Court File and Parties
CITATION: Cannon v. Gerrits, 2022 ONSC 6867
DIVISIONAL COURT FILE NO.: DC-22-1300-0000
DATE: 20221206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BACKHOUSE, VARPIO, KING J.J.
BETWEEN:
Rebecca Cannon and Jordyn Greenham Plaintiffs (Respondents)
– and –
Philip Gerrits and Maryann Gerrits Defendants (Appellants)
COUNSEL:
Kyle Armagon, for the Plaintiffs (Respondents)
Atrisha Lewis, for the Defendants (Appellants)
HEARD: June 27, 2022 by videoconference in Oshawa.
Reasons for Decision
KING J.
Overview
[1] This is an appeal with leave from the decision of M. Edwards R.S.J., dated January 14, 2022, granting a Certificate of Pending Litigation (“CPL”) against a property known municipally as 992 Catskill Drive, Oshawa, Ontario (“the property”). The Reasons for Decision are dated February 4, 2022, which is found at Cannon v. Gerrits, 2022 ONSC 851 (“Cannon”).
Evidence
i. The Agreement of Purchase and Sale
[2] The evidence is not in significant dispute.
[3] Philip and Maryann Gerrits (the “appellants”) are the owners of the property.
[4] On June 9, 2021, they listed the property for sale on the Multiple Listing Service at a price of $850,000, with an offer date of June 14, 2021.
[5] On June 11, 2021, Rebecca Cannon and Jordyn Greenham (the “respondents”), submitted a pre-emptive offer to purchase the property for the sum of $1,100,000. The appellants accepted the offer.
[6] The Agreement of Purchase and Sale (“APS”) executed by the parties contained the following term with respect to the delivery of the deposit required by the purchaser, as follows:
DEPOSIT: Buyer submits upon acceptance One Hundred Thousand Dollars (CDN$) 100,000 by negotiable cheque payable to Keller Williams Energy LEPP Group Real Estate, Brokerage “Deposit Holder” to be held in trust pending completion or other termination of this Agreement and to be credited toward the Purchase Price on completion. For the purposes of this Agreement, “Upon Acceptance” shall mean that the Buyer is required to deliver the deposit to the Deposit Holder within 24 hours of the acceptance of this Agreement. The parties to this Agreement hereby acknowledge that, unless otherwise provided for in this Agreement, the Deposit Holder shall place the deposit in trust in the Deposit Holder’s non-interest bearing Real Estate Trust Account and no interest shall be earned, received or paid on the deposit.
[7] The following language was further included in the Schedule ‘C’ of the APS:
The Buyer acknowledges that due to Covid 19, the Listing Brokerage may not be accepting deposit cheques and agrees to deposit directly into the Listing Brokerage’s Trust Account the deposit amount indicated herein within one (1) banking day following acceptance of this Agreement.
[8] Once the APS was executed by the parties, the property was taken off the market.
[9] On June 12, 2021, the next day, the respondents delivered a personal cheque in the amount of $100,000 to the listing brokerage.
[10] The listing brokerage confirmed the cheque by email that same day but advised that they preferred a certified cheque.
[11] The respondents indicated by email that they would attempt to deliver a certified cheque by June 14, 2021.
[12] At no point did the appellants, or the listing brokerage, indicate the deposit had to be paid by direct deposit, or in any way specifically indicate there needed to be compliance with Schedule ‘C’.
[13] On June 14, 2021, the appellants instructed their agent to advise the respondents that they had breached the APS. The appellants then terminated the APS. As of that time, the appellants were still in possession of the respondents’ original cheque but had not endorsed same.
[14] The respondents provided a certified cheque on June 15, 2021.
ii. The Certificate of Pending Litigation
[15] The respondents commenced an action with respect to the APS. They also made application for a certificate of pending litigation with respect to the subject property.
[16] The motion for a certificate of pending litigation was heard before Edwards R.S.J. On January 14, 2022, Edwards R.S.J. ordered that a CPL would issue against the property. He found that there was a triable issue with respect to whether the respondents had an interest in the property. He also found that there was a triable issue with respect to whether there was a valid APS that had been repudiated by the appellants. In reaching his decision, Edwards R.S.J. determined that the property was unique.
[17] Leave to appeal the decision was granted on April 1, 2022.
Issues on Appeal
i. Did the motion judge err by failing to consider all of the Agreement of Purchase and Sale (“APS”) regarding the property?
ii. Did the motion judge err by improperly considering the subjective intentions of the appellants and other external circumstances in interpreting the APS; and
iii. Did the motion judge erroneously assess the uniqueness of the property?
Standard of Review
[18] The standard of review on a judicial appeal is to be determined with reference to the nature of the question: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (“Housen”).
[19] On questions of law, the standard of review is correctness. On questions of fact, the standard of review is palpable and overriding error. A palpable and overriding error is an error that can be plainly seen and that affected the result, is unreasonable or is unsupported by the evidence. On questions of mixed fact and law, the standard is palpable and overriding error, unless there is an extricable question of law, in which case, the standard of review on that extricable question is correctness. Housen does not directly address the standard of review of exercises of discretion. However, appellate courts in Ontario have generally accepted that decisions involving the exercise of discretion should be paid great deference. An exercise of discretion should only be interfered with where there has been an error of law or where the discretion is exercised on wrong principles or misapprehended evidence: see Elliott Lake (City) (Integrity Commissioner) v. Pearce, 2021 ONSC 7859 (Div. Ct.) at para. 30.
Analysis
[20] For the reasons that follow, I would dismiss the appeal.
Did the motion judge err in his application of contract interpretation principles?
[21] The appellants submit that the motion judge failed to apply the proper principles of contract interpretation in his interpretation of the APS. As such, he committed an error of law that is to be reviewed on a standard of correctness.
[22] Schedule ‘C’ required the respondents to deliver a deposit to the listing broker’s trust account within one banking day of the acceptance of the APS. This did not occur, thereby leaving the respondents without an interest in the property.
[23] It is a basic principle of law that contract interpretation requires the decision-maker to review the contract as a whole and give meaning to all terms within an agreement.
[24] The appellants submit the motion judge failed to interpret the APS as a whole when determining whether there was a triable interest with respect to an interest in the property. Specifically, the motion judge committed this error by disregarding the provisions in Schedule ‘C’ of the APS. In doing so, he failed to interpret the APS as a whole.
[25] Counsel for the appellants submit that the wording of Schedule ‘C’ was before the motion judge because:
a) the APS was in the motion record [see affidavit of Rebecca Cannon, sworn October 29, 2021, at para. 9]; and
b) reference was made to Schedule ‘C’ in the cross-examination of Rebecca Cannon on December 8, 2021 [see questions 69-72].
[26] The appellants submit that the decision of the motion judge confirms that he did not reference, or even consider, Schedule ‘C’ because in his decision he stated, at para. 19:
...the actual agreement signed by the Appellants as evidenced by the deposit term, only requires the Respondents to submit a deposit in the form of a “negotiable cheque.”
[27] As a result of the failure of the motion judge to consider and interpret Schedule ‘C’, the motion judge committed an error of law, subject to the standard of correctness.
[28] The respondents submit there is no evidence before the court that the wording of Schedule ‘C’ was specifically brought to the attention of the motion judge.
[29] Accordingly, it would not be proper to permit the appellants to raise the issue of the wording of Schedule ‘C’ for the first time on this appeal. In R. v. Reid, 2016 ONCA 524 (“Reid”), Watt J.A. stated, at para. 39:
The general rule is that courts of appeal will not permit an issue to be raised for the first time on appeal: R. v. Warsing, [1988] 3 S.C.R. 579, [1998] S.C.J. No. 91, at para.16, per L’Heureux-Dubé J. (dissenting in part); R. v. Brown, [1993] 2 S.C.R. 918, [1993] S.C.J. No. 82, at pp. 923-24 S.C.R., per L’Heureux-Dubé J. (dissenting); Kaiman v. Graham, [2009] O.J. No. 324, 2009 ONCA 77, 245 O.A.C. 130, at paras. 18-19; and R. v. Roach, [2009] O.J. No. 662, 2009 ONCA 156, 246 O.A.C. 96, at para. 6.
[30] The prejudice caused to the other party in such instance is obvious. As well, if a new ground is permitted, the reviewing court will be considering a different case than the judge making the initial determination.
[31] I would dismiss this ground of appeal. I have concluded that the appellants should not be permitted to raise the issue of the interpretation of Schedule ‘C’ for the first time on this appeal.
[32] I start by noting that counsel for the appellants was not counsel (or from the same firm) as counsel who appeared on the appeal.
[33] Counsel for the appellants on the appeal was unable to advise the court whether the wording of Schedule ‘C’ and the interpretation of the APS as a whole was raised by the appellants in the statement of defence, the motion materials, or in oral submissions.
[34] There is a significant difference between a reference to Schedule ‘C’ being contained in the evidence on the motion record and whether the specific language pertaining to the interpretation of the APS as a whole was brought to the attention of the motion judge. The fact that Schedule ‘C’ was set out in the record does not satisfy me that the issue of the wording and interpretation of the schedule now suggested by the appellants was before Edwards R.S.J.
[35] Furthermore, it is unclear whether counsel who represented the appellants on the motion failed to bring Schedule ‘C’ to the attention of the motion judge through ignorance, inadvertence, or decided as a matter of strategy not to aver to that provision in submissions to the court.
[36] In an adversarial system, the failure of a motion judge to “mine” the terms and conditions of an agreement, however long or short, to seek contract interpretation language potentially relating to issues that were not even raised by a litigant in the pleadings, or in the motion materials, does not constitute a reversible error of law.
[37] A determination of whether a judge committed a reversable error can only be made by examining whether that judge rendered a decision and made appropriate decisions based on the evidence that was brought to the attention of the judge. To suggest otherwise is to invite litigation chaos and uncertainty. If judges are required to look for additional language in a document that has not been clearly brought to their attention by a litigant with respect to an issue that was not put in issue on the motion, the decision-making process would be endless. That result runs contrary to the goals of our adversarial system.
[38] Furthermore, in order to be permitted to raise a new issue on appeal, Reid establishes at para. 43 that the appellant must satisfy the following three precautions:
The evidentiary record must be significant to permit the appellant court to fully, effectively, and fairly determine the issue raised on appeal.
The failure to raise the issue at trial must not be done for tactical reasons; and
The court must be satisfied that no miscarriage of justice will result from the refusal to raise the new issue on appeal.
[39] The appellant fails in respect of all three of these preconditions.
[40] Firstly, the evidentiary record is not significant. It is unclear to what extent the issue of Schedule ‘C’ was raised, if at all.
[41] Secondly, on a review of the record, it is impossible to ascertain whether the approach of the appellants on the original motion was done for tactical reasons as described in Reid.
[42] Finally, and most significantly, no miscarriage of justice occurred. The appellant’s real-estate agents accepted the deposit cheque from the respondents. There was no effort made to communicate that Schedule ‘C’ was being enforced or relied on.
[43] Furthermore, and in any event, it is not clear that even if the relevant portion of Schedule ‘C’ had been presented and argued before the motion judge, that he committed a reversible error.
[44] Schedule ‘C’ does not clearly and unequivocally mandate that the deposit payment had to be made by direct deposit into the account of the listing agent as a fundamental term and condition of the APS.
[45] The wording indicates that as a result of Covid-19, the listing brokerage “may not be accepting deposit cheques.” This language is clearly directory. It is not mandatory.
[46] Furthermore, on initial receipt of the deposit cheque from the respondents, neither the listing brokerage nor the appellant advised them that unless they made a direct deposit into the brokerage’s account, the agreement was, or would be, null and void.
[47] The evidence is that the listing brokerage did nothing more than indicate to the respondents in an email dated June 12, 2021, that they “preferred a certified cheque.”
[48] Accordingly, it is not clear that even if the wording of Schedule ‘C’ had been raised by the appellants and brought to the attention of the motion judge that the CPL could not, or should not, have been granted.
[49] The motion judge’s decision on this was based on his discretion. It must and should be awarded significant deference. As a result, no palpable and overriding error was committed. Schedule ‘C’ was not relevant to the issue of whether the APS stipulated that the only manner to satisfy the APS was to pay by direct deposit.
[50] This ground of appeal is dismissed.
Did the motion judge improperly assess the subjective intentions of the parties?
[51] In his decision, the motion judge made various references to the appellants wanting to achieve the highest possible purchase price for the property as motivation for them terminating the APS.
[52] For example, at the beginning of his decision, the motion judge stated that “an owner of a residential property in a so-called “hot” real estate market, will always want to obtain the highest sale price for his or her property”: Cannon, at para. 1.
[53] The appellants submit the motion judge attributed importance to this motivation to conclude that was the reason the appellants terminated the APS. At paras. 23 and 24 of the decision, Edwards R.S.J. stated:
[23] The Defendants wanted the highest possible purchase price for their residence. There is nothing wrong with an owner of a property wanting the highest possible purchase price for their home. Once an agreement is signed, however, there are legal obligations. While the Defendants may have wanted to “gain the most value” for their home and they may have felt that they were robbed of that opportunity, whatever complaints the Defendants may have do not lie with the Plaintiffs. The equities, in my view of this case, strongly favour the Plaintiffs.
[24] The position taken by the Defendants if this court accepted their arguments would allow the owner of a property to simply repudiate a binding agreement of purchase and sale, leaving the owners the opportunity to obtain an even higher purchase price in the rising real estate market that we are presently confronted with.
[54] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 57, Rothstein J. writing for the Supreme Court of Canada stated:
[57] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 101 B.C.A.C. 62).
[55] As well, the appellants rely on J.M.B. Cattle v. Kaufman, 2015 ONSC 7372, at para. 98, wherein Price J. stated a seller’s motivation is not relevant as, “either they have the right to terminate the APS or they do not.”
[56] The appellants submit the motion judge improperly focused on the subjective intentions of the appellants in terminating the APS rather than interpreting the mutual and objective intentions of the parties to the APS.
[57] The respondents submit the appellants are in error in this respect and have conflated the test for granting a CPL. That is, the test on the application for a CPL is not whether the APS has been breached. Rather, the question to be answered is whether the moving party has an interest in the subject property.
[58] The court must look at all relevant matters and determine in all of the circumstances whether a CPL should be issued. The respondents submit the motion judge can consider the intent of the party selling the property as a factor in this equitable exercise: see Perruzza v. Spatone, 2010 ONSC 841, at para. 20. I agree. The motion judge did not commit a palpable and overriding error in taking the intentions of the appellants into consideration, in granting the CPL.
Did the motion judge erroneously assess the uniqueness of the property?
[59] The appellants submit the motion judge erred in the application of legal principles to assess whether the subject property was unique.
[60] One of the factors to be considered to determine whether a moving party has satisfied the onus of establishing that the property is unique is that it cannot be readily duplicated elsewhere: see John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd., 2003, 63 O.R. (3d) 304, 223 D.L.R. (4th) 541 (C.A.), at para. 39.
[61] The appellants emphasized that in the statement of claim, the respondent plaintiffs only stated as follows:
[22] The Plaintiffs’ claim is not compensable by damages. The Property is unique due to, inter alia, its features and locations. There is no adequate substitute property that is similarly available to the Plaintiffs’ search for a four-bedroom home in a family-friendly neighbourhood.
[62] Furthermore, in the affidavit of one of the respondents, Rebecca Cannon, she only stated as follows:
[37] If the transaction [sic] purchase this Property cannot be completed as per the Agreement, Jordyn and I do not have the same chances of finding this kind of property in the location we are looking for with the same features as they are not readily available for purchase.
[63] In her cross-examination, the respondent, Rebecca Cannon, added a number of criteria she considered that made the property unique.
[64] Additionally, the appellants emphasize that there is no evidence the respondents even attempted to locate a suitable replacement property.
[65] The respondents assert the effect of this was to reverse the onus to the appellants to establish the property was not unique.
[66] The motion judge effectively failed to review the property as a whole, but only focused on the proximity to a park – a fact that was not ever pleaded. The respondents submit the decision made by the motion judge was a finding of mixed fact and law. The legal standard to be applied in assessing such a decision is whether there was a palpable and overriding error: see Housen, at para. 37.
[67] They submit the motion judge reviewed the evidence and concluded that the property was unique. That conclusion is afforded significant deference. That is particularly so, when the decision is made in the context of determining whether it is just and equitable to grant a CPL in the circumstances.
[68] The respondents submit that the motion judge did not base his decision to grant the CPL solely on the basis that the property abutted a park.
[69] In Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52 (“Lucas”), Brown J.A. writing for the Court of Appeal for Ontario stated as follows:
[73] In assessing whether a property is unique, courts may have regard to: (a) a property’s physical attributes; (b) the purchaser’s subjective interests, or (c) the circumstances of the underlying transaction. While physical and subjective uniqueness of property will usually be significant in cases where a purchaser – as opposed to a vendor – seeks specific performance, the types of uniqueness are not exclusive and no difference in evidential weight should be given to one form over another: Jeffrey Berryman, The Law of Equitable Remedies, 2nd ed. (Toronto: Irwin Law, 2013), at pp. 355-57.
[74] Uniqueness does not mean singularity or incomparability. Instead, it means that the property has a quality (or qualities) making it especially suitable for the proposed use that cannot be readily duplicated elsewhere: Dodge (S.C.), at para. 60. For example, a rising real estate market, particularly where the purchaser’s deposit remains tied up by the vendor, may indicate that the transaction could not have been readily duplicated or that other properties were not readily available at the time of breach within the plaintiff’s price range: Walker v. Jones (2008), 298 D.L.R. (4th) 344, at para. 165; Sivasubramaniam v. Mohammad, 2018 ONSC 3073, 98 R.P.R. (5th) 130, at para. 84 and 92, aff’d 2019 ONCA 242, 100 R.P.R. (5th) 1.
[75] The court should examine the subjective uniqueness of the property from the point of view of the plaintiff at the time of contracting: Dodge (S.C.), at para. 59. The court must also determine objectively whether the plaintiff has demonstrated that the property or the transaction has characteristics that make an award of damages inadequate for that particular plaintiff: Dodge (S.C.), at para. 59; Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, at paras. 70-73, leave to appeal refused, [2019] S.C.C.A. No. 55.
[70] In the end, the motion judge concluded as follows:
The property was in a neighbourhood in Oshawa close to where her [the respondent’s] extended family lived.
The property was also close to work for herself and her husband, Jordyn [the respondents].
There was a desired 50-foot yard for Jordyn [the respondent] to work.
The property backed into a park for their children.
The property was close to her mother who could assist with childcare.
[71] It was open to the motion judge to find as he did based on the considerations set out in Lucas.
[72] Given that the motion judge relied on evidence before the court, that decision must be given deference. There was not a palpable and overriding error in his assessment of the uniqueness of the property.
Conclusion
[73] For all these reasons, the appeal is dismissed.
Costs
[74] As agreed by the parties, as the successful party, the respondents are entitled to costs in the amount of $7,500.
King J.
Backhouse J.
Varpio J.
Released: December 6, 2022
CITATION: Cannon v. Gerrits, 2022 ONSC 6867
DIVISIONAL COURT FILE NO.: DC-22-1300-0000
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BACKHOUSE, VARPIO, KING J.J.
BETWEEN:
Rebecca Cannon and Jordyn Greenham
Plaintiffs (Respondents)
– and –
Philip Gerrits and Maryann Gerrits
Defendants (Appellants)
REASONS FOR JUDGMENT
Released: December 6, 2022