COURT OF APPEAL FOR ONTARIO

DATE: 20231114 DOCKET: C70918

Pepall, van Rensburg and Monahan JJ.A.

BETWEEN

Keith D’Silva and Esther D’Silva Plaintiffs (Respondents)

and

Louise Algranti and Selim Algranti Defendants (Appellants)

Counsel: Julian Binavince, for the appellants William C. McDowell, Aoife Quinn and Efua K. Gyan, for the respondents

Heard: September 25, 2023

On appeal from the order of Justice Sharon Lavine of the Superior Court of Justice, dated June 24, 2022, with reasons reported at 2022 ONSC 3798.

van Rensburg J.A.:

A. Overview

[1] This is an appeal of an order for specific performance of an agreement of purchase and sale (“APS”) of a cottage property. The appellants (the “Algrantis”), who were the sellers of the property, asserted that the APS had terminated and refused to close. The respondents (the “D’Silvas”) sued and obtained summary judgment with an order for specific performance. The transaction has since closed, and the property has been transferred to the respondents. The appellants seek an order from this court declaring that the APS had become null and void or had otherwise terminated, and for the reconveyance back to them of the property.

[2] For the reasons that follow I would dismiss the appeal. The appellants advance on appeal arguments that did not succeed at first instance. They have failed to demonstrate any reversible error in the motion judge’s decision, which turned on the specific and largely uncontroverted facts of the case.

B. Facts

[3] In 2017 the Algrantis purchased two adjoining lots on Lake Muskoka for redevelopment. One lot had a cottage and a cabin, and the other was vacant. The Algrantis obtained approval from the Town of Gravenhurst (the “Town”) to sever the lands into three lots, each with lake frontage, with the intention to sell two lots, and to build a new cottage for themselves on the third.

[4] About a month after the Algrantis listed two lots for sale, on September 16, 2020, the parties entered into the APS with respect to the lot containing the cottage (which had been renovated), the cabin, and a newly built dock and boathouse (the “Property”). The legal description of the Property in the APS was “to be determined subject to final land severance”. The D’Silvas understood from the Algrantis that the Town had approved the severance, and that registration of the three lots was being finalized with the Land Registry Office.

[5] The APS, which was on a standard form with schedules attached, included paragraph 15, which was a condition for Planning Act compliance by the sellers and their covenant to proceed diligently and at their expense to obtain any necessary consent by completion. Schedule A provided for a closing date 30 business days after the registration of new property identification numbers (“PINs”), but not before November 2, 2020. Schedule B contained a “consent to sever” condition, stating that the offer was conditional upon the sellers’ obtaining, at their expense, a consent to sever the Property and requiring them to sign any requisite documents required for the condition and to “do all things reasonably necessary in support of the satisfaction of the condition”. Schedule B provided for the sellers to give notice of the fulfillment of the condition by November 5, 2020, failing which the APS would become null and void, with the deposit returned to the buyers.

[6] In the months that followed, it was the common understanding of the parties and their real estate lawyers that the required severance from the Town had been obtained, and that all that remained was the provision of the relevant PINs. This was the thrust of an email sent on September 24, 2020 by the Algrantis’ lawyer to the D’Silvas’ lawyer. She said that her law firm had been working on the land assembly and severance since 2017; she provided a sketch showing the Property which she described as comprised of a shore road allowance, a road allowance, three severances, two utility easements and two consent easements; and she attached the legal descriptions of the properties as they then were, surveys and transfers. At the end of her email, the Algrantis’ lawyer wrote that she was “not sure why the agents put in a condition regarding consent from the town because everything is completed so that paragraph is moot”.

[7] In the next ten days the parties agreed to several amendments to the APS. One amendment was to the completion date. The parties agreed that the closing would take place “as soon as possible after the land registry office issues a PIN number and legal description” and the amendment stated that the D’Silvas’ preferred date was November 6, 2020, and no later than December 15, 2020.

[8] On October 10, the parties walked the Property together. The Algrantis confirmed that land severance was complete, and that they were only waiting for the PINs to be issued.

[9] On October 16, the Algrantis’ lawyer informed the D’Silvas’ lawyer that her clients did not want to move forward with the sale, and they offered to return the deposit and to pay the D’Silvas’ legal fees. The D’Silvas refused to terminate the APS.

[10] Meanwhile the PINs remained outstanding. The D’Silvas’ lawyer was in weekly contact with the law office of the Algrantis’ lawyer about the status of the PINs. On December 11, the Algrantis’ lawyer advised that the PINs would be finalized the week of December 14.

[11] On December 14, the D’Silvas’ lawyer confirmed that his clients remained ready and willing to purchase the Property regardless of their stated preference for a closing of December 15, and proposed an amendment to the APS setting a title search date of December 22 and a closing date of January 7, with the two dates being conditional on the PINs being finalized that week. In response, the Algrantis agreed to extend the completion date to December 22, on condition that time would continue to be of the essence, and that “in the event that the transaction does not close December 22, 2020, subject to any valid exception to title in accordance with the [APS], the deal will be considered null and void and the transaction at an end”. (The Algrantis refer to this as the “finality clause”).

[12] On December 14 the D’Silvas’ lawyer also proposed a title search deadline of December 17 and sent a requisition letter, which among the title requisitions identified issues with respect to three of the PINs to be conveyed.

[13] The Algrantis’ lawyer responded on December 18 that the Town was satisfied there were no issues, and insisting the Property could be conveyed. She also provided certain closing documents. The D’Silvas’ lawyer responded that he disagreed that the Property could be conveyed as proposed, and that the Algrantis’ lawyer had not addressed the severance issues. He proposed working together to rectify the conveyancing issues.

[14] Three days later, on December 21, the Algrantis’ lawyer responded that, in light of the time it took to complete the severance application process, her clients were “not prepared to complete any further Town application or conveyance matters within any specific time frame”. She further advised that “in the event that the transaction is unable to close, and clear and marketable title cannot be conveyed by December 22, 2022, the deal as agreed by both parties [would be] deemed null and void”. The D’Silvas’ lawyer responded that the completion date of December 22 was subject to any “valid exception to title”. The Algrantis’ lawyer took the position that this was a Planning Act issue, not a title issue, and that her clients would not agree to any further extensions.

[15] On December 22, the D’Silvas’ lawyer proposed that the parties proceed to closing with a holdback of the full purchase price until the conveyancing issues were rectified. The Algrantis’ lawyer relied on paragraph 10 of the APS (that if a seller is unable/unwilling to remove a restriction on title that will not be waived by the buyer, the seller could terminate). Although the D’Silvas’ lawyer disagreed that para. 10 applied, he indicated that the D’Silvas waived any objection to title, and were prepared to close the transaction, without holdback. He also stated that the D’Silvas would rectify the severance issues post-closing at their own expense, on the agreement the Algrantis would co-operate in the correction of any conveyances post-closing. On December 22, 2020, the D’Silvas tendered the balance due together with the documents required to complete the transaction. The Algrantis refused to close.

[16] The D’Silvas commenced an action on January 15, 2021 claiming that the Algrantis breached the APS and seeking specific performance. The D’Silvas moved for summary judgment.

C. The Summary Judgment Motion

[17] The evidence on the summary judgment motion consisted of affidavits from the D’Silvas and the Algrantis, and, on behalf of the D’Silvas, the affidavit of lawyer Sidney Troister, attaching his expert report. Mr. Troister’s expertise in real estate matters and his opinion were accepted by the parties and the motion judge. Mr. Troister concluded that, on December 22, 2020 the Algrantis could not convey good and valid title to the Property in compliance with the Planning Act because of their conveyancing errors in advance of closing and their failure to obtain appropriate certificates of consent under the Planning Act to give effect to the intended creation of a separately conveyable parcel of land. He explained how the title impediments could be easily corrected.

[18] The Algrantis’ position on the motion was that the APS had become null and void on November 5, 2020. They claimed that they had never given notice, as required by Schedule B of the APS, that the severance had been obtained, and that they had not waived the condition. The motion judge rejected this argument. She concluded that the September 24 email from the Algrantis’ lawyer contained a clear and unequivocal representation that everything had been completed. The lawyer’s reference to her extensive involvement in the file was intended to provide assurance to the D’Silvas that they could rely on. Even if the Algrantis did not know about the email, as they asserted, they were bound by their lawyer’s representation. The motion judge found that the representation either satisfied the condition or was a waiver of it.

[19] The motion judge stated that it was not necessary to consider the D’Silvas’ alternative argument based on estoppel. She went on however to refer to the “uncontroverted facts” that demonstrated that the APS was valid: the Algrantis had never asserted that the APS had been terminated on November 5 and they did not return the D’Silvas’ deposit; they met with the D’Silvas and walked the Property together, assuring them that all that was required was the issuance of the PINs; until almost the closing date they and their lawyer took the position that all was complete other than the registration and assignment of PIN numbers; and the Algrantis affirmed the APS by extending the closing date to December 22. The motion judge concluded that all of this conduct supported the conclusion the APS was valid and was relied on by the D’Silvas. She found it would be inequitable for the Algrantis to assert that the APS was at an end when they had acted on the basis that the APS was valid.

[20] The Algrantis argued in the alternative that the APS had come to an end on December 22. They relied on the “finality” clause that required the closing to take place at the latest by that date.

[21] The motion judge rejected this argument. She referred to what had taken place in the days preceding December 22, concluding that the Algrantis were essentially relying on their own defaults to terminate the APS. In response to the requisition letter, the Algrantis’ lawyer insisted that there were no issues with conveyancing. When the D’Silvas’ lawyer proposed that the parties work together to resolve the problems, the Algrantis’ lawyer responded three days later, on December 21, that the Algrantis were refusing to take any steps to rectify the issues. The motion judge concluded that the refusal to do what was necessary to complete the transaction was inconsistent with the Algrantis’ obligations under the APS to proceed diligently and to do all things necessary to obtain the severances. They could not rely on the “finality” clause when they were in breach of their obligation to use their best efforts to obtain the severance: the impediments to the transfer of good title could have been easily resolved shortly after the closing date. The Algrantis’ refusal to do so was inconsistent with the terms of closing which permitted an exception for a valid objection to title and their obligations as vendors under the APS. The motion judge held in the alternative that, if the December 22 closing date was firm, the Algrantis acknowledged the objection could be waived, and the D’Silvas had waived the objection in clear and unequivocal terms.

[22] The motion judge also rejected the Algrantis’ argument that the APS was void for uncertainty because the legal description of the Property did not provide any rights of way to access the road. Schedule A contained a clause that provided that “the seller warrants that there is ingress and egress to the property from the nearest municipal public road” and there was no issue of road access. The issue was never raised until the action was commenced. The mistake was unilateral on the part of the Algrantis and the motion judge found it did not make the APS void.

D. Issues

[23] The appellants assert that the motion judge erred in (1) failing to find that the APS terminated on November 5, 2020; and (2) failing to find that the APS terminated on December 22, 2020. I would not give effect to the Algrantis’ arguments on appeal. The motion judge’s conclusions were based on factual findings and are supported by the record. No error of law or palpable and overriding error of fact or mixed fact and law has been established.

1. The motion judge did not err in rejecting the argument that the APS became null and void on November 5

[24] The Algrantis assert that the motion judge erred in finding that the consent to sever condition in Schedule B had been satisfied. They say that it was wrong for the motion judge to conclude that the September 24 email from their lawyer to the D’Silvas’ lawyer constituted compliance with the severance condition or their waiver of the condition. They point to their evidence that they did not know about their lawyers’ email, and they say that in any event the email did not comply with the specific requirements of the APS that require notice to be given through the parties’ real estate agents.

[25] I would not give effect to this argument. The Algrantis rely on para. 3 of the APS which provides for the appointment of the listing brokerage as agent for the seller for the purpose of giving and receiving notices pursuant to the APS. It provides that “any notice … shall be deemed given and received when delivered personally or hand delivered to the Address for Service provided in the Acknowledgment below”. Although the agents’ email addresses were provided in para. 3, the Address for Service in the Acknowledgment was blank. In any event, there is nothing to suggest that notices could not be provided by their respective legal counsel. To the contrary, once the lawyers were involved, they were also the parties’ agents.

[26] The motion judge did not err in concluding that the September 24 communication from the Algrantis’ lawyer satisfied or waived the severance condition. She drew a reasonable inference that the references in the September 24 email from the Algrantis’ lawyer to her firm’s involvement in the land assembly, and asserting her understanding that severance had been obtained, “was intended to provide assurance to the D’Silvas that they could rely on, and have confidence in, her representation that everything was completed, and the condition regarding consent to severance was moot”: at para. 60. The motion judge reasonably concluded that the representation was intended to be relied on and was in fact relied on by the D’Silvas. She noted that, as their lawyer on the transaction, the Algrantis’ lawyer had the authority to make the representation and the Algrantis were bound by it.

[27] In addition to finding that the September 24 communication satisfied or waived the condition, the motion judge concluded that the Algrantis were estopped by their conduct from taking the position for the first time during the litigation that the APS had terminated on November 5. Although the Algrantis attempted to terminate the APS in October 2020, they continued throughout the parties’ dealings to affirm the ongoing validity of the APS including by extending the closing date. It was only on December 22 that they took the position that the APS had become null and void when it could not be closed on that date. I turn now to this argument, that was renewed before this court on appeal.

2. The motion judge did not err in concluding that the APS was not terminated on December 22, 2020

[28] The Algrantis contend that the motion judge erred in concluding that the APS was not terminated on December 22, 2020. First, they say that the motion judge misinterpreted para. 15 of the APS, which reads “This Agreement shall be effective to create an interest in property only if the Seller complies with the subdivision control provisions of the Planning Act by completion and Seller covenants to proceed diligently at Seller’s expense to obtain any necessary consent by completion”. They argue that para. 15 means that the APS would be null and void if the Property could not be conveyed because of a Planning Act violation on the closing date. The Algrantis submit that this is consistent with s. 50(21) of the Planning Act, which provides in part:

An agreement, conveyance, mortgage or charge made, or a power of appointment granted, assigned or exercised in contravention of this section or a predecessor thereof does not create or convey any interest in land…

[29] Second, the Algrantis take issue with the motion judge’s conclusion that as a result of errors, the Algrantis had not proceeded diligently in meeting their obligations to obtain the required consents, resulting in their inability to rely on the “finality” clause to terminate the APS. They assert that their obligations related to the process of obtaining the required consents and not the result of that process. The fact that errors were made by the professionals they retained did not mean that they failed to fulfill their contractual obligations, which were only to make best efforts. The Algrantis submit that there was no evidence they failed to proceed diligently or in good faith before the extended closing date, and that the motion judge considered the wrong time period when she concluded that they unreasonably refused to take steps post-closing to rectify title issues.

[30] Third, the Algrantis say the motion judge erred in concluding that the D’Silvas had waived the condition when, on December 22 their lawyer indicated that the D’Silvas waived any objection to title, were prepared to close the transaction, without holdback, and would rectify the severance issues post-closing at their own expense, on the agreement the Algrantis would co-operate. They argue there is no such thing as a conditional waiver or a waiver with conditions.

[31] I would not give effect to these arguments.

[32] First, I disagree with the contention that the motion judge erred in her interpretation of para. 15 of the APS, when she failed to hold that the APS was null and void when the Planning Act condition was not met on the completion date. The Algrantis only refer to the opening phrase of s. 50(21) of the Planning Act. Section 50(21) reads in full:

An agreement, conveyance, mortgage or charge made, or a power of appointment granted, assigned or exercised in contravention of this section or a predecessor thereof does not create or convey any interest in land, but this section does not affect an agreement entered into subject to the express condition contained therein that such agreement is to be effective only if the provisions of this section are complied with. [Emphasis Added.]

[33] The effect of para. 15, combined with para. 10 of the standard form APS, is that vendors are required to do what is required to obtain Planning Act approval. Section 50(21) remedies an agreement that would otherwise contravene the Planning Act where, as here, the agreement is subject to an express condition that it is to be effective only if the subdivision control provisions of the Planning Act are complied with: see Morgan Trust Company of Canada v. Falloncrest Financial Corporation, 218 OAC 71 (C.A.), at para. 20.

[34] Second, the motion judge did not err in holding that the Algrantis failed to act diligently to obtain the required consents, and therefore were in breach, and not permitted to rely on the finality clause to terminate the APS. This conclusion was grounded in the fact and expert evidence on the motion. The motion judge found that the Algrantis failed to take steps to rectify the Planning Act issues after December 21, 2020, although there were further steps available. Indeed, there was no evidence that they were taking steps after the APS had been signed (other than their lawyers’ efforts to obtain the PINs), because it was assumed that there were no issues with the process that had been followed. The Algrantis’ lawyer took this position within days of the APS being signed. When it was brought to her attention on December 17 that more needed to be done, she responded three days later, initially disagreeing and then stating in unequivocal terms that her clients were not prepared to take any further steps. The assumption was that all of the work that had been done up to December 21 was sufficient, when in fact it was not. The Algrantis sold the Property on the basis that they would, as per para. 15 of the APS, proceed diligently at their expense to obtain any necessary consents by the completion date and per Schedule B, which required them to do all things reasonably necessary in support of the satisfaction of the condition. The expert evidence was that the conveyancing issues could have been addressed. Whether or not the Algrantis’ refusal to take steps post-closing could be considered a breach of their obligations under the APS, there is no evidence that they discharged their obligations before the extended closing date of December 22. They had obligations under the APS, whether or not mistakes were made by the professionals they retained. Their refusal to take any further steps when it was brought to their lawyer’s attention that more was required to be done was reasonably considered by the motion judge to be inconsistent with their obligations under the APS.

[35] Third, the motion judge did not err in finding the D’Silvas waived their objection to title. The D’Silvas’ waiver and the practical requirement for post-closing co-operation must be considered in context. After the Algrantis’ lawyer communicated that they would take no further steps to address the conveyancing issues, the D’Silvas’ lawyer indicated that his clients remained willing to close the transaction, and that they were prepared to rectify the conveyancing issues at their own cost. It was the Algrantis who had proceeded with the initial severance application and subsequent dealings with the Town. Given their refusal to do anything further to rectify the issues (which, as between the sellers and the buyers, was within the sellers’ control), they had a duty to co-operate in the correction of the conveyances. The practical obligation that the Algrantis sign any necessary documents did not undermine the D’Silvas waiver of their title objection.

[36] The Algrantis acknowledged that the D’Silvas’ objection could be waived. The motion judge did not err in finding that the D’Silvas were able to, and did, waive their objections to title. The motion judge’s finding that the email from the D’Silvas’ lawyer on December 22 waived the objection to title was a factual finding that is owed deference by this court.

E. Disposition

[37] For these reasons I would dismiss the appeal, with costs payable by the appellants to the respondents. If the parties are unable to agree on costs, they may, within 20 days, provide written submissions of up to five pages, exclusive of any bill of costs.

Released: November 14, 2023 “S.E.P” “K. van Rensburg J.A.” “I agree S.E. Pepall J.A.” “I agree P.J. Monahan J.A.”