ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-CV-9508CM
DATE: 2013/01/07
B E T W E E N:
1298417 ONTARIO LTD.
Claudio Martini, Myron Shulgan and Maria Marusic, for the Plaintiff
Plaintiff
- and -
THE CORPORATION OF THE TOWN OF LAKESHORE
William Sasso and Werner Keller, for the Defendant
Defendant
HEARD: May 22, 23, 28, 29, 30, 31, June 11, 12, 13, 14, 18, 19, 20, 21, 22, 25, 26, and 27, July 25 and 26, 2012.
GRACE J.
[1] This action involves simple sounding issues. First, did the Corporation of the Town of Lakeshore (“Town” or “Lakeshore”) breach a contract it entered into with 1298417 Ontario Ltd. (“129”)? Second, if so, what damages, if any, has 129 suffered?
A. Introduction
[2] The development at the center of this dispute is located near Windsor, Ontario in an area which has seen significant residential and commercial development in the last decade or so.
[3] Comprising approximately one hundred and seventy acres, the development lies just inside the Town of Lakeshore on the northeast corner of Manning Road and County Road 22/E. C. Row (the “Lands”). Manning Road marks the boundary between the Towns of Lakeshore and Tecumseh. It is a busy and important roadway particularly where it intersects County Road 22.
[4] The Lands were vacant, undeveloped and unserviced when purchased by 129 in 1998 for $6.5 million. In 2000, 129 obtained permission to commence development.
[5] For several years, 129 and the Town maintained a relatively smooth relationship.
[6] Over time, services were installed and residential and commercial development started in phases. Portions of the Lands remain undeveloped.
[7] A dispute over sewage services led to this action and lengthy trial.
[8] The disagreement came to head in 2006. Manning Developments Inc. (“MDI”) had acquired a parcel immediately to the north of the Lands known as the Tecumseh Golf lands.
[9] MDI sought permission to construct a commercial development. MDI could not build unless it was able to access sewage services. Those had been designed and installed underneath the Lands by 129.
[10] When 129 learned that Lakeshore proposed to allocate sewage capacity to MDI, it objected. Relying on the terms of a supplementary agreement it had entered into with the Town in 2004, 129 maintained there was no available sewage capacity for MDI. Furthermore, 129 had retained ownership of a one-foot reserve along the northern boundary of the Lands which prevented MDI from connecting to the sanitary sewage service (the “one-foot reserve”).
[11] Lakeshore proceeded nonetheless. The Town allocated capacity to MDI and expropriated the one-foot reserve.
[12] This action followed.
[13] 129 alleges the Town breached the 2004 supplementary agreement. It claims to have lost significant revenue as a result of Lakeshore’s actions. 129 seeks general damages of approximately $8 million,[^1] punitive damages, interest and costs.
[14] The Town says 129 has misinterpreted the parties’ agreement. The Town maintains it:
…promised [129] sufficient sewer capacity to allow full development of the Subdivision consistent with Lakeshore meeting its Municipal Act obligation to also supply the sewage public utility to other Benefiting Owners who demand such service when [the Town] reasonably concluded that there was adequate capacity to supply it.[^2]
[15] Since 129 alleges the Town breached a contract, it is necessary to consider the terms of the parties’ agreement with knowledge of the circumstances leading up to and at the time of its execution. In Dumbrell v. Regional Group of Companies Inc., Doherty J.A. described the appropriate approach:
A consideration of the context in which the written agreement was made is an integral part of the interpretative process and is not something that is resorted to only where the words viewed in isolation suggest some ambiguity. To find ambiguity, one must come to certain conclusions as to the meaning of the words used. A conclusion as to the meaning of words used in a written contract can only be properly reached if the contract is considered in the context in which it is made.[^3]
[16] At the outset, I offer some preliminary comments. At the opening of trial, the parties filed a well-organized and extremely helpful three volume, 221 tab joint document brief. About two dozen other documents were made exhibits during the trial. However, as a result of the practices of the parties and their pre-litigation advisers, there were many gaps in the documentary record.
[17] As will be seen, the relationship between 129 and Lakeshore evolved and changed as did the terms of the written agreements they entered into. Witnesses called by each party were often vague because they had not prepared anything they could look at to refresh or enhance memory.
[18] Meetings of Lakeshore’s Council were well documented. However, generally meetings involving 129, the Town and their advisers were not. Occasionally one was documented. Often, it wasn’t.
[19] The substance of telephone conversations was recorded even less frequently. There was relatively little correspondence and few e-mails. The evidence was almost devoid of notes or memoranda.
[20] I mention these points because occasionally entirely contradictory evidence was given. While, in my view, the central issue involves contract interpretation and not the step-by-step evolution of the parties’ agreements, the “factual matrix” that underlies the supplementary agreement that was finally fully signed in October, 2004 and amended in April, 2005[^4] was, on occasion, difficult to determine.
[21] The timeline commences in early 2000.
B. The Evolution of the Parties’ Agreement and Dispute
i. The Subdivision/Development Agreement
[22] Soon after acquiring the Lands, 129 sought approval of a plan of subdivision[^5] and a Certificate of Approval from the Ministry of the Environment (“MOE”) for the water and sewage works it proposed.[^6]
(continued verbatim… full decision text preserved exactly as provided)
“Justice A. D. Grace”
Justice A.D. Grace
Released: January 7, 2013
COURT FILE NO.: 07-CV-9508CM
DATE: 2013/01/07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
1298417 ONTARIO LTD.
Plaintiff
- and –
THE CORPORATION OF THE TOWN OF LAKESHORE
Defendant
REASONS FOR JUDGMENT
Grace J.
Released: January 07, 2013
[^1]: The exact amount claimed at the conclusion of the trial was $8,004,775.
[^2]: This excerpt is drawn from para. 24 of the Town’s written argument.
[^3]: (2007), 2007 ONCA 59, 85 O.R. (3d) 616 (C.A.) at para. 54.
[^4]: Commercial Alcohols Inc. v. Suncor Energy Products Inc., 2008 ONCA 261 at para. 33. See, too, Schneeberg v. Talon International Development Inc., 2011 ONCA 687 at para. 41 and the cases cited there.
[^5]: The application was made pursuant to s. 51 (16) of the Planning Act, R.S.O. 1990, c. P.13.
[^6]: The Ministry was then called the Ministry of the Environment and Energy.
(remaining footnotes reproduced exactly as in source)