COURT FILE NO.: 08-02364 (Hamilton)

DATE: 2012/09/04

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

1709451 Ontario Inc.

Michael Courneyea, for the Plaintiff/ Defendants by Counterclaim

Plaintiff

- and -

1718541 Ontario Inc. and Margarida Pacheco

Patrick Summers, for the Defendants/ Plaintiffs by Counterclaim

Defendants/ Plaintiffs by Counterclaim

- and -

1709451 Ontario Inc. and Resham Kang

Defendants by Counterclaim

HEARD: May 22, 23, 24 and 25, 2012 and June 14, 15 and 25, 2012

LOCOCO, J.

REASONS FOR JUDGMENT

I. Introduction

[1] This action arose out of the sale of a gasoline station. The seller is seeking repayment of a vendor-take-back (VTB) mortgage and a promissory note issued on closing to the purchaser and guaranteed by the purchaser’s principal shareholder. The seller is also seeking possession of the property pursuant to the VTB mortgage. The purchaser and the guarantor have counterclaimed against the seller and its principal shareholder, seeking damages for breach of contract and misrepresentation.

[2] By agreement of purchase and sale accepted on November 29, 2006, 1709451 Ontario Inc. (170) agreed to sell a Petro-Canada gasoline station in Hamilton to Margarida Pacheco in trust for 1718541 Ontario Inc. (171) for a purchase price of $1,500,000. The property also included a Country Style coffee kiosk and a convenience store. 170 had only recently purchased this property, in a transaction that closed approximately six weeks previously in October 2006.

[3] Under the purchase agreement, 170 was required to deliver to 171 its income tax returns and Statement of Income and Expense for the past six months. The agreement also included certain covenants and warranties of 170 that were to survive closing, including a covenant and warranty that the financial position of the business was at the agreement date and at the closing date at least as good as that reflected in the financial statements delivered to 171. The purchase agreement also included the following provision:

The Seller, its directors and shareholders acknowledge that Buyer will rely on the Financial Statements provided by Seller to the Buyer in accordance with this Agreement with respect to the profitability of the business for the past year and the Seller, its directors and shareholders represent and warrant that these Statements and Records are true and accurate and that this warranty shall survive for a period of two years after closing.

[4] The purchase agreement also stated that the agreement (including any attached schedule) constituted the entire agreement between the buyer and seller, and there was no representation, warranty, collateral agreement or condition which affected the agreement other than as expressed in the agreement.

[5] The purchase agreement was subject to certain conditions for the benefit of 171, which were to be satisfied or waived by 171 within 30 days of the date of the agreement. These provisions included a condition that 171 arrange financing on terms acceptable to 171, and a condition that 171 and its financial advisor be satisfied with 170’s Statement of Income and Expense for the past six months. Ms. Pacheco on behalf of 171 executed a waiver of these conditions on December 30, 2006.

[6] The only financial records provided to Ms. Pacheco prior to delivery of 171’s waiver were two printouts from the “Bulloch” system (Petro-Canada’s electronic record system) that were sent to Ms. Pacheco by fax on December 20, 2006. Each of these printouts was entitled “Sales Summary Report”, the first for the month November 2006 and the second for period December 1 to 19, 2006. Each of these reports disclosed aggregate fuel sales and aggregate confectionary sales (referred to in the summaries as “Item Sales”) for the relevant period.

[7] The purchase transaction was originally scheduled to close on January 31, 2007, but 171 was not able to arrange financing by that date. The transaction ultimately closed on or about March 9, 2007. In order to finance the purchase price, 171 obtained a first mortgage from a financial institution. 170 also gave 171 a VTB mortgage, repayable in one year, for the principal amount of $300,000 plus interest at the rate of eight per cent per annum. As well, in order to finance the purchase of inventory on closing, 170 and 171 entered into a promissory note in the amount of $60,000, repayable by 171 over one year in monthly installments of $5,000. Repayment of the VTB mortgage and the promissory note was guaranteed by Ms. Pacheco.

[8] Under the purchase agreement, 170 agreed to complete a Country Style drive-through on the property. Upon closing, 170 gave a written undertaking to 171 and Ms. Pacheco that 170, at its own expense, would complete an application for a minor variance to the Committee of Adjustment of the City of Hamilton (and any appeals) to permit the construction of the drive-through and would complete construction within six months after closing. The undertaking also stated that if the drive-through was not completed within this period, 171 was at liberty to complete the drive-through at 170’s expense and 171 was entitled to recover its costs through a reduction of the amount owing under the VTB mortgage.

[9] After closing, 171 made the required payments under the VTB mortgage and the promissory note until October 2007, but made no further payments after that. According to Ms. Pacheco, she stopped making payments in part because 170 did not proceed with the Country Style drive-through within the time provided for in the undertaking. As well, Ms. Pacheco alleged that 171 was not in a position to make further payments since the financial performance of its business was significantly less favourable than had been represented to her.

[10] 170 subsequently brought this action against 171 and Ms. Pacheco, seeking payment of the amounts due under the VTB mortgage and the promissory note as well as possession of the property. 171 and Ms. Pacheco denied that there was any amount owing to 170. By way of counterclaim against 170 and its principal shareholder, Resham Kang, 171 and Ms. Pacheco sought damages for misrepresentation and breach of contract with respect to the financial information relating to 170, as well as damages for failure to complete the drive-though.

[11] In response to 171’s counterclaim, 170 and Resham Kang denied any liability for damages. They claimed that the financial condition of the business had not been misrepresented, and in any case, pursuant to the purchase agreement, 171 had the opportunity to review and be satisfied with 170’s financial records and had waived the relevant condition. Therefore, 171 and Ms. Pacheco were not entitled to avoid their payment obligations or seek damages based on the alleged inadequacy of the information 170 provided. 170 and Resham Kang also claimed that they were unable to obtain municipal approval to build the drive-through because of Ms. Pacheco’s failure to cooperate with the required application process, and that by her conduct, 171 and Ms. Pacheco had abandoned, waived or repudiated the undertaking.

[12] The issues to be determined are as follows:

1. Amount due under VTB mortgage and promissory note – Apart from the issues raised by 171 and Ms. Pacheco in their defence and counterclaim, what amounts would otherwise be payable to 170 under the VTB mortgage and the promissory note?

2. Breach of contract/misrepresentation – financial information: Are 170 and Resham Kang liable for breach of contract or misrepresentation with respect to the financial information provided to Ms. Pacheco?

3. Failure to complete drive-through: Are 170 and Resham Kang liable for failure to complete the drive-through?

4. Damages – drive-though: If 170 or Resham Kang is liable for failure to complete the drive-through, what is the amount recoverable by 171 and Ms. Pacheco?

5. Damages – financial information: If 170 or Resham Kang is liable with respect to the financial information provided, what is the amount recoverable by 171 and Ms. Pacheco?

6. Possession of mortgaged property: Should 170 be granted possession of the mortgaged property pursuant to the VTB mortgage?

[13] I will deal with each of these issues in turn.

II. Amount due under VTB mortgage and promissory note

[14] Apart from the issues raised by 171 and Ms. Pacheco in their defence and counterclaim, there was no real dispute about the amounts that would otherwise be payable to 170 under the VTB mortgage and the promissory note. Rather than setting a total dollar amount that would be due to 170, I have instead set out below a description of how the amount due under each of the VTB mortgage and the promissory note would be calculated.

[15] 171 made the required payments to 170 under the VTB mortgage in the amount of $2,000 per month with respect to interest due up to October 9, 2007. No amount was paid on account of principal, and accordingly, the full principal amount of $300,000 would be due and owing. As well, interest would be payable at the rate of eight per cent per annum commencing October 9, 2007 (the date of the last interest payment), and continuing to the date of judgment. Post-judgment interest would be payable thereafter at the same rate.

[16] 171 made the required payments on account of principal under the promissory note totaling $35,000. Accordingly, the remaining principal amount due would be $25,000. As well, pre-judgment interest would be payable at the rate prescribed pursuant to the Courts of Justice Act[^1] commencing November 9, 2008 (the due date of the first missed principal payment under the promissory note), and continuing to the date of judgment. Post-judgment interest would be payable thereafter at the prescribed rate.

III. Breach of contract/misrepresentation – financial information

(a) Factual background

[17] Are 170 and Resham Kang liable for breach of contract or misrepresentation with respect to the financial information provided to Ms. Pacheco? In order to consider this issue, it would be helpful to set out further details relating to the parties, as well as the circumstances leading to the execution and closing of the purchase transaction, including the financial information provided to Ms. Pacheco both before and after the purchase agreement was entered into.

[18] Margarida Pacheco came to Canada from Portugal as a young woman in 1986. She did not speak English. She had the equivalent of a grade nine education in Portugal. Her only subsequent formal education consisted of courses in English as a second language. She now reads and writes English. She initially worked in Canada cleaning offices and schools on a contract basis, and subsequently worked as a secretary at her church from 1998 to 2006. By 2006, she and her husband owned their own home in Mississauga, which had an approximate value of $300,000, with a mortgage of approximately $40,000. Ms. Pacheco’s husband is a cleaning manager at a community college.

[19] Ms. Pacheco was ambitious, and decided that she wanted to run her own business. She had no business experience, other than her previous cleaning contracts. She decided on ownership of a gasoline station because, as she put it in her evidence, everyone needs gas. In early November 2006, she met with two real estate agents, Baljit Dhaliwal and Ken Sehgal, in response to a magazine advertisement they had jointly placed regarding gasoline stations for sale. The real estate agents advised her of two prospects in Toronto before mentioning a gasoline station located at 564 Barton Street East in Hamilton, which 170 had listed for sale with them. Ms. Pacheco decided to pursue the Hamilton station.

[20] Resham Kang is the principal shareholder of 170, together with his wife, Debo Kang. Resham Kang was originally from India and immigrated to Canada from England in 1987, with his family joining him the next year. In 1987, through another corporation, he purchased a Petro-Canada gasoline station in Orangeville, which he continues to operate along with another Petro-Canada station in Beeton that opened in 2011. He was assisted in the operation of his gasoline stations by his two sons, Taljinder (Tal) Kang and Ajwinder Kang. Resham Kang also previously operated a convenience store in Toronto, which was sold prior to 170’s purchase of the Hamilton gasoline station. Mr. Dhaliwal and Mr. Sehgal acted as real estate agents on the sale of the Toronto convenience store as well as on the sale of the Hamilton Petro-Canada station to 170 by the previous owner, Rajneesh Dutta.

[21] Tal Kang was the only member of the Kang family to testify at the trial. According to his evidence, he was principally involved with both the purchase of the Hamilton station by 170 and the sale of the station to 171. In a transaction that closed on or about October 11, 2006, 170 purchased the station from Mr. Dutta for a purchase price of $1,250,000. Tal Kang testified that after the closing, his brother Aljinder became ill, placing a burden on Tal Kang with respect to operation of the gasoline stations in Orangeville and Hamilton that he could not handle. By early November 2006, the Hamilton station was listed for sale with Mr. Dhaliwal and Mr. Sehgal.

[22] According to Ms. Pacheco’s evidence, the only information she received about the Hamilton gasoline station prior to entering into the purchase agreement was provided by the real estate agents. Mr. Sehgal showed her the premises on two occasions and she met Tal Kang during those showings, but did not have a conversation with him. According to Ms. Pacheco, she was advised by Mr. Sehgal that the station sold over 10,000 litres of gasoline per day and that the profit margin was four to five cents per litre. The real estate agents provided her with an information sheet that indicated an annual fuel volume of 4,000,000 litres, which would work out to average daily sales of just short of 11,000 litres. The information sheet was printed on one page with no letterhead, with the following notation printed at the bottom of the page (as it appears on the information sheet): “Note: All information given by vendor Realestate Broker or realestate person will not be responsible for the accuracy.” In his evidence, Tal Kang denied telling the real estate agents that the station sold more than 10,000 litres a day or 4,000,000 litres annually, and denied authorizing the agents to make any representations, stating that he was unaware of the existence of the information sheet prior to its production by Ms. Pacheco in this litigation.

[23] Within two weeks of first meeting the real estate agents, Ms. Pacheco decided to make an offer for the Hamilton station. Mr. Sehgal prepared an offer for her signature. In order to get into business as soon as possible, Ms. Pacheco initially told Mr. Sehgal that she wanted the transaction to close in one month, but he suggested a two month period instead. She did not seek advice from a financial professional or a lawyer prior to making the offer. However, the offer included financing and due diligence conditions in her favour (as previously noted) and was also subject to the approval of the lawyers for both parties within five days of acceptance. The initial offer was for $1,450,000, which was refused. She subsequently offered $1,500,000, which was accepted by 170 on November 29, 2006. It was only then that she provided the purchase agreement to her lawyer, David Arn. He was the lawyer for the church where she worked, and had not previously acted for her.

[24] According to Ms. Pacheco, after the offer was accepted, she repeatedly asked Mr. Sehgal for 170’s financial statements for the previous six months, as required by the purchase agreement, but never received them. Instead, on December 20, 2006, she received by fax two printouts entitled “Sales Summary Report” for November 2006 and for the period December 1 to 19, 2006, as previously described.

[25] Ms. Pacheco also testified that she met with Tal Kang at the Hamilton station on two occasions during December prior to the waiver of the conditions in her favour. Ms. Pacheco stated that on the first occasion, Tal Kang told her that the station was selling more than 10,000 litres of fuel per day. However, according to Ms. Pacheco, at the second meeting, he revised this estimate, stating that the annual fuel sales were 3,500,000 litres instead of 4,000,000 litres, which on an annualized basis would be an average of less than 10,000 litres per day (in fact, 9,589 litres per day). In his testimony, Tal Kang denied Ms. Pacheco’s evidence relating to his representations about daily and annual fuel sales, stating that when he met with her after the purchase agreement was signed he advised her that fuel sales were 8,000 to 10,000 litres per day.

[26] As noted previously, on December 30, 2006, Ms. Pacheco signed a written waiver of the conditions in her favour, including the financing condition and the condition that the purchaser and its financial advisor be satisfied with the vendor’s Statement of Income and Expense for the past six months. Ms. Pacheco testified that Mr. Sehgal called her that day and arranged to meet her at a coffee shop, where he produced the waiver for her signature. According to Ms. Pacheco, she told him she wanted to show it to her lawyer, but he told her that there was no time to do so, and that she needed to sign the waiver to avoid losing the transaction. Ms. Pacheco testified that she trusted Mr. Sehgal when he told her not to worry, that he would take care of her, and she signed the waiver.

[27] In her testimony, Ms. Pacheco also described the financing that 171 obtained in order to close the purchase transaction. Through the real estate agents, she was put in touch with a mortgage broker named Rabi Karim, who introduced her to a RBC Royal Bank branch manager in Orangeville for the purpose of obtaining first mortgage financing. Mr. Karim also took her to an accountant to obtain financial projections, so that an appraisal report could be prepared to support the mortgage financing application. Mr. Karim also arranged for additional funds to be raised by refinancing the mortgage on her personal residence.

[28] After extension of the closing date for the purchase transaction, first mortgage financing was eventually approved by RBC pursuant to a mortgage commitment letter dated March 5, 2007, but there were still insufficient funds to close the transaction. Ms. Pacheco described a meeting organized by the real estate agents at a coffee shop on March 8, 2006, at which Resham Kang with some reluctance agreed to provide $300,000 in VTB financing to 171, guaranteed by Ms. Pacheco, in order to close the transaction. Ms. Pacheco also expressed some reluctance to close on these terms, but in the end agreed to do so.

[29] As well, although the matter was not discussed at the March 8 meeting, 170 agreed the next day to provide $60,000 in financing for the purchase of inventory by way of the promissory note from 171, guaranteed by Ms. Pacheco. On that basis, the purchase transaction closed on or about March 9, 2007, which was the date of the VTB mortgage and the promissory note. The property transfer and RBC’s first charge were subsequently registered on March 13, 2007.

[30] According to Ms. Pacheco, after the closing of the purchase transaction, the financial performance of the gasoline station did not accord with the representations previously made to her. Set out below is a chart showing fuel sales on a monthly basis by the station for the period October 11, 2006 to December 31, 2007. The seller 170 operated the station from October 11, 2006 to on or about March 9, 2007, and the purchaser 171 operated the station thereafter. The chart shows the total sales and the daily average for each month, as well as adjusted daily average figures for December 2006 and January 2007 to reflect the number of days the station was actually open those months. The figures in the chart (all of which are in litres) were derived from printouts of Sales Summary Reports from Petro-Canada’s Bulloch system.[^2]

Date Total fuel sales Daily average Adjusted

Oct. 11-31, 2006 170,537 8,121

Nov. 2006 277,600 9,253

Dec. 1-19, 2006 177,855 9,361

Dec. 2006 (month) 265,598 8,568 9,319

Jan. 2007 259,517 8,372 8,651

Feb. 2007 258,559 9,234

Mar. 1-9, 2007 76,195 9,524

Mar. 2007 (month) 198,224 6,394

April 2007 192,111 6,430

May 2007 [not legible]

June 2007 210,553 7,018

July 2007 199,684 6,441

August 2007 199,342 6,430

Sept. 2007 205,664 6,855

Oct. 2007 210,715 6,797

Nov. 2007 203,870 6,796

Dec. 2007 196,600 6,342

[31] There was no evidence before the court as to actual fuel sales prior to 170’s purchase of the station from the previous owner, Mr. Dutta. However, as noted below under the heading “Damages – financial information,” based on records of fuel purchases by Mr. Dutta from Petro-Canada in the period from March to October 2006, it appears that fuel sales during that period averaged less than 6,000 litres per day.

[32] By reference to records of fuel purchases by 171 from Petro Canada after 2007, it appears that fuel sales at the station during 2008 continued to be significantly below the level experienced by 170 during the time it owned the station, but increased thereafter. In the one year periods ended March 31, 2010 and March 31, 2011, annual purchases by 171 were 3,375,840 litres and 3,712,685 litres respectively, indicating a level of fuel sales that met or exceeded the annualized sales figures experienced by 170 when it owned the station.

[33] With the above background, the Defendants argued that 170 and Resham Kang should be held liable for breach of contract or misrepresentation with respect to the financial information provided to Ms. Pacheco. For each of those causes of action, the onus of proof was on the Defendants to establish liability on a balance of probabilities. As explained further below, after considering the evidence and submissions of counsel, I have concluded that the Defendants did not discharge that onus. Accordingly, 170 and Resham Kang are not liable for breach of contract or misrepresentation with respect to the financial information provided to Ms. Pacheco.

(b) Breach of Contract

[34] Dealing first with the claim for breach of contract, it was clear that the claim against Resham Kang personally for breach of contract could not succeed. On the evidence, when he signed the purchase agreement and other relevant documents relating to this transaction, he was clearly acting on behalf of 170 and not in his personal capacity. In these circumstances, he has no personal liability to 171 or Ms. Pacheco for breach of contract based on the financial information provided to Ms. Pacheco.

[35] With respect to the breach of contract claim against 170, the printouts entitled “Sales Summary Report” for November and December 2006 provided to Ms. Pacheco clearly did not constitute a Statement of Income and Expense for 170 for the previous six months, as contemplated by the purchase agreement. However, Ms. Pacheco on behalf of 171 waived the condition in 171’s favour that 171 and its financial advisor be satisfied with that the Statement of Income and Expense. In my view, by doing so, 171 waived its ability to later complain that the information provided did not strictly comply with the requirements in the purchase agreement. If Ms. Pacheco thought that she needed more information in order to assess the viability of the investment opportunity, it was open to her to insist that the information be produced or otherwise to withdraw from the transaction.

[36] In this regard, I sympathize with Ms. Pacheco’s plight, given the precarious financial position in which she now finds herself. However, I agree with Plaintiff’s counsel position that she is in this position not because of wrongful acts on the part of 170 and Resham Kang, but rather because of her determination to enter the business world, and in so doing she undertook commitments that were beyond her experience or financial capability. In my view, in the circumstances of this case, she cannot now rely on her lack of business experience and financial vulnerability to avoid her obligations.

[37] Defendants’ counsel argued that 170 breached its representation and warranty (as set out in the purchase agreement) that the financial statements were true and accurate, and also argued that 170 breached the covenant and warranty that the financial position of the business was at the agreement date and at the closing date at least as good as that reflected in the financial statements delivered to 171. In my view, these positions were not supportable on the evidence.

[38] The only financial reports provided to 171 after the purchase agreement was entered into were the Sales Summary Reports for November and December 2006 referred to previously. They were not financial statements in the formal sense, but there was no evidence before the court to suggest that the information in those reports was not a true and accurate reflection of the sales for the relevant periods.

[39] As well, the aggregate sales figures for the monthly periods during which 170 operated the gasoline station (as set out in the chart above) support the view that the financial position of the business was at least as good, at the agreement date and at the closing date, as that reflected in the Summary Sales Reports for November 2006 and December 1 to 19, 2006, as required by the purchase agreement. In this regard, I note that generally speaking, the daily average fuel sales on a month to month basis for the relevant period was generally consistent with the average daily sales for the periods reflected in the Summary Sales Reports provided to 171. The average daily sales (as adjusted in the case of December 2006) was in excess of 9,000 litres for each month except for the period October 11-31, 2006 (when the average daily sales were 8,121 litres) and the month of January 2007 (when the adjusted average was 8,651 litres). However, I accept the explanation provided by Tal Kang in his evidence that sales in October 2006 were likely affected by the change in ownership that month from Mr. Dutta to 170. I also accept his evidence that variability in fuel sales could be expected on a month to month basis and that there were often negative variations in fuel sales in the winter months due to weather considerations, which may well have affected January 2007 fuel sales.

[40] Defendants’ counsel argued that in reaching my conclusions on this issue, I should also consider the performance of 171’s business after closing, including the marked drop in monthly fuel sales. As well, he argued that I should consider the volume of fuel purchases by the previous owner in the period from March to October 2006 which, in his submission, indicated a lower level of fuel sales during that period. However, I agree with 170’s counsel that, on the evidence, there were other factors which could have explained the drop in sales after closing as well as lower sales under the previous owner, including the inexperience of Ms. Pacheco and Mr. Dutta in operating a gasoline station, competitive factors, variability of fuel sales on a month to month basis and (with respect to sales while Mr. Dutta was the owner) the fact that the station had only recently been rebranded as a Petro-Canada station.

[41] Taking these factors into account in the context of the evidence as a whole, I have concluded that the Defendants have not satisfied their onus of establishing the financial position of the business was not at least as good at the agreement date and at the closing date as that reflected in the Summary Sales Reports.

[42] Accordingly, I have concluded that 170 and Resham Kang were not liable for breach of contract with respect to the financial information provided to Ms. Pacheco.

(c) Misrepresentation

[43] Alternatively, the Defendants argued that 170 and Resham Kang should be found liable in tort for misrepresentation with respect to the financial information provided to Ms. Pacheco. The cause of action asserted by the Defendants was grounded in negligent misrepresentation.

[44] The elements of the tort of negligent misrepresentation, as articulated by the Supreme Court of Canada in Queen v. Cognos,[^3] are as follows:

(1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate or misleading; (3) the representor must have acted negligently in making the misrepresentation; (4) the representee must have relied, in a reasonable manner, on the negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.

[45] It was the Defendant’s position that each of the elements of negligent misrepresentation were established in this case with respect to the financial information provided to Ms. Pacheco. In support of this position, Defendants’ counsel noted a number of statements made to Ms. Pacheco, either directly by Tal Kang or through the real estate agents, which were alleged to be untrue, inaccurate or misleading, including representations that daily fuel sales averaged more than 10,000 litres (by the real estate agents and Tal Kang) and that annual fuel sales were 4,000,000 litres (by the real estate agents) or 3,500,000 litres (as revised by Tal Kang). Defendants’ counsel also argued that the information contained in the Sales Summary Reports for November 2006 and December 1 to 19, 2006 did not provide an accurate representation of the financial position of the business, and were therefore misleading based on an alleged failure to disclose additional sales data, including sales in October 2006 when 170 owned the station as well as prior sales in 2006 under the previous owner, Mr. Dutta.

[46] As previously noted, based on the evidence before me, I have concluded that the Defendants did not discharge the onus of establishing that 170 and Resham Kang were liable for misrepresentation with respect to the financial information provided to Ms. Pacheco. In particular, I was not satisfied on the evidence that representations were made to Ms. Pacheco that were untrue, inaccurate or misleading in any material way or that she relied on any such representations in proceeding with completion of the purchase transaction. Ms. Pacheco clearly did not rely on fuel sales being more than 10,000 litres daily or 4,000,000 litres annually since, on her evidence, Tal Kang revised his estimate to 3,500,000 litres annually prior to her waiver of the conditions in her favour in the purchase agreement. I accept Ms. Pacheco’s evidence that Tal Kang provided an estimate of annual sales of 3,500,000 litres, but the evidence indicated that this estimate was not materially inaccurate when compared with total fuel sales during the whole period that 170 owned the property. In the period October 11, 2006 to March 8, 2007, approximate annualized fuel sales were over 3,200,000 litres, and when adjusted to take into account days on which the station was closed, over 3,300,000 litres.

[47] In reaching the conclusion that fuel sales were not materially different than the representation by Tal Kang, I have also taken into account Tal Kang’s evidence (referred to previously) as to variability in fuel sales on a month to month basis and expected negative variations in fuel sales in the winter months. As well, I agree with the position of Plaintiff’s counsel that I should not consider fuel sales in the period prior or subsequent to 170’s ownership of the business, taking into consideration other factors that may affect the comparability of such data, as previously noted.

[48] In addition, I was not satisfied on the evidence that Ms. Pacheco relied on the statements made to her with respect to the financial performance of the business in her decision to proceed with the purchase. As previously indicated, considering the evidence as a whole, Ms. Pacheco appeared determined to enter the gasoline station business by purchasing the subject property from 170 and was not likely to have been deterred by negative variations in financial performance in the range indicated by the evidence. As well, under the conditions in 171’s favour in the purchase agreement, 171 and its financial advisor had the opportunity to examine and be satisfied with the financial condition of the business. In the event, Ms. Pacheco made what amounted to a cursory investigation, without obtaining any outside assistance, and then waived the conditions without requesting further information she was entitled to under the purchase agreement. In all the circumstances, I am not satisfied that Ms. Pacheco has established reliance with respect the financial information relating to the business.

[49] In any case, I agree with Plaintiff’s counsel that, in the circumstances of this case, 170 was entitled to rely on the so-called entire agreement clause in the purchase agreement to exclude liability for representation not contained in the purchase agreement, which would include representations relating to annual or daily fuel sales of the business. As noted previously, the purchase agreement stated that the agreement (including any attached schedule) constituted the entire agreement between the parties, and there was no other representation, warranty, collateral agreement or condition which affected the agreement. While Ms. Pacheco did not have legal advice before entering into the purchase agreement, she consulted a lawyer shortly thereafter and had the opportunity to withdraw but did not do so. Once again, I recognize that by proceeding to complete the purchase transaction, Ms. Pacheco undertook commitments that were beyond her business experience or financial capability. However, in all the circumstances, I have concluded she cannot rely on these factors to avoid the consequences of the entire agreement clause in this case.

IV. Failure to complete drive-through

(a) Factual background

[50] Are 170 and Resham Kang liable for failure to complete the Country Style drive-through? In order to consider this issue, it would be helpful to set out further details relating to the planned drive-through.

[51] According to the evidence of Ms. Pacheco, in November 2006 during her second visit to the Petro-Canada gasoline station prior to making an offer to 170, she was advised by Mr. Sehgal that there were plans to build a Country Style drive-through. He showed her signage that would be used for this purpose. As noted previously, the purchase agreement entered into with 170 included a covenant by 170 to complete the Country-Style drive-through.

[52] Unknown to Ms. Pacheco, the original plan to build a drive-through was conceived by Mr. Dutta, the previous owner of the Petro-Canada station. According to the evidence of Mr. Dutta at the trial, earlier in 2006, he made an application to the Committee of Adjustment for a minor zoning variance to allow the drive-through to be built. In this regard, it was necessary to obtain a study regarding noise pollution resulting from the drive-through, and Mr. Dutta apparently made preliminary contact with J. E. Coulter Associates Limited about preparation of a noise impact study. However, Mr. Dutta did not proceed with further significant steps relating to the drive-through because by August 2006 he had agreed to sell the station to 170. According to Mr. Dutta, there were no special arrangements relating to the drive-through in the purchase agreement with 170, which closed in October 2006.

[53] In his evidence, Mr. Dutta stated that within a month after closing of the sale to 170, he heard from Resham Kang that 170 wanted to pursue the Country Style drive-through. Mr. Dutta contacted the City of Hamilton planning department, and was advised that 170 would be able to take over Mr. Dutta’s application with his permission. According to Mr. Dutta, he advised 170 that he would give his permission if they paid his costs to date, which he estimated at $5,000 to $10,000. Mr. Dutta stated that 170 agreed to pay those costs, but he heard nothing further from 170 with respect to the drive-through.

[54] Prior to the closing of the sale to 171 in March 2007, Ms. Pacheco’s lawyer requested an undertaking from 170 with respect to completion of the Country-Style drive-through. As a result, 170 gave the undertaking to 171 and Ms. Pacheco referred to previously under which 170, at its own expense, would complete an application for a minor variance to the Committee of Adjustment (and any appeals) to permit the construction of the drive-through and would complete construction within six months after closing.

[55] In his evidence, Tal Kang outlined the steps taken by 170 in order to complete the drive-through. Mr. Dutta was contacted about taking over his application for a minor variance, as previously noted. As well, a quote dated November 17, 2006 was obtained from J. E. Coulter Associates for a noise impact study, and such a study was ultimately completed in March 2007 just before closing and submitted to the City of Hamilton planning department. According to Tal Kang, he also contacted a construction company that had provided a quote for the drive-through work to Mr. Dutta in July 2006 (in the amount of $8,000), and obtained a further quote in February 2007 from another company (in the amount of $8,400).

[56] In his evidence, Tal Kang conceded that after submission of the noise impact study to the City of Hamilton planning department in March 2007, little happened to advance the drive-through prior to the expiry of the six month period in the undertaking in September 2007. Tal Kang claimed he was trying during this period to contact Mr. Dutta in order to get his permission to pursue the application for a minor variance already made by Mr. Dutta, but had trouble reaching him because Mr. Dutta was out of the country. According to Tal Kang, when he succeeded in reaching Mr. Dutta, Mr.Dutta asked for $10,000 to cover costs he had already incurred, which Tal Kang resisted. Tal Kang also stated that he and his wife had their first child during that period, which distracted him from advancing the drive-through during the summer of 2006.

[57] I note that Tal Kang’s evidence as to the timing of Mr. Dutta’s request for reimbursement of his drive-through costs did not accord with the evidence of Mr. Dutta. According to Mr. Dutta, he made the request for reimbursement some months earlier in November 2006, which 170 agreed to, but that Mr. Dutta heard nothing further from them with respect to the drive-through after that. While it would make no difference to the outcome (as indicated later), I prefer the evidence of Mr. Dutta on this point, which makes more sense as a matter of consistency than Tal Kang’s version of events.

[58] According to Ms. Pacheco, she called Tal Kang periodically after closing with respect to the lack of progress in completing the drive-through, and also contacted Resham Kang, who assured her the drive-through would be built. Ultimately, she ceased payments on the VTB mortgage and the promissory note after making the October 2007 payments, citing 170’s failure to honour the undertaking as one of her motivating factors.

[59] According to Tal Kang, in a further effort to move the drive-through along (and to persuade Ms. Pacheco to resume payments under the VTB mortgage and the promissory note), he arranged for Cantam Group Ltd. to provide a proposal for consulting services to obtain the required approvals from the City of Hamilton planning department. Under a proposal dated January 29, 2008, Cantam would submit a new application for a minor variance on behalf of 171 and would process the required approvals from the planning department. In order to proceed, it was necessary for a new application to be completed and signed by 171. Tal Kang testified that he visited Ms. Pacheco at the gasoline station in Hamilton, providing her with a blank application and asking her to sign it in blank so that it could be completed by Cantam and submitted. However, according to Tal Kang, she refused to sign, saying it was 170’s responsibility to complete the drive-through and not hers. In her evidence, Ms. Pacheco denied that the meeting described by Tal Kang took place, although she said that she could have spoken to him by telephone. In any case, Ms. Pacheco and Tal Kang agreed that by fax dated February 6, 2008, 170’s lawyer contacted Ms. Pacheco’s lawyer, requesting that 171 complete the attached blank application for a minor variance so that it could be submitted to the planning department, which Ms. Pacheco refused to do.

[60] Following Ms. Pacheco’s refusal to complete a new application for a minor variance, 170 commenced this action as well as Notice of Sale under Mortgage proceedings in April 2008. By way of counterclaim against 170 and Resham Kang, 171 and Ms. Pacheco sought damages for failure to complete the drive-though. In this regard, 171 and Ms. Pacheco relied on the covenant in the purchase agreement to complete the drive-through as well as the undertaking given on closing with respect to the drive-through.

(b) Analysis

[61] After considering the evidence before me and the submissions of counsel, I have concluded that 170 is liable to 171 and Ms. Pacheco for breach of its obligations under the undertaking, but Resham Kang is not. I have also concluded that 171 and Ms. Pacheco do not have a separate claim sustainable against either 170 or Resham Kang under the drive-through covenant in the purchase agreement.

[62] Dealing first with the drive-through covenant in the purchase agreement, the case law is clear that there is no presumption in favour of merger on closing of warranties contained in the purchase agreement, the question of merger being one of intention of the parties.[^4] In this case, the purchase agreement clearly sets out an extensive list of covenants and warranties that survived closing without any time limit, as well as at least one representation and warranty that survived for a period of two years after closing. 170’s covenant to complete the drive-through was not included in either category. In my view, the clear implication was that this covenant did not survive closing and is no longer enforceable. In these circumstances, 171’s lawyer on the transaction was well advised to require a separate undertaking on closing with respect to completion of the drive-through, which was exactly what he did. In any case, as previously noted, any claim against Resham Kang personally for breach of the purchase agreement was not sustainable, since he signed that agreement on behalf of 170 and not in his personal capacity.

[63] Turning next to the undertaking, it was clear on the evidence that the claim against Resham Kang personally for breach of the undertaking could not succeed. As with the purchase agreement, Resham Kang signed the undertaking on behalf of 170 and not in his personal capacity.

[64] It was beyond dispute, however, that 170 did not comply with the undertaking. The minor variance application and construction of the drive-through were not completed within six months after closing, and have not been completed to this day.

[65] The Plaintiff’s position was that 170 was unable to obtain municipal approval to build the drive-through because of Ms. Pacheco’s failure to cooperate with respect to the required application, and that by her conduct, 171 and Ms. Pacheco abandoned, waived or repudiated the undertaking. In this regard, Plaintiff’s counsel argued that the Defendants breached an implied a duty of good faith and a duty to co-operate in contractual agreements when co-operation is necessary to achieve the objectives of the agreement. After considering the evidence before me and the submissions of counsel, I am unable to agree.

[66] There was nothing in Ms. Pacheco’s conduct prior to her refusal to complete the new minor variance application to suggest that she had abandoned, waived or repudiated compliance with the undertaking. To the contrary, she was insisting that the undertaking be complied with, even after the six month period for completion of the drive-through had expired. I have also concluded, however, that by refusing to co-operate with 170 by completing the new application form, Ms. Pacheco and 171 were not in breach of any implied duty of good faith or duty to co-operate, and therefore did not abandon, waive or repudiate the undertaking. In this regard, I agree with the Defendants that upon presentation of a blank application form by 170’s lawyer, it was unreasonable to expect Ms. Pacheco to complete and return the application. From a timing perspective, the six month period for completion of the drive-through had expired a number of months earlier, and the efforts undertaken by 170 during the period since the undertaken was given in March 2007 were clearly inadequate, even if Tal Kang’s version of events were accepted in full. In addition, pursuant to the undertaking, it fell on 170 to marshal at their expense a significant portion of the information required to fill out the application, information that was within 170’s knowledge and not Ms. Pacheco’s. As well, in my view, it was equally unreasonable for Tal Kang to suggest that Ms. Pacheco should have signed the application in blank and allowed their consultants to fill in the application and submit it, which would have been inconsistent with good practice and good sense.

[67] Accordingly, I have concluded that 170 breached its undertaking with respect to completion of the Country Style drive-through, and that 171 and Ms. Pacheco did not abandon, waive or repudiate compliance with that undertaking.

V. Amount recoverable – drive-through

[68] Given my conclusion that 170 breached the undertaking to 171 and Ms. Pacheco with respect to the Country Style drive-thorough, what amount, if any, is recoverable by 171 and Ms. Pacheco?

[69] The Defendants’ position was that the amount recoverable for breach of the drive-through undertaking should consist of the cost of completing the drive-through in the amount of $112,259, as well as damages for loss of profits in the amount of $54,750.

[70] According to Defendants’ counsel, the amount required to complete the drive-through was $112,259. This figure was based on the expert evidence of Steve Pongracz and George Zajac of IBI Group, who at the request of Defendants’ counsel prepared an expert report with respect to the planning and construction of a drive-though at the station.

[71] The amount calculated by Defendants’ counsel for lost profits was $54,750 for a period of 12 months commencing September 2007. That 12 month period was based on the fact that as of February 2008, Tal Kang was still affirming 170’s intention to complete the drive-through. If a new minor variance application had been made at that time, based on the expert evidence called by the Defendants, it was reasonable to expect completion of the application process and construction of the drive-through by September 2008, one year after expiry of the six month period provided for in the undertaking. The figure of $54,750 was based on expected profits of $150 per day for one year.

[72] Dealing first with the costs for completion of the drive-through, I agree with Defendants’ counsel that 170 and Resham Kang should bear the expected costs for completion of the drive-through as contemplated by the undertaking, including the costs of the City of Hamilton application process, landscaping and construction costs and the cost of any necessary equipment. In this regard, the most comprehensive evidence before the court was derived from the expert evidence of Steve Pongracz and George Zajac called by the Defendants. However, I agree with Plaintiff’s counsel that the evidence taken as a whole does not support recovery of the full amount sought by the Defendants for such costs. For example, on the evidence, it appeared that the drive-through contemplated by the calculations of Defendants’ counsel included a dual lane system, which was apparently beyond what was contemplated in the original drive-through plans. As well, the fees for the application process (including consultants’ fees) that were included in the Defendants’ calculation were somewhat higher than the quotes obtained previously by 170. The Defendants’ calculation also included a contingency fee of $10,000, which was derived from the IBI expert report, which did not include an explanation of how this figure was arrived at. In addition, the estimate contemplated construction costs in current dollars, whereas costs incurred in 2007 or 2008 if 170 had complied with the undertaking, on the evidence, may well have been lower.

[73] Taking these factors into account and considering the evidence as a whole, I have concluded that it would be appropriate to fix the amount recoverable by 171 and Ms. Pacheco from 170 for breach of the undertaking in respect of the expected cost for completion of the drive-through at $80,000. As contemplated by the undertaking, this amount is to be offset against the amount otherwise due to 170 under the VTB mortgage.

[74] With respect to the balance of the Defendants’ claim for breach of the undertaking, I agree with Plaintiff’s counsel that there was no amount recoverable by 171 and Ms. Pacheco for loss of profits. As I have previously indicated, the Defendants’ claim against 170 for its failure to complete the drive-through was supportable based on 170’s breach of the undertaking. If 170 did not complete the drive-through within the required time, the undertaking specifically contemplated recovery by 171 and Ms. Pacheco of costs they would be required to incur to complete the drive-through themselves by way of reduction in the amount due under the VTB mortgage. The undertaking does not in addition contemplate recovery for loss of profits, and in my view, it would not be consistent with the limited scope of the undertaking to interpret it as doing so.

[75] In any case, I am not satisfied that there was reliable evidence before me that would allow me to conclude that the Defendants had discharged the onus on them to demonstrate that they suffered a loss of profits as a result of 170’s failure to complete the drive-through. As previously indicated, the lost profit figure of $54,750 advanced by Defendants’ counsel was based on expected profits of $150 per day for one year. That daily profit figure was based on projected sales of $300 per day and an expected profit margin of 50 per cent. The projected sales figure was derived from handwritten field notes taken by Robert Kosar, an expert witness called by the Defendants in connection with their claim for damages with respect to the financial information provided to Ms. Pacheco. Mr. Kosar was involved in the preparation of appraisal reports relating to the Petro-Canada station, including a February 2007 appraisal report prepared for the purposes of supporting 171’s application to RBC for a first mortgage. According to Mr. Kosar, the notes indicated that Tal Kang projected drive-through proceeds of $300 per day. As well, according to Mr. Kosar’s evidence, the estimated industry average profit margin for coffee/donut sales was 50 per cent.

[76] I am not satisfied, however, that the evidence relied on by the Defendants was sufficient to support a finding of $300 per day in lost sales. The evidence (which was second or third hand at best) did not provide any basis for this projection. As well, the information was provided in a different context, that is, in connection with the preparation of an appraisal report to support an application by Ms. Pacheco for mortgage financing. In addition, I was not persuaded that the estimated industry average profit margin of 50 per cent for coffee/donut sales was appropriate in this case based on the evidence before me, including Ms. Pacheco’s evidence that she discontinued sale of Country Style products at the station in 2009 because of the poor performance relating to sales of those products.

VI. Amount recoverable – financial information

[77] Had I found 170 and Resham Kang liable with respect to the financial information provided to Ms. Pacheco, it would also be necessary to consider what amount would be recoverable by 171 and Ms. Pacheco by way of damages.

[78] In order to assess the damages that would have been suffered by 171 and Ms. Pacheco, Defendants’ counsel relied primarily on the evidence of David Ridley and Robert Kosar of Ridley & Associates Appraisal Services Limited, who were called by the Defendants to provide expert evidence relating to damages. In October 2011, Ridley & Associates provided to Defendants’ counsel a retrospective appraisal report as of February 5, 2007 with respect to the Petro-Canada station. Ridley & Associates had previously prepared an appraisal report in February 2007 to support the first mortgage financing application for the station by Ms. Pacheco, and had also prepared an earlier appraisal report in February 2006 to support a mortgage financing application for the station by Mr. Dutta, the owner previous to 170.

[79] In his closing submissions, Defendants’ counsel based his calculation of damages principally by reference to the difference in the value of the station depending on the level of fuel sales. This general approach was consistent with the evidence of Mr. Ridley and Mr. Kosar, who indicated that the level of fuel sales was a very important factor in determining the value of a gasoline station. Defendants’ counsel provided two alternative bases for calculating the damages suffered by 171 and Ms. Pacheco in relation to the financial information provided to Ms. Pacheco.

[80] The Defendants’ preferred approach to calculation of damages was based on annual fuel sales of 2,500,000 litres, which according to the expert evidence called by the Defendants indicated a fair value of the station of $850,000, which was $650,000 less than $1,500,000 paid by 171. The amount of the damages suffered by 171 and Ms. Pacheco under this scenario would therefore be $650,000. According to the Defendants, the figure of 2,500,000 in annual fuel sales represented a true picture of sales at the station, rather than the 3,500,000 litres ultimately represented to Ms. Pacheco by Tal Kang. In this regard, Defendants’ counsel noted that based on fuel purchases by Mr. Dutta and 170 from Petro-Canada in the period March 2006 to November 2006, annualized fuel sales would have been less than 2,200,000 litres. As well, based on 171’s purchases of fuel purchases in the two years following the closing of 171’s purchase of the station, annual sales would have averaged approximately 2,500,000 litres.

[81] The alternative scenario advanced by Defendants’ counsel was based on annual fuel sales of 3,200,000 litres which, according to the expert evidence called by the Defendants, indicated a fair value of the station of $1,160,000, or $340,000 less than the amount paid by 171. The amount of the damages would therefore be $340,000. According to Defendants’ counsel, use of this alternative annual sales level of 3,200,000 litres would be justified based on the average level of fuel sales during the period 170 owned the station, as compared to the level of sales represented by Tal Kang.

[82] Assuming that the annual sales figure advanced in each of these two scenarios was accepted as providing a true sales picture for the station, I would consider the damages calculations referred to above as useful starting points in the calculation of damages. However, I have previously concluded that it was appropriate in this case to estimate annual fuel sales based on actual fuel sales while 170 owned the station rather than upon prior or subsequent sales. Consistent with this conclusion, I find that that the second scenario advanced by Defendants’ counsel would be the more appropriate starting point for calculation of damages in this case. That scenario was based on annual fuel sales of 3,200,000 litres, which was on the evidence at the low end of the approximate range of annualized fuel sales while 170 owned the station. As previously noted, based on figures compiled by Plaintiff’s counsel, annualized sales while 170 owned that station was over 3,200,000 litres on an unadjusted basis, and over 3,300,000 litres when adjusted for days on which the station was closed. In this regard, on the evidence, I prefer the calculations made by Plaintiff’s counsel to those of Defendants’ counsel, which would have indicated slightly lower annual sales figures.

[83] In light of the foregoing, in all the circumstances, had I found 170 and Resham Kang liable with respect to the financial information provided to Ms. Pacheco, I would have fixed damages payable at $300,000.

[84] Plaintiff’s counsel also argued that that any amount of damages that would otherwise be payable to the Defendants should be reduced or eliminated by reason of Ms. Pacheco’s failure to mitigate her losses by accepting an offer to purchase the station that she was alleged to have received in late 2006 or early 2007. In my view, the evidence does not support a finding that Ms. Pacheco’s damages should be reduced because of failure to mitigate.

[85] According to the evidence of real estate agent Mikihail Nersessian, Ms. Pacheco listed the station for sale with him in late 2006, and he recalls bringing in an offer of $1,600,000 for the station, which Ms. Pacheco declined to sign back. Ms. Pacheco acknowledged listing the station with Mr. Nersessian, but denied receiving any offers. For his part, Mr. Nersessian was not able to recall the precise details of the offer, and no longer had any documentation to support his evidence in this regard. Accordingly, it is not known what conditions were attached to the offer or whether the prospective purchaser had the financial wherewithal to complete the purchase.

[86] The party alleging failure to mitigate has the onus of proof on that issue.[^5] In all the circumstances, I have concluded that the Plaintiff did not establish failure by the Defendants to mitigate their damages by refusing to accept an offer to sell the property, as alleged by Plaintiff’s counsel.

VII. Possession of mortgaged property

[87] Should 170 be granted possession of the mortgaged property pursuant to the VTB mortgage?

[88] Under the terms of the VTB mortgage, 170 is entitled to immediate possession of the property upon the failure of 171 to perform its obligation under the VTB mortgage, including its payment obligations. As indicated elsewhere in these reasons for judgment, 171 is clearly in default of its obligations under the VTB mortgage. Accordingly, 170 would be entitled possession of the property pursuant to the VTB mortgage.

[89] The evidence at trial indicated, however, that the mortgaged property is subject to a prior first mortgage in favour of RBC. The principal amount of this mortgage plus interest has become payable by 171, but has not been paid. The right of a subsequent mortgagee to have possession of the mortgaged property is subject to the right of the prior mortgagee to possession.[^6]

[90] In these circumstances, I have concluded that the appropriate disposition would be to grant 170 judgment for possession of the mortgaged property, but to stay its effect until 60 days after the judgment for possession has been served on holders of any prior encumbrance registered against the property.

VIII. Conclusion

[91] For the reasons set out above, judgment will issue as follows:

1. The Defendants shall pay to the Plaintiff pursuant to the VTB mortgage the principal amount of $220,000 (after taking into account an offset of $80,000 payable by the Plaintiff pursuant to the drive-through undertaking), together with interest at the rate of eight per cent per annum commencing October 9, 2008, to the date of judgment, plus post-judgment interest thereafter at the same rate.

2. The Defendants shall pay to the Plaintiff pursuant to the promissory note the principal sum of $25,000, together with interest at the rate prescribed for pre-judgment interest pursuant to the Courts of Justice Act commencing November 9, 2008, to the date of judgment, plus post-judgment interest thereafter at the prescribed rate.

3. The Plaintiff is entitled to possession of the property located at 564 Barton Street East, Hamilton, Ontario, but the effect of this paragraph is stayed until 60 days after the judgment for possession has been served on holders of any prior encumbrance registered against the property.

[92] On the question of costs, unless otherwise agreed between the parties as to timing, the Plaintiff shall serve and file brief written submissions (not to exceed three pages) together with a bill of costs within 21 days. The Defendants will have an opportunity to respond with brief written submissions within 21 days of receipt of the Plaintiff’s submissions. The Plaintiff will have an opportunity to reply with brief written submissions within seven days of receipt of the Defendants’ response. Should counsel for both sides prefer to make oral submissions, they should speak to the Trial Coordinator to arrange a date.

_________________________________

The Honourable Mr. Justice R.A. Lococo

Released: September 4, 2012

[^1]: R.S.O 1990, c. C.43, s. 128.

[^2]: In this chart, I have accepted figures compiled by Plaintiff’s counsel for the period up until March 9, 2007 which were provided to the court during final submissions. These figures differ in some cases from figures compiled by Defendants’ counsel, but the differences are not material.

[^3]: 1993 CanLII 146 (SCC), [1993] 1 S.C.R. 87 at 110.

[^4]: See Fraser-Reid v. Drowmtsekas, 1979 CanLII 55 (SCC), [1980] 1 S.C.R 720 at 738.

[^5]: Michaels v. Red Deer College, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Standard Chartered Bank v. Pakistan National Shipping Corp., [2001] 1 All E.R. (Comm) 822 (C.A.) at para. 38.

[^6]: Tannenbaum v. Helpvic Ltd. (1960), 1960 CanLII 385 (ON CA), 22 D.L.R. (2d) 333, 1960 CarswellOnt 169 (C.A.).