ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO. CV-09-00387080
DATE: 20140721

BETWEEN: STARPORT LANDING INC. (Plaintiff)

AND: LAUREL SPRINGS WATER CORP et al (Defendants)

AND: NCG VENTURES INC et al. (Third Parties)

BEFORE: M.A. SANDERSON J.

HEARD: June 30, 2014

COUNSEL:
Patrick Bakos for the Plaintiff
Steven Gadbois for the Defendants

ENDORSEMENT

[1] This is a Simplified Rules action.

[2] The Defendant Laurel Springs Water Corp. ("Laurel") brings this motion for summary judgment dismissing the claim against it of Starport Landing Inc. (Starport"), and for an order for payment to it of a $50,000 deposit.

[3] Counsel for Laurel submitted generally that the facts are not in dispute and that this is an appropriate case for summary judgment. Moreover the Plaintiff's action is statute barred.

[4] Counsel for Starport submitted generally that the motion should be dismissed because there are genuine issues for trial. There are a number of factual issues that require the calling of evidence, including the factual circumstances relevant to the resolution of the limitation issue.

[5] The litigation involves an abortive sale in 2006 of an industrial property located at 139 Northfield Drive West in Waterloo ("the lands") that had a Ministry of the Environment Prohibition Order (the "MOE Prohibition Order") registered against its title at all material times.

[6] Laurel Springs originally contracted to sell the property under a tendering process to NCG Ventures Inc. ("NCG") by Agreement of Purchase and Sale (“APS”) dated June 26, 2006. The documents forwarded to NCG as part of the tendering process included the MOE Prohibition Order and a report from WESA Environmental Consultants.

[7] Laurel advised NCG of the MOE Prohibition Order. The APS stipulated that the offer was conditional for a period of 30 business days from acceptance upon the buyer being satisfied with the environmental condition of the property. The buyer could waive the condition at its option.

[8] Schedule A included at para 2:

This offer is conditional for a period of thirty business days from acceptance of this Agreement upon the buyer being satisfied, in his sole discretion with the environmental condition of the property failing which this Offer shall be null and void and the deposit shall be returned to the BUYER if full without interest. These conditions are included for the sole benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.

And at para 7:

The Buyer will be doing environmental works on the site which may include drilling, sampling, etc all correspondence between the Buyer’s consultants and the Buyer will as well be forwarded to the Seller including any reports…etc….

[9] NCG and Laurel extended the time on several occasions for NCG to satisfy itself on the environmental condition of the property. The last extension granted was to expire on August 14, 2006.

[10] On August 11, 2006, the principal of NCG received a letter from the environmental expert it had hired, advising the information it had received was insufficient to provide a cost estimate for remediation. He wrote that he needed to speak with Mr Miller in the MOE to obtain further information. He notified that due to the complexity of the site and its high profile with the MOE, he would need a week from the time he interviewed the MOE and received the needed information to provide cost estimates for the remediation.

[11] On August 11, 2006, Starport took an assignment of NCG's interest in the APS.

[12] NCG notified Laurel of the assignment by letter dated August 11, 2006.

[13] On August 14, 2006, Starport waived the condition in the APS about being satisfied with the environmental condition of the property.

[14] Therefore the APS did not expire on August 14, 2006 as it otherwise would have done.

[15] Counsel for Laurel submitted that since it relies on the August 11, 2006 letter from NCG’s expert to NCG to which I have referred above, on the basis of that letter it was satisfied with the physical condition of the property, Starport was clearly aware of its environmental condition and the hurdles faced with the MOE. Significantly no one from Starport deposed either that he/she /they did not receive the tender documents from NCG or that no one from Starport knew about the MOE Prohibition Order at the time it took the assignment from NCG.

[16] Counsel for Starport submitted that Laurel has not proved that Starport knew about the MOE Prohibition Order. Immediately after learning of the assignment as a result of receiving NCG’s August 11, 2006 letter, Laurel had an obligation to notify Starport of the MOE Prohibition Order. It has not proved that it did so. The Plaintiff’s waiver of the condition that the buyer be satisfied with the environmental condition of the property [after consulting with Brownfields Services Ltd, the author of the August 11, 2006 letter to DCG] did not affect Laurel's obligation under the APS to remove any restriction, charge, lien, or encumbrance from title to the property prior to closing. Starport was entitled to a return of its deposit because Laurel did not remove the MOE Prohibition Order from title before the scheduled closing.

[17] He was referring to s. 4(c) of the Vendors and Purchasers Act RSO 1990, c V.2 that provides as follows:

4(c) the vendor has thirty days in which to remove any objection made to the title, but if the vendor is unable or unwilling to remove any objection that the purchaser is not willing to waive, the vendor may cancel the contract and return any deposit made but is not otherwise liable to the purchaser;

[18] On August 18, 2006, four days after Starport had waived the environmental condition in the APS, Starport's lawyer wrote Laurel’s lawyer a letter including the following:

We have now received a copy of the Agreement of Purchase and Sale dated June 26 and an assignment of same dated August 11 … and we confirm we represent the purchaser herein.

As mentioned to you in our telephone discussion yesterday, I am very concerned about the implications of a Certificate of Prohibition …We shall seek further instructions from our client in this regard,and needless to say, are concerned about completing this transaction and assuming the liability that would flow to the purchaser…as a result of taking title to the subject lands. The order relating to the contamination was not provided to the purchaser as required.

[19] Counsel for Starport submitted that Mitz was referring to the obligation of every person with an interest in real property before dealing with the property in any way under s. 197 of the Environmental Protection Act to give a copy of [any] order affecting the property, to every person who will acquire an interest in the property: "… A dealing with real property by a person who is subject to a requirement imposed … is voidable at the instance of a person who was not given the copy of the order in accordance with the requirement."

[20] On August 28, 2006, Starport's lawyer Mitz wrote a requisition letter to Ross, Laurel's lawyer, demanding the discharge and removal from title of the MOE Prohibition Order.

[21] On September 11, 2006, Mitz demanded again that the MOE Prohibition Order be removed before closing.

[22] Counsel for Starport filed the affidavit of Amanda Carpenter in support of its motion. She deposed at para. 18 that on September 13, 2006, Mitz sent a letter to Ross about an amendment to the Agreement, based on information he had received from Associated Brownfields Services in a letter dated September 12, 2006.

[23] Counsel for Starport submitted before me that in the September 13, 2006 letter, Mitz was confirming a concluded agreement between Starport and Laurel.

[24] Counsel for Laurel submitted that the September 13, 2006 letter documents a proposal made by Mitz to Ross that was never accepted.

[25] In the alternative, counsel for Starport submitted it is not clear when Laurel agreed to extend the time to allow MOE to accept the remediation plan and for its execution and implementation. A trial is necessary to resolve that issue.

[26] On the basis that Laurel was not able to deliver a good and marketable title as required in the APS, on October 19, 2006, Mitz demanded the return of the deposit.

[27] On November 20, 2006, Mr Friedman, a solicitor for Starport, wrote to Ross advising that legal proceedings, including a claim for specific performance, would be instituted if Ross did not respond by November 22, 2006.

[28] Ms. Carpenter deposed that on February 21, 2007, representatives of Starport and Laurel attended at the site to discuss the transaction. However, she did not allege that Laurel made any specific promises [including any promise in connection with the running of a limitation period].

[29] On September 27, 2007, since the transaction would not be going ahead as a result of Laurel’s failure to satisfy the “valid objections going to the root of title… including the discharge and removal of the MOE Prohibition Order," counsel for Starport wrote Ross demanding a return of the deposit.

[30] On October 18, 2007, Friedman re-sent the September 27, 2007 letter to Ross.

[31] On April 2, 2009, Friedman again reiterated he had instructions to commence proceedings to recover the deposit.

[32] The Statement of Claim was issued on September 15, 2009.

THE ISSUES

o Has the Plaintiff Starport raised any genuine issues requiring a trial?

o Could Starport demand that Laurel remove the MOE Prohibition Order after waiving the environmental condition inserted in the APS for the benefit of the purchaser?

o Had the Limitation Period expired before Starport’s action was commenced on September 15, 2009?

Has the Plaintiff Starport raised any Genuine Issues for Trial?

[33] Rule 20.01(3) of the Rules of Civil Procedure provides that after delivering a Statement of Defense, a defendant may move for summary judgment dismissing all or part of a claim.

[34] Rule 20.04(2) provides that a court shall grant summary judgment if it is satisfied there is no genuine issue requiring a trial.

[35] Rule 20.02(2) of the Rules of Civil Procedure provide that in response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the pleadings, but must set out in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial.

[36] In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada clarified the test to be applied on summary judgment motions such as this. The Supreme Court held there will be no genuine issue requiring a trial when a judge can make the necessary findings of fact, apply the law to those facts, and where it is a proportionate, more expeditious and less expensive means to achieve a just result than a trial.

[37] The Supreme Court directed that the summary judgment rules must be broadly interpreted, favouring proportionality and fair access to affordable, timely, and just adjudication of claims.

[38] On a motion for summary judgment under Rule 20, without using the new fact finding powers, the first step is to determine whether there is a genuine issue requiring a trial based on the evidence. If there appears to be a genuine issue requiring a trial, the judge should then determine whether a trial can be avoided by using the new powers under 20.04(2.1) and 20.04(2.2).

[39] Paragraph 50 of the Hryniak decision includes the following:

…When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears repeating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant principles so as to resolve the dispute.

Application of the Law to the Facts

[40] Here, I am confident that the necessary facts are sufficiently clear and that a trial is not required for this Court to reach a just resolution of this dispute.

[41] I do not accept the submission of counsel for Starport that its waiver with respect to the environmental condition of the property dealt only with the physical condition of the property, not the title issues which he suggested were separate and unrelated to that waiver.

[42] Carpenter deposed that Starport provided the waiver because it had satisfied itself on the physical environmental condition of the property.

[43] Counsel for Starport did not adduce any evidence to the effect that his client filed the waiver on August 14, 2006 because it did not know about the MOE Prohibition Order.

[44] On August 14, 2006, when it filed the waiver, Starport was clearly aware there were serious unresolved environmental issues in relation to the property and that the APS would expire unless it either waived the environmental condition or it sought and obtained an extension to allow it to perform further environmental investigations.

[45] At that point, it sought no extension. Rather, it took the position the MOE Prohibition Order must be lifted/removed from title before closing. Unless the MOE Prohibition Order were removed from title, the vendor would be unwilling or unable to convey to it the title the vendor had originally agreed to convey to NCG. Unless the MOE Prohibition Order were lifted, Laurel would not convey the title it had agreed to convey to NCG.

[46] Laurel could not convey title clear of the MOE Prohibition Order until the MOE had approved and implemented a remediation plan. That could not be expected to happen immediately.

[47] I am satisfied that when Starport entered into the contract with NCG under which NCG assigned its rights under the APS, Starport was aware that the MOE was insisting on remediation of the lands. The need for remediation was no surprise to it. Starport was aware of the content of the August 11, 2006 letter from Associated Brownfields Services Limited to NCG, setting out the information it needed to quantify the cost of that remediation. I do not accept Starport's contention that it had satisfied itself on the environmental condition of the property. Starport knew it was buying an environmentally challenged property with undetermined remediation costs.

[48] I also reject the submission that on closing, Laurel was required under the APS to provide title to the property free of its environmental challenges. The sale price in the APS would have already reflected what Laurel and NCG clearly knew at the time the APS was originally signed [and I have found Starport knew at the time of the assignment] - there was a serious contamination problem on the property that needed to be remediated at an undetermined cost.

[49] Starport knew that it was agreeing to buy a property with environmental problems that needed to be remediated.

[50] NCG and its assignee Starport knew if the environmental condition were not waived, the APS would expire on August 14, 2006. Starport chose not to let the APS expire. It waived the environmental condition knowing that was necessary to prevent expiry and knowing that remediation would be costly.

[51] As of August 17, 2006, when Mitz suggested in his letter to Ross that he had discovered the MOE Prohibition Order by searching the title, Starport had not yet paid the $50,000 to NCG. Starport did not make its $50,000 payment to NCG until August 30, 2006. If, in fact, Starport were unaware of the MOE Prohibition Order and was surprised about exposure to unforeseen liabilities, as Mitz alleged on August 18 [but which the principals of Starport did not directly allege in response to Laurel's motion for summary judgment], Starport could have refused to pay the deposit. Starport and NCG had agreed that Starport would have until August 18 to pay the deposit and if it did not do so the deal would be null and void. Starport did not finalize the deal with NCG until it paid the deposit on August 30.

[52] I find the September 13, 2006 letter documents a proposal made by Mitz to Ross that Ross never accepted.

[53] Its counsel now submits that it was entitled to take the position that the waiver was irrelevant. The failure to remove the MOE Prohibition Order went to the root of title. Unless the MOE Prohibition Order were removed from title, Starport would not receive substantially what it had contracted to receive.

[54] I disagree. By taking the position it did, Starport was seeking substantially more than what NCG had contracted to receive and substantially more than it had agreed to take by assignment from NCG. Starport was not entitled to refuse to close on the basis that it did. Laurel was entitled to keep the deposit.

[55] There are no factual issues requiring a trial. I reach this conclusion on the present state of the evidence. It is not necessary to consider the additional powers of trial judges granted under Rule 20.

The Limitation Issue

[56] Given the foregoing, it is not necessary to determine the limitations issue.

[57] However, I am of the view that there is no uncertainty about when Starport or its agents were aware it would have to bring action if it wanted to try to enforce the return of the $50,000 deposit. That was clear by November 22, 2006.

[58] I have found after Starport waived the environmental condition on August 14, 2006, Laurel did not extend the time for Starport to get the MOE Prohibition Order removed from title. When Mitz proposed that Laurel agree to an amendment to the APS, Laurel did not consent.

[59] Starport adduced no other evidence upon which this Court could hold there was an agreement to extend or waive Laurel's rights to rely on a 2 year limitation.

Summary

[60] On the evidence here, I feel confident no purpose would be served by requiring a trial here. The interests of justice do not require it.

Disposition

[61] An order will go granting summary judgment to Laurel dismissing Starport's action. Starport is not entitled to a return of the deposit.

[62] Counsel may make written submissions on costs not exceeding three pages on or before August 18, 2014.

M.A. SANDERSON J.

Released: