together. They required the application judge to resolve two claims the appellant asserted against the respondent.

[3] First, the appellant alleged that the respondent breached provisions of the agreement requiring the respondent to commence construction of homes within 30 days of model home permits becoming available. According to the appellant, this breach triggered an obligation on the respondent to pay interest on the unpaid purchase price for the period of the delay, which the appellant asserted was November 4, 2018 to June 12, 2019.

[4] Second, the appellant alleged that the respondent failed to close the transaction by the outside date the agreement stipulated, namely two years after a plan of subdivision was registered. The plan was registered on December 13, 2018. The appellant claimed that the respondent should be liable for interest on the purchase price at 12 percent per year from December 13, 2020 until the transaction actually closed.

[5] The application judge dismissed the claim that the appellant should pay interest due to a delay in construction of the homes between November 2018 and June 2019. He held that the obligation of the respondent to pay interest was triggered only if three provisions of the agreement were breached by the respondent – one provision requiring construction of homes to commence within 30 days of model home permits becoming available, and two provisions concerning the pace at which construction would take place thereafter. He was not satisfied that there was evidence of a breach of all three provisions. The application judge also found that the appellant was in breach of its obligation to properly install services for the property, namely the sanitary sewer system. This problem was discovered in June 2019, when the respondent attempted to commence construction. The respondent was unable to construct any homes for the next one year and ten days while the appellant rectified the problem. Therefore, the appellant could not rely on any delay by the respondent related to commencing construction.

[6] The application judge also rejected the claim for interest on the purchase price based on a failure to close on December 13, 2020. He effectively added to the contractually stipulated outside closing date the appellant’s one year and ten-day delay in completing the proper installation of the services. He ordered that the transaction close by December 23, 2021.

[7] The appellant argues that the application judge erred in not granting both of its claims. We disagree.

[8] With respect to the claim for delay in construction, we agree with the respondent that there was no acceptable evidence that the model home permits were available on October 4, 2018, which is the lynchpin of the appellant’s claim that construction should have started 30 days thereafter, on November 4, 2018. The parties’ agreed statement of facts did not say that model home permits were available on October 4, 2018. It stated only that the appellant sent an email to the respondent on October 4, 2018 claiming that the appellant had been so informed. It was also an agreed fact that the municipality required the plan of subdivision to be registered before issuing building permits. That did not occur until December 2018.

[9] Moreover, the evidence established that, after the respondent discovered in June 2019 that the sanitary sewers had been inadequately installed by the appellant’s contractor, the respondent was prevented from engaging in construction for one year and ten days while the appellant rectified the problem. In oral argument, counsel for the appellant fairly conceded that the respondent would not have been able to start construction in November 2018 due to the same problem. Although the appellant argues that the agreement did not specify when it had to install the sanitary sewers, it was open to the application judge to proceed on the basis that there was a relationship between the appellant fulfilling its obligation to install the services and the ability of the respondent to commence and continue construction. We see no error in his conclusion that the appellant’s breach prevented it from relying on the respondent’s alleged delay in commencing construction.

[10] As for the claim for 12 percent interest on the purchase price from December 13, 2020, there are two problems with this claim.

[11] First, it is, in essence, a claim for damages for delayed closing, but there is no evidence to support the 12 percent rate as a measure of what is required to put the appellant in the position it would have been in had the transaction closed in December 2020. In other words, the appellant did not prove its alleged damages.

[12] Second, although the services problem had been rectified before December 2020, the agreement contemplated the respondent being able to build and sell units before that date, giving it the opportunity to close the transaction in stages with funds generated by this activity. It was open to the application judge to find that the delay of the appellant in fulfilling its obligation to properly install the sanitary sewers delayed the respondent in its ability to construct and sell homes for more than one year, disentitling the appellant from relying on the December 13, 2020 closing date.

[13] Accordingly, the appeal is dismissed.

[14] In accordance with the agreement of the parties, the respondent is entitled to the costs of the appeal in the sum of $7,500, inclusive of disbursements and applicable taxes.

“M.L. Benotto J.A.”

“B. Zarnett J.A.”

“J.A. Thorburn J.A.”