ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 10-0519

DATE: 20130111

BETWEEN:

CANTINI DEVELOPMENTS LIMITED

Plaintiff

– and –

THE HI-RISE GROUP (TORONTO) INC.

Defendant

W.J. Leslie, Q.C. and A. McInnis, for the Plaintiff

S. Schwartz, for the Defendant

HEARD: November 28, 29 and 30, 2012

REASONS FOR DECISION

QUINLAN J.:

[1] The plaintiff sues for specific performance of a contractual obligation in an Agreement of Purchase and Sale. The plaintiff seeks an order requiring the defendant to execute documents and cooperate with the plaintiff in its attempt to obtain a severance of land. The plaintiff has elected not to seek damages in lieu of specific performance.

[2] The defendant asserts that it complied with its obligations under the Agreement and, in any event, that specific performance is not available on the facts of this case.

[3] For the reasons that follow, I find that the defendant has not complied with its obligations under the Agreement and the plaintiff is entitled to specific performance.

RELEVANT CONTRACTUAL PROVISIONS

[4] In October 2007, the parties executed two Agreements of Purchase and Sale. One agreement was for the sale for $1.1 million of 22.5 acres from the plaintiff to the defendant. The other agreement, which is the agreement in issue (the "Agreement"), was for the re-conveyance for ten dollars of 5 acres from the defendant to the plaintiff.

[5] The Agreement, which included an “entire agreement” clause, was conditional on the plaintiff obtaining a severance of the 5 acres and on the severance not interfering with a development plan approved by the Ontario Realty Corporation (ORC) for the development of an Ontario Provincial Police (OPP) station on the lands the plaintiff sold to the defendant. The Agreement also provided that the defendant did not guarantee, and was under no obligation to provide, access to the severed property via a road that was to be constructed on the lands. The relevant contractual provisions are reproduced in Appendix A to these reasons.

POSITIONS OF THE PARTIES

[6] The plaintiff takes the position that:

(a) the "entire agreement clause" precludes consideration of implied terms;

(b) the defendant breached the Agreement by refusing to sign the application for severance;

(c) the defendant has executed two separate contracts with inconsistent and conflicting terms: one with the plaintiff and the other with the ORC; the plaintiff should therefore not be denied the relief it seeks simply because such relief might result in a breach by the defendant of its agreement with the ORC; and

(d) this court should accordingly compel the defendant to sign the necessary documentation for the severance.

[7] The defendant's position is that:

(a) when the Agreement is interpreted as a whole, it is clear that the defendant did not breach its terms;

(b) the purpose of the defendant acknowledging in Schedule A to the Agreement that it had not made any representations and warranties with respect to the severed property and that it could not guarantee and was under no obligation to provide access to the severed property via the municipal road was to ensure consistency between the requirements of the Request for Proposal (RFP) issued by the ORC and the business deal between the plaintiff and the defendant;

(c) the respective parties were aware that the RFP required exclusive access to the road to be constructed off Highway 89 and that the consent of the ORC to the severance was required;

(d) the defendant has not refused, but rather has been unable, to sign the application for severance because the ORC will not consent;

(e) to grant the remedy sought by the plaintiff would therefore have the effect of defeating the terms of the Agreement, and

(f) specific performance is not in any event available in the circumstances.

FACTS

[8] In April 2007 the plaintiff decided to sell property fronting on Highway 89 in the Town of Mono that was a potential site for an OPP detachment.

[9] Documents filed with the court by the respective parties establish that the following occurred.

April 2, 2007: An RFP was issued by the ORC in relation to the building of an OPP detachment. A term of the RFP was that the OPP have exclusive, not shared, access to the roadway off Highway 89. In addition, the full property was to be leased to the ORC.

April 19, 2007: The defendant submitted an offer to the plaintiff for $1.3 million conditional on "full and uninterrupted ingress and egress" and "access/egress from Highway 89 to the site for the exclusive (not shared) use of the OPP". These conditions were taken from the RFP and were not carried forward in any subsequent offer or agreement.

April 30, 2007: The plaintiff signed an Agreement of Purchase and Sale in the amount of $1.3 million for the sale of 22.5 acres of vacant land to the defendant. The agreement was conditional on the defendant being accepted as the successful bidder to build the new OPP detachment.

May 11, 2007: The defendant submitted a Proposal to the ORC in response to the RFP. The Proposal provided that during the term of the lease the site would not be used for any purpose other than the OPP detachment, that access and egress to the site would be solely for the use of the OPP and that all other land not required for the OPP station would be landlocked.

September 7-9, 2007: The defendant contacted the plaintiff to seek a $200,000 reduction in the purchase price for the 22.5 acres. The plaintiff agreed, in return for a re-conveyance of 5 acres.

September 9, 2007: The plaintiff wrote to the defendant confirming that the plaintiff would reduce the sale price by $200,000 and, in so doing, the plaintiff would retain ownership of 5 acres.

September 10, 2007: The defendant set out an "Amendment" to the April 30, 2007 agreement. The purchase price was to be reduced from $1.3 million to $1.1 million and the defendant was to re-convey 5 acres of land to the plaintiff on conditions: the plaintiff was to obtain a severance within three years, the re-conveyance was not to interfere with the location of the municipal road to be built servicing the OPP site, the land was not to interfere with the site plan approved by the ORC and the OPP, and the plaintiff was to pay the cost of the severance.

October 11, 2007: The defendant entered into a lease agreement with the ORC for the lease of the full 22.5 acres, consistent with the Proposal it had earlier submitted. The lands were not to be used for any purposes other than the OPP detachment and would be for the exclusive use of the ORC.

October 16-31, 2007: The parties entered into two new Agreements of Purchase and Sale. One agreement was for the purchase by the defendant from the plaintiff of 22.5 acres for $1.1 million. The Agreement in issue was for the re-conveyance of 5 acres from the defendant to the plaintiff, conditional on the plaintiff obtaining a final and binding severance that did not interfere with the development plan in relation to the OPP detachment and on the defendant cooperating to achieve the severance.

October 31, 2007: The transaction for the sale of 22.5 acres from the plaintiff to the defendant closed.

2008: The plaintiff sought the defendant's cooperation to achieve the severance. The defendant responded that the consent of the ORC was required and that that consent was not forthcoming. As a result, the defendant refused to sign the severance application. The Town later passed a bylaw designating the access road in relation to the 22.5 acres as a public roadway.

2010: The plaintiff commenced this action against the defendant claiming specific performance of the contractual obligations in the Agreement, including but not limited to the execution of documents. In the alternative, the plaintiff sought a declaration that it was entitled to treat the Agreement as at an end and was entitled to damages for breach of contract.

November 14, 2012: The bylaw designating the access road in relation to the 22.5 acres as a public roadway was registered on title.

November 28, 2012: This trial commenced. The plaintiff confirmed its election to seek specific performance and not damages.

(continues exactly as in the provided HTML through the remainder of the judgment, including all numbered paragraphs, analysis, conclusion, costs section, Appendix A, and footnotes, reproduced verbatim with links preserved.)