Campbell Pools Inc. v. The Seville Group Inc., 2015 ONSC 2314

COURT FILE NO.: 10-48168

DATE: 20150519

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CAMPBELL POOLS INC.

Plaintiff

– and –

THE SEVILLE GROUP INC.

Defendant

Eric Williams, & Jeremy Rubenstein for the Plaintiff

Kevin A. Johnson, for the Defendant

HEARD: January 12-15, 2015

REASONS FOR JUDGMENT

beaudoin j.

Overview

[1] The Plaintiff, Campbell Pools Inc., seeks a declaration that it has a valid and binding agreement to purchase lands and premises known municipally as 540 Pitch Off Road in Plantagenet, Ontario from the Defendant, Seville Group Inc. (“Seville”). The Plaintiff seeks specific performance of that agreement and the delivery of the deed and other title documents. In the alternative, the Plaintiff states that facts give rise to the remedy of proprietary estoppel with respect to the subject lands. In the further alternative, the Plaintiff seeks a lien on the real property pursuant to s. 37 of the Conveyancing and Law of Property Act R.S.O., c.C34 in the amount of $650,000. In the further alternative, the Plaintiff seeks judgment against the Defendant in the amount of $650,000 for unjust enrichment.

[2] The Defendant denies that there was an agreement; and if there was an agreement, such an agreement was not enforceable. The Defendant pleads and relies on the Statute of Frauds, RSO 1990, c. S.19, s. 4 and by way of counterclaim seeks an accounting of all insurance proceeds received by the Plaintiff and claims an award not limited to $300,000 for its further share of those proceeds.

The Facts

[3] Tom Campbell is the owner and operator of Campbell Pools Inc. and it carries on the business as a vendor of swimming pools and supplies. In this decision, any reference to “Campbell” will include a reference to both Tom Campbell and Campbell Pools Inc. according to the context. Campbell had previously operated the business with two partners Harry Martyniuk and Terry Martyni, but that partnership ended in 2007 prior to the events that give rise to these proceedings. Campbell has been carrying on its business from leased premises located at 540 Pitch Off Road in Plantagenet, Ontario since 1994.

[4] The leased premises are part of a larger 1,100 acre farm owned by the Defendant and they consist of a large two-story barn, a house, a horse barn and a shed. Campbell dealt exclusively with Seville’s agent, Maurice Duciaume (“Duciaume”) with regard to any issues arising from the lease.

[5] The lease, executed in 2002, describes the lands and premises as being comprised of approximately 4 acres as more particularly described in “Schedule A” to the lease. Campbell could not recall having seen this Schedule and no such document was produced at trial.

[6] Section 3.01 of the lease required the tenant to keep in full force and effect insurance protecting the interests of the tenant, the landlord and the mortgagees of the landlord. Section 4.01 similarly required the landlord to keep in full force and effect (at the cost of the tenant) insurance on the building, improvements and all appurtenances. Section 4.03 made the landlord responsible for all costs associated with all structural or capital repairs. Article 5 covered Damage and Destruction. The landlord had the obligation to repair damage or destruction to parts of the demised premises, however, in the event of damage or destruction to the property, section 5.01 (a) of the lease provided that the lease could be terminated if those damages could not be repaired within 120 days and provided that either the landlord or the tenant gave to the other ten (10) days’ notice. A two year extension was executed on February 3, 2005 and was signed by Duciaume “for Seville Group Inc.”

[7] By letter dated October 4, 2005, Campbell offered to purchase property from Seville for $300,000. His hand drawn sketch (Ex. 2-49) attached to that letter describes a parcel of approximately 14 acres in size. Duciaume replied on October 12, 2005 that the owner did not accept the offer but he attached a copy of an e-mail exchange between himself and Seville’s owner, Germano Valle (“Valle”) wherein Duciaume advised Valle “this is not a time to be scornful of offers made on hard-to-sell assets, and well above the valuation.” He refers to a conversation with an agent with a competing property for sale for $350,000: “for modern steel building with nice offices on 19.5 acres, highway commercial, 400 amp service, new septic.”

[8] Two years later, on August 24, 2007, by letter from Maurice Duciaume, Manager, Seville Group Inc., Seville offered to lease an additional adjacent parcel of land to Campbell for a total of 11 acres. The property is described in an attached plan of survey that contains 19.515 square metres delineated by a line of occupation (Ex. 2-54A). The parties agree that this area converts to only approximately 4.8 acres. Campbell does not recall receiving a survey of the additional land and none was produced at trial. In any event, he was not interested in the 11 acre parcel. He offered to renew the existing lease for a further four years which offer Duciaume accepted subject to a few amendments.

The Collapse of the Barn

[9] Sometime during the evening of March 9-10, 2008, the large barn that Campbell used for the storage collapsed as a result of a severe snowstorm. The barn was full of Campbell’s stock and materials required for its business. There were two levels with 1600 square feet of storage on each level. A number of photographs showing the extensive damage were put in evidence.

[10] Campbell immediately tried to secure and salvage whatever stock was undamaged and was in contact with the insurers, Economical Mutual. He urgently needed a temporary building to protect his stock. Crawford Adjusting Company was assigned to adjust the loss and Scott Dale was appointed as the adjuster. During this time, Duciaume sought information from Crawford about insurance coverage. Seville did not have any insurance on the property even though the lease required it to do so. The correspondence reveals that Seville was concerned that the insurer might try to off-load the problem and sought assurances that the loss was covered by insurance held by the tenant.

[11] During this time, Campbell arranged for temporary storage for its stock in Cornwall, Ontario. While both parties were dealing with the adjuster, Campbell made a proposal to Duciaume. He suggested that Seville could get $440,000 of the insurance proceeds in turn for his purchase of the land. Campbell would get $300,000 in order to build a dome instead of a barn and to put up some shelving for his stock. Seville would not have to rebuild the barn. By fax dated May 20, 2008, Duciaume responded as follows:

Hi Tom;

I just got the go-ahead to offer you the buildings as they presently sit, on the existing 5 acre lot, for $440,000.

Additional acres abutting can only be purchased with a process that identifies a lower price for acres “behind” the existing buildings, or a higher price for “road frontage acres” as shown in the sketch I sent you last fall.

Also, both of these potential prices will be affected by the number of acres acquired, (to a maximum of 20 acres).

[12] Duciaume was then in contact with Valle by e-mail dated May 28, 2008. It says (in part):

Campbell got back to me to say that he finds it “puzzling” that the offer to sell to him now eliminates the extra land that I had surveyed for rental purposes.

He understands that the offer, on what he currently uses, is 440K cash “as is.”

[13] That earlier sketch referred to the 11 acres that Seville had offered to rent and has not been found. Meanwhile, Campbell continued to deal with the insurers and received compensation for his damaged property. On July 16, 2008, Crawford sent Duciaume the provisions of the insurance policy dealing with replacement cost and sought Seville’s intentions with respect to the damaged building. If Seville did not replace the barn, settlement would be made on the basis of Actual Cash Value.

[14] On the same date, Campbell wrote to Scott Dale:

Dear Sir:

I have had discussions with Mr. Maurice Duciaume today and we both agreed that, yes you can pay to have the structure rebuilt like it was before. I figure the cost to dismantle and rebuild, according to existing bylaws and permits, would be around $1.2 million plus GST. Also it can take up to 6 months to rebuild it and for me to move back to that location. So the cost of staying in Cornwall for those six months would be $50,000 X 6 for a total of $300,000 which would raise a total cost of replacement around 1.5 million plus GST, if everything goes well.

Maurice Duciaume and I both agree that the following options would make more sense for all parties involved. A cheque for $440,000 plus GST would be paid to Maurice Duciaume for Campbell Pools purchasing the property. Another cheque for $610,000 plus GST would be given to Campbell pools for rebuilding purposes at his discretion. With this money, it is the intention of Campbell Pools to put up a dome and shelving. This would take about 3 months and would cost the insurance only 3 X $50,000 for total of $150,000, for the Cornwall warehousing.

Our options will cost the insurance company $1.2 million instead of 1.5 million. Why would the insurance company not want to save $300,000 and in the process, make the landlord and tenant happy?

[15] He then refers to an outstanding inventory cheque balance and adds that the Cornwall warehousing lease will be terminating on July 31, 2008. He reminds Mr. Dale that it has been four months and one week since the collapse.

The August 3, 2008 Letter

[16] On August 3, 2008, Duciaume faxed a letter to Dale that reads:

Re-: Settlement of Damages at 540 Pitch Off Road, Plantagenet

To whom it may concern;

Our tenant, Campbell Pools Limited is attempting to finalize its claim with Economical resulting from a collapsed roof this winter at its main storage facility in Plantagenet.

It is the understanding I have been given by Mr. Dale that the property owner/co-insured of the damaged warehouse at 540 Pitch Off Road (Seville Group Inc.) has the following two options for settlement, one of which must be approved by Seville:

1. a rebuilding of the structure to replace the damaged portions;

2. a cash settlement which will be paid to the tenant and also the landlord, in the disbursement of two cheques. One cheque payable to the Landlord, for $440,000, will represent the purchase of the buildings and the land (app. 5 acres) which the tenant (Campbell Pools Inc.) presently rents from landlord (Seville Group Inc.).

I hereby authorize you to expedite the second option (cash settlement) which allows landlord to be paid the sum mentioned above. Please note that this sum represents a payment by the tenant (Campbell Pools Inc.) for the outright purchase of the lands, and as they have not yet been formally severed from the larger farm acreage, there will necessarily be a delay for payment, contingent upon the tenant completing the necessary legal steps to achieve the severance.

Whether the procedure calls for all funds to be paid to the Insured (Campbell pools), and for the portion payable to the landlord to be held in escrow, is not considered by landlord to be material to the settlement.

Signed______________________

Maurice Duciaume, Manager, Seville Group

I am authorized to bind the corporation.

[17] At the bottom of the document, Campbell wrote “Maurice, I agree with this. Please send to Crawford. Thank you. T.C.” A reporting letter from Scott Dale to Economical dated September 17, 2009 confirms that the agreement is subject to Economical’s approval.

[18] According to Campbell, once the insurance proceeds were paid to Seville, the property in question was to be his. On September 23, 2008, Duciaume sent an e-mail to Andre Barrette, a surveyor. The subject of the e-mail is: “Survey for Tom Campbell” and it reads:

Hi Andre;

Please find attached a digital image of lands and buildings currently in use by Campbell Pools as tenant to Seville Inc. (my employer), in Plantagenet.

Tom would like you to perform a survey of these lands, possibly with a couple of acres of additional land – (to be determined). This is for the purpose of a municipal severance from the existing farmlands.

Confirmation of the initiative is expected shortly; he will contact you.

As mentioned in our conversation today, it is likely that an easement will also be required as part of this survey. The easement is basically the existing heavy gravel roadway which extends to the rear of the proposed new property, from Pitch Off Road.

Maurice Duciaume

Seville Group Inc.

[19] Attached to the e-mail is the 19.515 m² plan of survey. Campbell said this sketch describes all of the area used by the business as well as the surrounding area maintained by him.

[20] A proof of loss form was faxed to Crawford on October 17, 2008. Under the heading Insurance and Loss, Campbell wrote “Building” and for the amount “claimed under this policy”, he recorded $440,000. Payment of the claim was to be made to Campbell Pools Inc. and Seville Group Inc. Both Campbell and Duciaume signed the form. On the same date, the Economical Insurance Company issued two cheques. The first cheque was in the amount of $440,000 and it was made payable to Tom Campbell, Harry Martyniuk and Terry Martyni and to The Seville Group. The second cheque was in the amount of $300,000 and it was payable to Campbell and his former partners operating as Campbell Pools.

[21] Campbell and his former partners endorsed the cheque for $440,000 and sent it to Duciaume on October 28, 2008, with a note that said: “the purchase of the land at 540 Pitch Off Road.” Campbell added that he would pay any additional cost incurred, for example; land survey, severance, etc.

[22] Campbell testified that he then spent over $650,000 to erect a dome and to improve the property. Photographs tendered in evidence demonstrated the extensive repairs and renovations to existing structures. Concrete floors were poured in order to support shelving under the new dome. An asphalt driveway was put in place and a floor was installed in the horse barn. The $300,000 cheque was used to dismantle the warehouse and to rebuild the structures on the property so that his stock could be moved back onto the property.

[23] On October 31, 2008, Crawford reported to Economical with respect to the settlement of the claim. In that report, reference is made to payments for the building ($730,000.), stock ($342,092.16) and business interruption loss ($714,387.06). Campbell believed that was the end of it and that he was now the owner subject to the severance of the property. He asked Andre Barrette to prepare two sketches of the property; one containing the area currently used by Campbell and another option for 8 acres.

[24] From that point on, namely, November 1, 2008, Campbell did not pay rent as he claims he had a verbal agreement with Duciaume to that effect.

[25] On December 23, 2008, Barrette reported that two pieces of land could be severed; one was for the smallest severance possible, namely, 6.0 acres. He also provided a sketch for a possible 8.0 acre parcel. He noted that the property lines were “squared-off” to produce a more regular shaped lot, which the Approval Authority would expect. He concluded that the smallest possible severance that encompasses the items showed to us is 6.0 acres. He sought further instructions. Campbell informed him that he had paid for the “squared-off” piece of approximately 6 acres for $440,000 and asked Barrette to inform Duciaume, which he did, by fax, on December 24, 2008 that said:

SUBJECT: proposed severance sketches for the sale in Plantagenet

Dear Maurice Duciaume:

I’m enclosing two severance sketches for your review and approval. You will note that the proposed property lines were “squared off” to produce a more regular-shaped lot, which is what the Approval Authority expects. Consequently the smallest possible severance that encompasses the items shown to us is 6.0 acres. Another sketch demonstrating 8.0 acres is also enclosed for your perusal. Thomas Campbell is offering $15,000 for the additional 2 acres. Please let me know which option is acceptable. I will finalize the sketch and give it to the lawyer for the agreement of purchase and sale. Once the agreement is signed by both parties, I will proceed with the severance application.

You will note the right-of-way is provided for the retained parcel along the southerly most edge of asphalt. I’ve sent an arbitrary width of six metres (20 feet) for this right of way. Please confirm that a right-of-way is still required for the retained parcel when you instruct me to use the six-acre or eight-acre parcel.

Seville advises that the Deal is under Review

[26] By the end of January, 2009, Campbell was still looking for a decision from Duciaume when he received this fax from him on January 27, 2009 that said:

Tom, the deal was under review. If you want to move forward, I need you to fax or courier any and all correspondence or documents to our lawyer Barry Webster.

[27] Campbell sent copies of the settlement cheques to Mr. Webster. Duciaume then contacted him on February 26, 2009 and advised that Seville had paid municipal taxes for 2008 on his behalf and he asked Campbell to forward a cheque to Seville in the amount of $5,323.30. Duciaume completed his note by stating: “Please note Seville continues to pay taxes on this property until severance is completed.”

[28] The next document is of some importance. The Defendant resisted the production of this document on the basis of solicitor-client privilege and on the basis that Duciaume had no authority to disclose it on behalf of the client. I concluded, after argument, that Duciaume had apparent authority and that any solicitor-client privilege to the document had been intentionally waived. The cover sheet says “as per our conversation today.”

[29] The fax includes two e-mails. The first is from Barry Webster to Scott Dale seeking information with respect to the payment of $440,000 and the settlement terms upon which the cheque was issued. He seeks information as to whether Seville has any obligation to rebuild.

[30] The second e-mail is from Duciaume to Campbell and he indicates: “This is confidential. I might be criticized if you reveal I sent it to you.” He then provides a copy of an e-mail dated February 26, 2009 from himself to Barry Webster and copied to others, including Valle. It says:

Hi Barry;

If I read your memo correctly, I conclude that you are under the impression that the 440K cheque was payable to others beside the Seville group. That is understandable when you only see the front of the cheque, but the fact is that the “other names” have signed over the cheque to Seville, in its entirety.

Sorry about your misapprehension on that most germane matter. However, Seville is trying to find out if it is entitled in any way to renegotiate the price beyond 440K, with the Primary Insureds. That is why we did not deposit the cheque.

The specific urging of Seville advisors was to investigate the possibility that the division of all the funds was unfairly (or not) weighted to the Primary Insured, at the cost of a “normal” settlement via division, in the case we have, namely the purchase of the damaged property by an insured tenant, from the landlord, by way of global settlement. You were chosen to investigate.

One view was, that the Primary Insureds had made “a windfall from the deal”. This is the sentiment that demands an accounting and a possible renegotiation.

So the case is, that you need to acquire the breakdown of the various cheques issued to the Insureds. We can then consider whether Seville was “hurried to the altar” unfairly. Seville’s cooperation is still required by Campbell Pools in order to get their severance and fully consummate the marriage.

I will try and get Scott redirected, in the meantime you might try calling Economical with a reduced set of questions. Maybe they will cooperate.

[31] Campbell testified that once he saw the suggestion that he received some form of “windfall”, he directed Scott Dale to provide him with a breakdown of the amounts paid and an explanation for the last two payments.

[32] He faxed a copy of his income tax returns to Duciaume and his 2008 income before income taxes that disclosed that his income had decreased from the preceding year by 55%. On March 24, 2009, he forwarded a Final Proof of Loss sent by Crawford that day. Under the heading Building it lists a total of $740,000 payable by two cheques; one for $300,000 and another cheque for $440,000. A total of $714,387.06 is recorded under Business Interruption, and a total of 342,095.16 is shown for stock. Copies of all cheques are provided.

The Cheque is cashed

[33] Barry Webster then contacted Scott Dale by e-mail dated March 24, 2009:

Dear Mr. Dale:

Thank you for contacting us by telephone this morning. We take this opportunity to confirm the following information you provided to us on behalf of the insurer pertaining to the above captioned insurance claim:

(1) Since Campbell Pools is the principal insured under the policy you are reluctant to provide Seville Group with the documents related to the insurance claim. However, you did indicate you will be sending all of the relevant documents to Campbell Pools, by the end of this week, and that you will request that Campbell Pools provide us with copies of the documents.

(2) The payment by Economical Insurance of $440,000 by cheque dated October 17, 2008 to various parties is a cash settlement and is not conditional upon the insured parties (including the Seville group) rebuilding or restoring the Property in any manner whatsoever.

(3) The Insurer will not commence any action in any manner related to the loss that is the subject matter of the above captioned insurance claim as against the Seville Group and the Insurer has therefore waived its rights of subrogation pertaining to any claims or potential claims as against the Seville Group. We confirm they are in possession of a document evidencing such waiver of subrogation rights.

Please note that our client is relying upon the accuracy of the foregoing information in connection with the Seville Group negotiating the aforementioned cheque.

[34] On April 23, 2009, Campbell forwarded a chronological statement of facts pertaining to the property to Mr. Jones, Seville’s accountant. That chronology cites his belief that the purchase of the property is a “done deal.” Relying on that belief, he advises that he has spent over $600,000 in improving the property. On May 7, 2009, Campbell forwarded an appraisal to Duciaume that supports his view that Seville was getting 2 ½ times the value of the property.

[35] On May 25, 2009, Campbell received a letter from Mr. Jones indicating that Campbell had not yet submitted an offer to purchase the property. He sought payment of rent and taxes until the closing. The letter adds:

Such closing, of course, is contingent upon the parties entering into an Agreement of Purchase and Sale whereby all of the terms and conditions of the transaction are agreed to by both parties.

[36] Nothing is said about Duciaume’s lack of authority to enter into an agreement nor is there any denial of an existing agreement. Campbell responded as follows:

It is nice to finally be contacted regarding the property at 540 Pitch Off Road. We were getting somewhat concerned not having heard from the Seville group or its agents since early April.

As we’ve been waiting since late December for an answer from The Seville Group regarding our proposal to purchase extra land and this seems to be a point of confusion, we will disregard the extra acres and submit an offer to purchase within the week.

In regards to the rent for the property, we had made a verbal agreement with Mr. Maurice Duciaume which had all rent waived from November 1, 2008 onwards in exchange for the $440,000 being given to The Seville Group immediately since even the most basic savings account would give the Seville Group a better return than the rent. Mr. Duciaume received this cheque in late October 2008.

It has been a series of delays on the part of The Seville Group that has led to this matter still being unresolved and we feel that the original agreement with Mr. Duciaume about waiving the rent should continue. We do however agree to pay all taxes from November 1, 2008 onwards for the 6 acres of property in question, not only the commercial taxes we’ve been paying.

As mentioned above, we will be submitting an offer to purchase within the week with the hopes of bringing this transaction to a prompt closing.

[37] Campbell then directed his Notary to send an Agreement of Purchase and Sale to Mr. Jones on June 10, 2009. On June 23, 2009, Mr. Webster responded to the Notary as follows:

We represent the Seville Inc. We have reviewed your client’s Offer to Purchase the Property (the “Offer“). As an initial comment we note that the deposit portion of the offer asserts that a $440,000 deposit has been paid. Please note that the $440,000 represents a portion of our client’s entitlement to insurance proceeds of $740,000 pertaining to an insurance claim relating to, inter alia, the destruction of our client’s building located on the property. The various covered losses are set out on the Proof of Loss schedule that accompanied Crawford and Company’s letter dated March 24, 2009, including the coverage of $740,000 relating to the loss of our client’s building located on the Property. Please note that the additional $300,000 that was paid to Tom Campbell at al. for the loss of our client’s building has yet to be forwarded to our client.

The deposit portion of the Offer, as currently drafted, creates the absurd result that our client is paying itself to convey the Property to your client. As a result, please revise the Offer accordingly and we will review the revised Offer with our client with a view to providing full comment. In addition, please make arrangements to have the remaining $300,000 for the building portion of the insurance proceeds paid to our client. You may send the revised offer and cheque in the amount of $300,000 payable to Seville Group Inc. to our office.

Thank you.

[38] The letter was sent on a without prejudice basis and Defendant’s counsel objected to the introduction. He relied on a previous counsel’s undertaking not to produce it at a trial. I ruled the letter admissible as the undertaking was not binding on this counsel and this was not a without prejudice offer of settlement.

[39] On October 26, 2009, Barrette reported that the Township would likely approve the severance of the 6 acre parcel.

[40] Campbell went through the details of his expenditures and the supporting invoices. His claim included $110,457.50 for wages; namely, the time spent on the renovations by himself and his employees.

[41] In cross-examination, he was referred to a sketch of the parcel of 5.29 acres (Ex. 2-176) where the business was located. At discovery, he had drawn a line delineating the area used by the business which comprised approximately 4 acres. He said that he maintained the remaining area since it was not accessible to Mr. Leduc who leased the bulk of the farm land from Seville. As for Duciaume’s Offer of May 20, 2008 for the purchase on the existing 5 acre lot, he believed that the $440,000 represented the entire property shown in the sketch; namely, the 5.29 acres and not the smaller area he had delineated at discovery.

[42] He was asked why he expected to get money when he did not own the barn and he was candid in stating he did not know. The insurance company agreed that that was the deal. He was getting $300,000 from the insurance company for dismantling the barn and putting up a dome and shelving and $310,000 for business interruption and other losses owed by the Insurer.

[43] He was asked to compare the Proof of Loss claim that he and Duciaume signed for $440,000 and the Proof of Loss form in the insurer’s file that recorded the building as having a value of $740,000 and he could not explain the difference.

[44] Although he has not paid rent, he has paid the taxes on the property; although he believes these payments are being held in escrow.

[45] As for the Agreement and Purchase Sale, this was a standard form and the $440,000 described as the deposit was also the price. He considered this document to be a formality needed to provide proof of consent to the severance from the registered owner.

Andre Barrette

[46] Andre Barrette was qualified as expert in land surveying and in the severance of agricultural lands. Campbell asked him to prepare a survey for severance purposes. On behalf of Seville, Duciaume confirmed on this September 23, 2008 and enclosed the survey containing the 19.95 square metres. He was asked to reshape that plan into a configuration that would lead to a plausible severance.

[47] According to Barrette, the existing plan was not acceptable because of its irregular shape and because it left out “slivers” of land. He produced two sketches. The first sketch of a 6 acre parcel reflects the reshaping he had done. He said this was a commercially feasible plan that would encompass all of the existing buildings. He also prepared a sketch of an 8 acre parcel at Campbell’s request. He then sent the two sketches to Duciaume and advised that Campbell was offering $15,000 for the additional 2 acres.

[48] Barrette said that the Approving Authority would require written confirmation of the owner’s consent and he suggested that a Standard Agreement of Purchase and Sale could be used for that purpose.

[49] Barrette obtained a free consultation from the Township and he was advised that the 6 acre portion was likely to get approval for severance. He had also included the possibility of a 5 acre parcel but he felt this was problematic as it left out a 100 foot strip that would be unsuitable for farming and could not be accessed by machinery. Moreover, the property line in that plan would be too close to the existing commercial buildings. He was extremely confident that the severance plan the 6 acre parcel would be accepted. This is the plan that was attached to the Agreement of Purchase and Sale sent by the Notary in June, 2009.

Stephen Maloney

[50] Stephen Maloney was qualified as an expert real estate appraiser. He conducted two appraisals of the property located at 540 Pitch Off Road. The Defendant objected that he had not signed the Acknowledgment of Expert (Form 53). I allowed his reports to be put into evidence. These reports had been served before the action was commenced and the Defendant had notice of their contents. I permitted the reports to be filed pursuant to Rule 53.03(3) with leave to cross-examine on the circumstances surrounding the retainer, if necessary.

[51] The first appraisal, dated April 27, 2009, was of the property in current condition with the improvements made by Campbell. The final estimate of Fair Market Value was $465,000.

[52] The second appraisal, dated June 18, 2009, was a retrospective appraisal as of March 7, 2008; the date prior to the barn collapse. The final estimate of Fair Market Value was $190,000.

[53] In cross-examination, he confirmed that the highest and best use for the property is its current use as a warehousing facility. He did concede that the property could have been used as a hobby farm facility prior to the collapse. He also agreed that he used warehouse comparables for the post-collapse appraisal and that he used hobby farm/agricultural comparables for the pre-collapse appraisal. This did not alter his conclusions.

Germano Valle

[54] Germano Valle is the sole shareholder of Seville Group. He was born in Italy, but moved to Canada in 1983 where he got involved in real estate ventures and moved back to Europe in the 90’s. The farm property located in Plantagenet is the sole property that Seville owns in Canada. It also owns property in Florida, New Jersey and Europe.

[55] He identified David Walker as a former director of Seville who signed the lease in 2002. He was later replaced by Stratton Stevens. The Plantagenet farm comprises 1,100 acres with a small portion reserved for commercial use and rented to Campbell. Duciaume was the property manager who negotiated the leases and presented offers to the director or to himself. While Duciaume could entertain offers to purchase property, he claimed that his authority was limited to monitoring the property and to discussions with the tenants. He said he had no authority to enter into an agreement for the sale of property. Duciaume died after this action was commenced, sometime in 2011.

[56] Although Duciaume witnessed Campbell’s signature on the lease and the extensions were signed by Duciaume, Valle said this was only done on his instructions. He confirmed that all communications between the tenant and his company would be through Duciaume.

[57] In August 2007, he authorized Duciaume to explore the possibility of a lease of an 11 acre parcel to Campbell who was not interested. Some time passed and he was referred to the May 20, 2008 e-mail from Duciaume to Campbell offering to sell the property for $440,000. He claimed that this was the beginning of negotiations only. He could not remember the details of how that offer came forward. He could not remember who initiated the discussion but confirmed that he authorized Duciaume to make the offer.

[58] He was referred to the cheque for $440,000 that was sent to Duciaume by Campbell. He claims that Duciaume never told him about the cheque and that the first time he heard about the cheque was in January, 2009 when it was received by Mr. Jones, but he corrected that when he was referred to Mr. Webster’s e-mail of December 3, 2008. He instructed his lawyers to get clarity on the cheque.

[59] Valle denied being informed by Duciaume that he was dealing with a land surveyor. He denied being behind Duciaume’s fax of January 27, 2009 indicating that the deal was under review although he conceded that he and Duciaume met with the lawyers around that time. He recognized the e-mail from Barry Webster dated March 24, 2009. Seville was interested in getting some clarification as the cheque in issue was about to expire.

[60] He claimed he cashed the cheque because it was for damage to the property. Although he had Campbell’s chronology, he took the position that there was no agreement since an Agreement of Purchase and Sale signed by a director would be required.

[61] As for the reference in the lease to approximately 4 acres, he agreed that there is no such sketch of the property and its whereabouts are unknown.

[62] He instructed his accountant to send the letter demanding payment of rent. He denied any knowledge of a verbal agreement between Duciaume and Campbell about foregoing rent and denied that Duciaume had authority to do so even though he had Campbell’s chronology by that time as well as Duciaume’s e-mail of February 27, 2009.

[63] In cross-examination, he said he was living in Europe when these events took place and that he was busy with other matters. By 2008, Duciaume had worked for him for over ten years. He did a satisfactory job and he had no reason to question his work. There was no written agreement setting out or limiting his responsibilities.

[64] He purchased the farm property for about $1,000 an acre in 1998 and it was all leased by Mr. Leduc or by Campbell. He acknowledged that Seville was obligated to take out its own insurance and that it did not do so. He acknowledged that section 4.03 obligated the landlord to repair damaged premises and he agreed that the tenant could demand that the barn be repaired after it fell down. Seville did not give notice to terminate the lease.

[65] Even though there were e-mail exchanges between himself and Duciaume in May 2008, he claimed that he only discovered early in 2009 that Campbell thought he had bought the property. While he maintained that Duciaume had not told him about the deal, he did not fire Duciaume who remained in his employ until his death in 2011. He did not ask Duciaume to set out his version of the events even though a chronology was requested from Campbell. He denied that Duciaume validated the deal with Campbell.

[66] He knew that the barn had fallen down sometime in March, 2008. As for the May 20, 2008 e-mail from Duciaume to Campbell, he confirmed that Duciaume had the authority to make that offer and he knew that the offer had been made. He knew that the tenant had insurance. He knew that Duciaume was looking after the insurance issues and claims he heard nothing from Duciaume. He did not follow up. He left it in Duciaume or Mr. Stevens’ hands. He denied getting the letter from Crawford explaining the insurance coverage. He was evasive when asked if Duciaume could deal with the insurance claims, but then agreed that it was a logical assumption.

[67] He was directed to the letter dated August 8th, 2005 outlining the settlement and that Campbell would forego the rebuilding of the property. He acknowledged that the $440,000 figure had come from Seville’s earlier offer. He had no evidence to contradict Campbell that this letter had been prepared by Duciaume and that it contained Duciaume’s signature. He denied that Duciaume was allowed to use the words “I am authorized to bind the corporation” even though the same phrase was used earlier by Duciaume to sign the lease with Mr. Leduc. He agreed that either he or Mr. Stevens could have given Duciaume that authorization. When asked if this represented an agreement to sell the property for $440,000, as is, with no requirement for the barn to be rebuilt, Valle was evasive then said he was in no position to comment.

[68] As for Duciaume’s letter of October 28, 2008 enclosing the endorsed cheque for $440,000, he claimed to have learned about this from Barry Webster or Mr Jones. He could not be sure of the date. He was taken to Duciaume’s e-mail of February 26, 2009. He maintained the reference to “re-negotiating the price” meant negotiation for the damage. When referred to the words “in the case we have, namely, the purchase of a damaged property by an insured tenant, from the landlord, by way of global settlement”, he refused to comment. When asked if he would have known that Duciaume sold the property for part of the insurance money, he claimed that there was no need for him to get involved or to interpret the facts as it was up to the lawyer. He admitted no document was ever sent to Campbell indicating that there was no sale until after Seville cashed the cheque.

[69] He was evasive about his obligation to rebuild the barn and about negotiations with the insurer, but admitted that Duciaume was involved. He was referred to Webster’s e-mail to the insurer of December 8, 2008 that raised questions about Seville’s obligation to rebuild before negotiating the cheque. When asked to concede if Duciaume believed that there was an agreement for the sale of the damaged property, he claimed that his e-mail of February 26, 2009 referred to the division of the funds and he refused to interpret the settled mind of Duciaume or of his lawyer.

[70] He acknowledged that Campbell had sent documents to demonstrate that he had not received a “windfall.” He was taken to Barry Webster’s letter of March 24, 2009 to Scott Dale that raised only two concerns before cashing the cheque, namely: i) there was no obligation to rebuild and, ii) there were no subrogation claims against Seville. Again, he denied that there had been a sale, even though Duciaume had sent an e-mail to him and Webster advising them as much. Despite his receipt of Campbell’s chronology in April, 2009, he refused to acknowledge that Campbell believed that he had bought the property. He was also aware that Campbell had made a series of improvements to the property by that time.

[71] Although Mr. Jones’ letter of May 25, 2009 asked for an Offer to Purchase, he maintained there had been no sale. As for the written offer for $440,000 received; he agreed that he instructed his counsel not to accept it because Seville “wanted more money.”

Michael Jones

[72] Michael Jones is Seville’s accountant and he discussed his involvement. He received the cheque for $440,000 around October 30, 2008. He sent an e-mail to Valle asking for instructions who then directed him to contact Barry Webster. He had no meeting with anyone from Seville but may have spoken to Stratton Stevens, but could not recall the conversation.

[73] He was taken to Campbell’s chronology. He met with Campbell on April 7, 2009 for about 30 minutes and he was given a tour of the premises and he was aware of the improvements Campbell had made. Campbell offered to give him invoices as proof of his expenditures which he declined.

[74] He sent the May 25, 2009 letter requesting an Offer to Purchase and demanding the continued payment of rent. The last rent payment was in November 2008.

The issues to be decided:

1. Did Maurice Duciaume have actual or apparent authority to enter into an agreement for the sale of the property?

2. Was there an agreement?

3. Is the agreement enforceable pursuant to the Statute of Frauds?

4. Does the doctrine of Part Performance Apply?

5. Is the Plaintiff entitled to Specific Performance?

6. In the absence of an agreement, is the Plaintiff entitled to the remedy of Proprietary Estoppel?

7. Did the Defendant breach its duty of good faith and honest performance of the contract?

8. If necessary, can the Plaintiff claim a lien or other relief under the Conveyancing and Law of Property Act?

9. If necessary, does the Plaintiff have an equitable claim of unjust enrichment?

Did Maurice Duciaume have actual or apparent authority to enter into an agreement for the sale of the property?

[75] The “indoor management rule” is set out in s. 19 of the Business Corporations Act, R.S.O. 1990, c. B.16:

19. A corporation or a guarantor of an obligation of a corporation may not assert against a person dealing with the corporation or with any person who has acquired rights from the corporation that,

the articles, by-laws or any unanimous shareholder agreement have not been complied with;

the persons named in the most recent notice filed under the Corporations Information Act, or named in the articles,

whichever is more current, are not the directors of the corporation;

the location named in the most recent notice filed under subsection 14 (3) or named in the articles, whichever is more current, is not the registered office of the corporation;

Note: On a day to be named by proclamation of the Lieutenant Governor, clause (c) is amended by striking out “subsection 14 (3)” and substituting “the Corporations Information Act”. See: 2011, c. 1, Sched. 2, ss. 1 (4), 9 (2).

a person held out by a corporation as a director, an officer or an agent of the corporation has not been duly appointed or does not have authority to exercise the powers and perform the duties that are customary in the business of the corporation or usual for such director, officer or agent;

a document issued by any director, officer or agent of a corporation with actual or usual authority to issue the document is not valid or not genuine; or

a sale, lease or exchange of property referred to in subsection 184 (3) was not authorized, except where the person has or ought to have, by virtue of the person’s position with or relationship to the corporation, knowledge to that effect. R.S.O. 1990, c. B.16, s. 19; 2006, c. 34, Sched. B, s. 3

[76] In short, if an individual is represented as a corporation’s officer or agent, the corporation cannot later rely on the individual’s lack of authority to enter into a particular transaction as a means to avoid a particular obligation. The rationale for this rule is that innocent parties should not have to worry about whether a corporation’s internal housekeeping is in order when entering into an agreement.[^1]

[77] In Courtot Investments Ltd. v. Royal Trust Co., 1980 CarswellOnt 3503, the Ontario Supreme Court held that the representation of an individuals’ authority may come from the title s/he occupies within the business. That Court further noted that the fact that company never raised any issues of lack of authority in any of its future correspondence with the innocent third party may be indicative of apparent authority.

[78] In Molson Sports & Entertainment v. Quattro Communications Inc., 2007 CarswellOnt 1080, the Court held that the exact words used in this case, namely, “I have authority to bind ….Inc.” was a clear representation about an individual’s authority to enter into an agreement on behalf of a corporation.

[79] I am satisfied that Duciaume had actual or apparent authority to enter into an agreement for purchase and sale of lands on behalf of Seville. Valle was not present in Canada during all of the relevant times and he could only act through agents. While he claimed that Duciaume had no authority to deal with the property, the evidence is contrary.

[80] As early as 2005, Campbell was offering to buy the property through Duciaume who responded after hearing from his principal. Campbell never dealt with anyone other than Duciaume and he could reasonably conclude that Duciaume had actual authority when Duciaume e-mailed him in May, 2008 and says “I just got the go-ahead to offer you….”

[81] Duciaume uses the words: “I have authority to bind the corporation” in the lease Seville executed with Leduc and again on the important document in issue; the letter to Scott Dale of August 3, 2008 confirming the settlement of insurance proceeds and the agreement with Campbell. The Defendant’s argument that Duciaume was not exercising powers and duties that were customary in the business of Seville is contradicted by the evidence before me.

[82] Although this action was commenced in 2010, the Defendant has not produced any documents that indicate that Duciaume acted without authority. Seville raised the issue for the first time in its pleadings. There was no written agreement setting out or limiting Duciaume’s responsibilities. The first and only evidence of any lack of authority is the testimony of Valle which I found to be generally evasive and unreliable.

[83] Moreover, Stratton Stevens, a director of Seville, was identified by Valle as someone who might have authority instead of Duciaume but he was not called as a witness and I draw an adverse inference from that fact.

Was there an Agreement and did it comply with the Statute of Frauds?

[84] The Plaintiff takes the position there is an agreement and that it sets out the parties, the price and the property[^2] and that these requirements are met in Duciaume’s letter of August 3, 2008. The Defendant’s principal argument is that there is no clarity with respect to the property to be sold at that price.

[85] The Defendant also relies on the reference in the Statement of Claim to both the May 20, 2008 and the August 3, 2008 letter as constituting the agreement. That argument confuses pleadings with evidence.

[86] The Defendant argues that the reference in the May 20, 2008 e-mail to additional acres being purchased limits the sale at $440,000 to the smaller pieced of land sketched by Campbell at his discovery. This argument ignores that the e-mail specifically cites a sketch sent by Duciaume in the fall of 2007. At that time, Seville was proposing a lease of an 11 acre parcel.

[87] The e-mail of May 20, 2008 mentions the “buildings as they presently sit, on the existing 5 acre lot.” Duciaume’s e-mail to Valle of May 28th, 2008 refers to “what he currently uses.” The letter of August 3, 2008 refers to “the buildings and land (app. 5 acres) which the tenant… presently leases…” The lease makes a reference to approximately 4 acres. There is a reference to a schedule “A” that cannot be found. There is a sketch of land produced at Campbell’s discovery that shows 5.29 acres. The digital image that Duciaume sent to Barrette for severance purposes refers to 19,515 square metres (or 4.8 acres). These sketches include not only the buildings that Campbell rents but also all of the land that he maintained.

[88] I accept the Plaintiff’s argument that it was hard to tell what the exact parcel would be other than Seville agreed to sell what could be legally severed. Andre Barrette’s evidence that only the 6 acre parcel would be acceptable to the Committee of Adjustment was not contradicted. This was rural land; any severance that left “slivers of land” would not be accepted as these were useless.

[89] Our Court of Appeal has held that a description of property does not have to be absolute to enforce an agreement of purchase and sale of land. In Manitoba (Public Trustee) v. Muzeen Estate, 2008 ONCA 640; 241 O.A.C. 95, the Court concluded that where a vendor cannot convey the property as agreed, the purchasers may take whatever the vendor has.

[90] This case also bears strong similarities to Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. There, the vendor refused to close the sale of land on the basis that the description of the property to be conveyed was too vague and the agreement was silent on issues pertaining to severance. The quantity of land to be conveyed was “four acres more or less.” The Supreme Court looked at the reasonable intentions and conduct of the parties to determine the particular lands to be conveyed before ultimately awarding specific performance of the property the vendor refused to sell:

On the issue of certainty of description of the land, courts have gone a long way in finding a memorandum in writing sufficient to satisfy the Statute of Frauds. The judges have consistently attempted to ascertain and effectuate the wishes of the parties, undeterred by lacunas in the language in which those wishes have been expressed. ….[^3]

[91] The Court noted that the Alberta Court of Appeal had rested its decision on the judgment of the Court in Turney v. Zhilka, 1959 CanLII 12 (SCC), 1959 S.C.R. 578 (a decision relied upon by the Defendant). The Court distinguished Turney v. Zhilka and went on to say:[^4]

In the present case, the quantity of land to be conveyed is stated in the written agreement. It is "four acres 'more or less'." This is one clear difference from Turney v. Zhilka. The language need not be construed in vacuo. We may have regard to the "surrounding facts." …

[92] The Court held that the vendor could not hide behind immaterial ambiguities in an effort to thwart the reasonable expectations of the parties. It concluded that the refusal to complete the transaction appeared to have been prompted by considerations other than the difficulty in identifying the land to be sold.

[93] In this case, Seville occupied none of the land used and maintained by Campbell. Alain Leduc is the only other person who was renting from Seville and he did not use any part of the 6 acre parcel identified by Barrette. The exclusive use of this parcel by Campbell can be seen by the aerial photograph filed as an exhibit (Ex. 2-121). Campbell’s evidence that he maintained and occupied the whole area was not challenged.

[94] As noted, Duciaume sent a digital image to Barrette of the “lands and buildings currently in use by Campbell Pools.” It shows all of the area now included in the 6 acre survey. There is a line of occupation on the westerly edge that contains a “sliver of land” that Barrette described as useless and which could not be excluded for severance purposes. Duciaume was seeking a survey for the purpose of a municipal severance. In all of its communications with Campbell, Seville never raised any doubts about the description of the land to be sold.

[95] Two sketches were sent to Duciaume; one of a six acre parcel and another for an 8 acre parcel. The only issue was whether Seville would sell 2 additional acres. By engaging Barrette to prepare a survey for severance, the parties, through their conduct, demonstrated their agreement to sever that parcel of land acceptable to the Authorizing Authority. Any difference with respect to the various descriptions of the land is irrelevant. Barrette’s evidence that a 6 acre parcel described in his survey was the minimum piece of land required for a severance was not contradicted. Valle admitted that Seville did not proceed with the agreement because it wanted more money: the refusal had nothing to do with identifying the land agreed to be sold.

[96] In this case, I am satisfied that there was an enforceable agreement between Campbell and Seville to sell a severable six acre piece of land that contained Campbell’s operations. If I am wrong on that point, the Plaintiff can further rely on the equitable doctrine of part performance.

[97] The Court of Appeal explained this doctrine in Erie Sand and Gravel Ltd v. Seres’ Farm Ltd, 2009 ONCA 709; 97 O.R. (3d) 241 at para 49:

The purpose of s. 4 of the Statute of Frauds is to prevent fraudulent dealings in land based on perjured evidence. However, Equity will not allow the Statute of Frauds to be used as an "engine of fraud". It created the doctrine of part performance to prevent the Statute of Frauds from being used as a variant of the unconscionable dealing which it was designed to remedy: see Hill v. Nova Scotia (Attorney General), 1997 CanLII 401 (SCC), [1997] 1 S.C.R. 69, at para. 10. The requirements in s. 4 of the Statute of Frauds must give way in the face of part performance because the acts of part performance fulfill the very purpose of the written document - that is, they diminish the opportunity for fraudulent dealings with land based on perjured evidence.

[98] There are four elements to the principle of part performance:[^5]

(a) The performance must be referable to the agreement;

(b) The acts of performance must be acts of the plaintiff;

(c) The contract must be one for which the law would grant specific performance if it had been properly evidenced in writing; and

(d) There must be clear and proper evidence of the existence of the contract.

[99] In this case, Campbell went ahead and spent over $600,000 in making improvements to the property, putting up a dome, installing shelving, asphalting the driveway, rebuilding the horse barn for its own purposes. In Sigrist, the court relied on the making of improvements to the subject property in applying the equitable doctrine of part performance. The same result occurred where a purchaser had ordered signs and shelves in reliance on an agreement.[^6] Campbell then hired a surveyor as the first step in obtaining a severance. In Erie Sand, the Court added at para 75:

In sum, it appears to me that given the decision of the Supreme Court in Hill, it is now settled law in Canada that the acts of both parties to an alleged oral agreement may be considered when a court is called on to determine if sufficient acts of part performance take an alleged agreement outside the operation of the Statute of Frauds…..

[100] Seville accepted and cashed the cheque. Duciaume gave life to the agreement by passing on a sketch of the property to Barrette for the purpose of a severance. Seville and its agents were aware of the improvements that Campbell was making to the property. I am satisfied that there were acts of performance by the Plaintiff and by the Defendant that are referable to an agreement and that there was clear and proper evidence of the contract.

Would Specific Performance be available?

[101] It is necessary to consider this part of the test carefully since the Plaintiff seeks this particular remedy. Specific performance is available where:

(a) The property is unique;

(b) Damages are comparatively inadequate to do justice, either because of an imprecision of the damages or because the vendor’s conduct is a flagrant and deliberate infliction of risk and loss on the purchaser; and

(c) There is a fair, real and substantial justification for the claim of specific performance.[^7]

[102] In John E. Dodge Holdings Ltd v. 805062 Ontario Ltd., (2003), 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304, the Ontario Court of Appeal indicated that a court should not use the dictionary definition of “unique.” The court held that the Plaintiff only needs to show that a substitute is not “readily available” or that the property has qualities that make it especially suitable for the purchaser and the particular use for which the property is intended.

[103] In this case, Campbell had used these premises for a long time. They were available at a very reasonable cost and the location was central to its operations. It was close to his customer base and to his home. The evidence disclosed that the only alternative available was a warehouse located in Cornwall at 10 times the monthly rent. In John E. Dodge, the Court of Appeal directed that there be a critical inquiry as to the nature and function of the property in relation to the specific purchaser. Factors such as proximity to the purchaser and its other existing business operations were relevant.

[104] Moreover, it has been held that a Plaintiff is not required to put forward specific evidence that there was not some other property available that has some, most, or all features that made the subject property unique. An onus of that magnitude would create an unduly large burden on the Plaintiff.[^8]

[105] In that same decision, the court held that a purchaser’s previous attempt to purchase the same subject property in the past was evidence of the property’s “uniqueness.” It also held that a purchaser’s conscious decision to pay an amount substantially in excess of market value was further evidence of “uniqueness.”

[106] In this case, Campbell previously considered a purchase of the property for $300,000 in 2005. The evidence before the court demonstrates that $440,000 was an amount that was in excess of its fair market value. Even if I were to exclude the evidence of the appraiser, Duciaume’s own e-mail of October 2005 describes Campbell’s then offer of $300,000 as being well above market value. Additionally, Campbell invested over $600,000 in time and materials in improving the property.

[107] Seville’s conduct is of serious concern. Once it received the cheque, Seville held it for some time before cashing it. It sought an explanation from Campbell and it is clear from his chronology that Seville knew that Campbell believed he had a deal. Duciaume said as much in his e-mail of February, 2009. When Duciaume suggested that Seville was trying to “renegotiate the deal”, Valle tries to deny this by stating that Duciaume was referring to damages only.

[108] Seville had the insurance records. The first proof of loss claimed was signed by Campbell and Duciaume; they indicated that the building had a value of $440,000. In its reporting letter to Economical Insurance group, Crawford records the amount $730,000 under the heading Building. In a later report, and under the same heading, Crawford records the amount as $740,000 payable by two cheques. Somehow, Seville or its agents looked at the records as to how the insurer allocated the payments made under the heading “Building” and concluded that Campbell had made a “windfall” with the insurance proceeds.

[109] Seville confused the method used by the insurance company to adjust the loss with an actual cash valuation of the barn that was destroyed. No evidence of the actual cash value of the barn was ever obtained or presented at trial. There is no evidence that the barn’s actual cash value was $740,000. The only evidence is the appraisal by Mr. Malone that the land and buildings had a value of $190,000 before the collapse of the barn. Mr. Duciaume held a similar view in 2005.

[110] Seville ignored the report of its own agent Duciaume when he advised that this was a sale of a damaged property “as is” with no obligation to rebuild. Duciaume was in contact with the adjusters at all times. He knew that Seville had two options for settlement which he clarified on August 3, 2008. Seville could rebuild or take a cash settlement. Duciaume had already concluded that an earlier offer of $300,000 from Campbell was one that should not have been refused by Seville. He knew the value of the property. He correctly identified that Seville was trying to find out if it was in any way entitled to renegotiate the price beyond $440,000. He reminded everyone that Seville was obligated to “consummate the marriage.” In cross-examination, Valle admitted that Seville just wanted more money.

[111] In this case, Seville had an obligation to rebuild. Seville did not give any notice of any intention to terminate the lease. There was no evidence that Seville intended to rebuild the barn or, if it had, that a new barn would have added in any way to the value of this agricultural property. Had Seville not rebuilt, Campbell could have walked away and Seville would have been left with an unsevered piece of property with little or no commercial value.

[112] Duciaume knew that Campbell was using the settlement proceeds to put up a dome and shelving. Knowing that Campbell believed he had a deal to purchase the 6 acre parcel for $440,000; that Duciaume said as much; and after having Mr. Jones inspect the improvements, Seville demanded an Offer to Purchase and arrears of rent. Seville knew that Campbell believed the Offer to Purchase was needed as proof of the owner’s consent to the severance.

[113] Seville then treated this new offer as a repudiation of the earlier agreement and considered the $440,000 payment a deposit. Seville cashed the cheque only when its solicitors determined it had no obligation to rebuild and there was no subrogation claim by the insurer. During all this time, Seville never once advised Campbell that Duciaume had no authority to enter an agreement and they never repudiated the agreement until the cheque was cashed. Seville knew that Campbell was not represented by counsel. In this case, damages would be inadequate to do justice to the Plaintiff and I find that the vendor’s conduct is a flagrant and deliberate infliction of risk of loss on the purchaser.

[114] For all of these reasons, I find that the remedy of specific performance is available to the Plaintiff.

[115] Seville’s conduct, in this case, invites the consideration of a further equitable remedy; namely, that of proprietary estoppel. Proprietary estoppel entitles a party to obtain an interest in land without a deed, conveyance or written agreement. As noted by the Court of Appeal in Schwark Estate v. Cuttings, 2010 ONCA 61; 316 D.L.R. (4th) 105, it is the only form of estoppel that can give rise to a cause of action. In that case, the court held that the rationale behind proprietary estoppel is to alleviate an innocent party against the inequities imposed by the rigours of the strict application of the law. It will prevent a person from insisting on his/her strict legal rights when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties.

[116] In Clarke v. Johnson, 2014 ONCA 237; 371 D.L.R. (4th) 618 at para 52, the Ontario Court of Appeal recently confirmed the three requirements that found a claim for proprietary estoppel:

1. if the owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit or the property;

2. in reliance upon his/her belief, the claimant asked to his detriment to the knowledge of the owner; and

3. The owner seeks to take unconscionable advantage of the claimant by denying him the right or benefit that s/he expected to receive.

[117] In that case, Justice Peppall adopted five “probanda” that have been used in English law to assist in determining whether proprietary estoppel has been set out. It is not essential that these five probanda be met; they only act as guides. These are:

1. Did the plaintiff make a mistake as to his legal rights?

2. Did the plaintiff expend money or do some act on the faith of his mistake belief?

3. Did the defendant note the existence of his own right which is inconsistent with the right claimed by the plaintiff?

4. Did the defendant note the plaintiff’s mistaken belief of his rights?

5. Did the defendant encourage, either directly or by abstaining from asserting his legal right, the plaintiff in his expenditure of money

[118] The court went on to conclude that if the court finds that an inequity exists, the court has a broad discretion to fashion an appropriate remedy. In this case, I have found that there was an enforceable agreement and that the remedy of specific performance for the conveyance of the 6 acre parcel is available to the Plaintiff. While it is not necessary for me to consider the doctrine of proprietary estoppel any further, I would have applied on the facts of this case.

[119] Having come to these conclusions, it is not necessary for me to consider the alternative claims for relief. I grant the declaratory relief sought and order specific performance of the agreement to sell the severable 6 acre parcel. I direct the Approval Authority to accept the application for the severance of this parcel without the owner’s consent. The Plaintiff is to bear all costs associated with obtaining the final severance. The Defendant’s counterclaim is dismissed.

[120] There is an issue of outstanding taxes: both business portion and property taxes. I find that the Agreement of Purchase and Sale took effect when Campbell endorsed the cheque for $440,000 and sent it to Duciaume on October 28, 2008. If the parties are unable to agree with respect to the payment of outstanding taxes, I direct a reference to the Master.

[121] In the absence of an agreement on costs, the parties are to provide me with brief written submissions not exceeding 10 pages within 20 days of the release of this decision.

Beaudoin J.

Released: May 19, 2015

CITATION: Campbell Pools Inc. v. The Seville Group Inc., 2015 ONSC 2314

COURT FILE NO.: 10-48168

DATE: 20150519

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

CAMPBELL POOLS INC.

Plaintiff

– and –

THE SEVILLE GROUP INC.

Defendant

REASONS FOR JUDGMENT

Beaudoin J.

Released: May 19, 2015

[^1]: Ramey v. Winkleigh Co-operative Housing Corp., 2010 ONSC 4676; 192 A.C.W.S. (3d) 814 at paras 36-37

[^2]: See McKenzie v. Walsh 1920 CanLII 72 (SCC), [1920], 61 S.C.R. 312 at paras 1-3

[^3]: At p.1078

[^4]: At p.1080

[^5]: Sigrist v. McLean, 2011 ONSC 7114; 2011 ONCA 549, 283 O.A.C. 100 at para. 81

[^6]: Starlight Variety Stores Ltd. v. Cloverlawn Investments Ltd. (1978), 1979 CanLII 1879 (ON CA), 22 O.R. (2d) 104 (H.C.J.), aff’d (1979), 1979 CanLII 2736 (ON SCDC), 26 O.R. (2d) 394 (Ont.C.A.) at para 21

[^7]: 1589380 Ontario Ltd. v. Heasty, 2009 CarswellOnt. 2878 at para. 26

[^8]: Silverberg v. 1054384 Ontario Ltd., 2008 CarswellOnt 6772 at para 136