Ontario Superior Court of Justice – Divisional Court

Barnes v. Highland Park Development Corp.

Date: 1999-04-21

Counsel: G. Slemko, for the appellant; R. Bradburn, for the respondents.

(Court File No. Div. Ct. 136/98)

Reasons for Decision

[1] O'Leary, J. [orally]: Clause 4 of the Agreement of Purchase and Sale provided that the occupancy date would be April 23, 1996. Construction was delayed by a bricklayer's strike. On February 9, 1996 Highland's solicitors wrote the purchasers' solicitors in part as follows:

"Further to the Agreement of Purchase and Sale herein, final closing was scheduled to take place on April 23, 1996.

We have been advised that since on or about January 19, 1996, the bricklayers on the above project are on a legal strike … this continued withdrawal of services … may affect closing of the above transaction. Once the strike has ended, our client will advise all purchasers … and set a new date for completion of the transaction, should this be necessary.

Under the circumstances, our client cannot guarantee that the above unit will be completed by the date set out in the Agreement of Purchase and Sale."

[2] On June 19, 1996, the vendor's solicitors again wrote to the purchasers' solicitors, the letter reading in part:

"We … have previously advised with respect to a delay in 'substantial completion' of the above premises. …

… although the strike has ended, our client is not yet in a position to give a definitive date for interim occupancy … "

[3] In the two letters just quoted from, Highland's solicitor seems to equate the occupancy date with "the final closing" date. It is clear however that what he had in mind was the date for occupancy.

[4] Finally, on July 18, 1996 Highland's solicitors wrote as follows:

"… substantial completion … as required under Paragraph 4 … will be achieved as of September 16, 1996. Pursuant to paragraph 5 of the Warranty Program Schedule 'G' … you are hereby notified that September 16, 1996 is the new date for interim occupancy."

[5] Schedule "G" which forms part of the Agreement of Purchase and Sale reads in part:

"It is recommended that the purchaser contract the vendor prior to closing date to determine that construction is proceeding on schedule and that closing may occur on time …

5(i) If the vendor cannot close the transaction by the closing date in the agreement because additional time is required for construction of the unit, the vendor shall extend the closing date … all extensions in the aggregate not to exceed 120 days …

(ii) If the closing date has been extended for 120 days and the vendor still requires further time for construction … the purchaser may terminate the agreement within the 10 days immediately after the 120 days have elapsed."

[6] It is to be noted that the letter from Highland's solicitors of July 18, 1996 states that,

"Pursuant to paragraph 5 of the Warranty Program Schedule 'G' … you are hereby notified that September, 1996 is the new date for interim occupancy."

It appears that Highland's solicitors considered Schedule "G" to be referring to the occupancy date when it speaks of "closing date". The purchasers' solicitors interpreted Schedule "G" in the same way for on August 19, 1996 they wrote to the vendor's solicitors as follows:

"Pursuant to the provisions of the Agreement of Purchase and Sale herein the purchasers hereby terminate said agreement. … "

This letter was transmitted by fax and by regular mail on August 19, 1996.

[7] Paragraph 23 of the Agreement of Purchase and Sale provides in part:

"in the case of the vendor, any notice required to be delivered pursuant to this agreement must be delivered personally or sent by facsimile transmission to the vendor in care of its solicitor. In the event such notice is mailed as aforesaid, it shall be deemed to have been received by the party to whom it is addressed on the third business day following the date of its mailing. … "

[8] It follows then that the letter mailed on August 19, 1996 is deemed to have been received on August 22, 1996.

[9] Since the occupancy date or interim closing date was to have been April 23, 1996 according to the Agreement of Purchase and Sale, 120 days had elapsed without the unit being ready for occupation on August 22, 1996.

[10] The letter terminating the transaction deemed to have been received by the vendor's solicitors on August 22, 1996, was received "within the 10 days immediately after the 120 days [had] elapsed".

[11] Nevertheless, the vendor's solicitors wrote in part as follows on September 3, 1996:

"… your clients only had the right to terminate the agreement within the 10 days immediately after 120 days after the original date of closing … As no notice was received between August 22 and September 1, 1996, our client's position is that the Agreement of Purchase and Sale is binding. … "

[12] The proper time within which the purchasers had the right to terminate because of delay was the only point raised between the solicitors for both parties when discussing whether or not the purchasers had effectively terminated the agreement. It is obvious then that Schedule "G" was ambiguous enough to lead the solicitors for the parties into thinking that it referred to "closing date" as being the occupancy date which, of course, is an interim closing date, though not the final closing date. There is abundant evidence to support the finding of ambiguity made by the trial judge.

[13] The ambiguity and confusion arising out of Schedule "G" seems to have arisen because Schedule "G" is the schedule provided for by s. 12 of Regulation 894 made under the Ontario New Homes Warranty Plan Act, O. Reg. 691/94, and was only to be added to Agreements of Purchase and Sale of new single residences, not to Agreements of Purchase and Sale of new condominium units. The vendor, in error, made it part of this agreement for the sale of the condominium unit. In our view the trial judge was correct in permitting the purchasers to interpret Schedule "G" as giving them the right to terminate the transaction.

[14] The trial judge was, in our view also correct in finding that Schedule "G" must apply to the interim closing date or it would have no effect at all.

[15] Paragraph 3 of the Agreement of Purchase and Sale reads:

"3. This transaction of purchase and sale is to be completed on the Closing Date which is to be the later of:

(i) the 'Occupancy Date'; or

(ii) a date 14 days after the Vendor's solicitor notifies the Purchaser or his solicitor of the registration of the Condominium and requests a formal closing with a specified date for closing;"

That provision of the contract leaves it up to the vendor to decide when, if ever, the final closing is to take place. If Schedule "G" is to have any effect it must relate to interim closing (the occupancy date) as found by the trial judge.

[16] For these short reasons and for those given by the trial judge, we uphold her decision. The appeal is dismissed. Costs fixed at $5,000.

Appeal dismissed.