ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-15-525827
DATE: 20150820

BETWEEN:

MUSLIM GREEN CEMETERIES CORPORATION
Applicant

– and –

TORONTO MUSLIM CEMETERY CORPORATION
Respondent

John J. Longo and Patrick Copeland, for the Plaintiff

Robert B. Cohen and Leonard Loewith, for the Respondent

HEARD: July 28, 2015

LEDERER J.:

[1] This is an application by which the purchaser of certain internment rights in the cemetery of the seller seeks to enforce the contract it says they entered into.

[2] The respondent, Toronto Muslim Cemetery Corporation, owns and operates a cemetery located in the town of Richmond Hill. The applicant, Muslim Green Cemeteries Corporation, sought to purchase the internment rights to a section of the cemetery (Phase VI), and to pay the costs of developing as many as 6,000 plots for subsequent sale to its members.

[3] In July 2013, the parties negotiated what they referred to as a draft Memorandum of Understanding. This document stated that it “…is not a legal contract”. It became the basis for ongoing negotiations. Nearly a year later, a revised draft was prepared. The stipulation that the document was not a legal contract was removed. This version bears the title “Agreement of Purchase and Sale of Internment Rights”, although the parties agree that it was not a final or formal agreement. While the two individuals who were primarily responsible for the negotiations (Helmi Abdel Rahman, on behalf of the applicant, and Syed Sabi Ahsan, for the respondent) signed this document on April 13, 2014, they were not authorized to contract on behalf each of the two parties. Helmi Abdel Rahman, when cross-examined, acknowledged that the document should not have been entitled an Agreement of Purchase and Sale. It was a Memorandum of Understanding. By its terms, it foresaw the need for and demonstrated the expectation that there would be a formal agreement that finalized the relationship. This Memorandum of Understanding noted:

Be it further resolved that within 4 weeks, a formal agreement shall be made between the parties.

[4] A deposit of $50,000 was to be paid once the formal agreement was accepted by both parties. Forty-five days was allocated as a due diligence period once the formal agreement was made. The “Closing Date” was identified as seven days “…after the Buyer is satisfied with the results of the Buyer’s due diligence”.

[5] On May 13, 2014, which is to say, two days longer than the four weeks the Memorandum of Understanding specified as the period within which the formal agreement was to be “made”, the parties signed a further version. This one was executed, following approval by the Boards of Directors of the two corporations, by individuals with the authority to do so. There were few changes. This document continued to refer to a formal agreement being made within four weeks, to the $50,000 deposit being paid and the forty-five day due diligence period beginning upon the acceptance and signing of a formal agreement. Despite this, the applicant submitted that the document signed on May 13, 2014 was intended to be and was understood by all those involved to be the formal agreement. The references to the expectation that there would be a formal agreement and the clauses that referred to it should have been removed. Their continued inclusion was an innocent and mutual mistake. The individuals involved were not lawyers and had completed the negotiations and the documentation on their own. No one suggested that this document was improperly named “Agreement of Purchase and Sale of Internment Rights”. The applicant seeks an order that this contract be rectified and specifically performed.

[6] The respondent opposes the motion. The document, as signed on May 13, 2014, was not the formal agreement referred to in the version of April 13, 2014. So far as the respondent is concerned, that fact is confirmed by the continued reference to the making of a formal agreement within four weeks. The execution of the document was nothing more than a ceremonial exercise to confirm what had already been done but, this time, by people authorized to sign. Counsel for the respondent submitted that it was always known, understood and expected that lawyers would have to review the contract and be involved in finalizing its terms before it was signed. As counsel sees it, at a minimum, these assertions and the evidence that supports them indicate that there are material facts in dispute, the determination of which will rest on findings of credibility. This would require that the proceeding be converted to a trial.

[7] The expression “Actions speak louder than words” is well-known. It could be said to be a cliché. It has more depth and meaning than that would suggest. It expresses the idea that what one does is more important than what one says. It has application to this case. The applicant relies on the actions of the parties following May 13, 2014 (the day the document in issue was signed) to establish the understanding and acceptance that the document was to be and is the formal agreement between the parties. The respondent relies on things that were said both before and after May 13, 2014 to suggest that the document signed on that day was not intended to be and was not the formal agreement the parties expected to sign.

[8] The document signed on May 13, 2014 refers to the obligation to pay a deposit in the following way:

The Parties agree to adhere to the following payment plan:

a) A DEPOSIT of Fifty Thousand ($50.000) dollars upon Acceptance of the formal Agreement by Both Parties.

[9] The trigger requiring that the deposit be paid was the acceptance of the formal agreement. On May 13, 2014, the day the document was signed by those authorized to do so, a cheque prepared by the applicant in the amount of $50,000 was delivered to and accepted by the respondent. It is not contested that this represented the payment of the deposit. What this indicates is that, upon the signing of the document, the deposit was paid and accepted. This is consistent with the pre-condition (the acceptance of the formal agreement) having been satisfied. There was no suggestion that the deposit was paid on any other basis or for any other reason.

[10] During the course of his cross-examination, the representative of the respondent, Syed Sabi Ahsan, agreed that that the parties met “to execute the formal agreement” and for the deposit to be paid “all in accordance with the memo of understanding” (Cross-examination of Syed Sabi Ahsan: Questions 80-89). The record contains the minutes of the meeting of May 13, 2014.They begin with an Agenda which lists as the main item of business:

Signing of the Agreement between MGCC [the Applicant] and TMCC [the Respondent]

[11] They conclude by reporting:

The first cheque of $50,000 deposit subject to closing was handed over and the agreement was signed by the four signing authorities, two from each organization.

[12] As matters transpired, the cheque did not clear but was replaced with a money order which was cashed and deposited. The money was not held “subject to closing”. It was placed in a bank account and has since been spent (Cross-examination of Syed Sabi Ahsan: Questions 120-125 and 138-140).

[13] Two days later, on May 15, 2014, Syed Sabi Ahsan sent an e-mail to the representative of the applicant, Helmi Abdel Rahman, thanking him and the executive of the applicant “…for this landmark agreement” (Cross-examination of Syed Sabi Ahsan: Questions 152-155).

[14] The document, signed on May 13, 2014, identifies the due diligence period as follows:

Be it further resolved that upon the signing of a formal agreement, a further forty-five days will be allocated as a due diligence period.

[15] During his cross-examination, Syed Sabi Ahsan agreed that the due diligence period was to be undertaken once a formal agreement was signed and began on May 13, 2014 following the execution of the document the applicant says (and the respondent denies) was the “formal agreement”. He acknowledged that the due diligence period closed near the end of June 2014 and that the applicant was conducting its due diligence during that period. More than that, he confirmed that he provided the applicant with the names of the respondent’s consultants and their contact information and that the applicant had entered into contracts with some of them, presumably as part of its due diligence (Cross-examination of Syed Sabi Ahsan: Questions 156-171). Syed Sabi Ahsan volunteered:

…it doesn’t make any sense to spend the money on due diligence, nobody does, until you have a signed agreement.

(Cross-examination of Syed Sabi Ahsan: Questions 194-195)

[16] The Application Record contains proposals from two consultants as to the work they would have to undertake in furtherance of the preparing of the site for the sale of plots and internment. Syed Sabi Ahsan agreed the work undertaken by the consultants, following the execution of the agreement on May 13, 2014, was undertaken at the behest of the applicant who bore the responsibility of paying them for it (Cross-examination of Syed Sabi Ahsan: Questions 257-258).

[17] The document, signed by the parties on May 13, 2014, within a paragraph entitled “Sales by Buyer”, also included the following provision:

…The Buyer upon signing this agreement and upon independently determining its ability to do so, may establish a Burial Assistance Plan for its Members and may advertise and sell subscriptions to its Burial Assistance Plan.

[Emphasis added]

[18] It stands to reason that before a buyer of anything is allowed to sell the product that is the subject of the rights it has sought to buy, it must have, at a minimum, acquired the right to complete the purchase. It must have, by that time, entered into a binding contract to buy what it seeks to sell. You cannot sell what you do not and may never own. During his cross-examination, Syed Sabi Ahsan indicated that he understood that, after signing the agreement on May 13, 2014, the applicant would be able to and began to advertise the sale of the plots it was to purchase (Cross-examination of Syed Sabi Ahsan: Questions 278-282).

[19] More than that, the document signed on May 13, 2014 also noted as a “Directive Principle” that:

…TMCC [the Respondent] shall not sell internment rights directly to members of MGCC [the Applicant]. MGCC to provide TMCC with MGCC’s …member list from time to time.

[20] In an e-mail to Helmi Abdel Rahman (the representative of the applicant) written on May 13, 2014 in preparation for and in anticipation of the signing to come later that day, Syed Sabi Ahsan (the representative of the respondent) asked that:

When we meet – please also supply the current Membership list of MGCC [the Applicant] so that we do not initiate direct discussion with any MGCC Members.

[21] The request for the membership list is an act which stands to confirm the understanding that the agreement to be signed was to be a binding contract (in this case, defined as the formal agreement). The parties acted on the reliance that it was such and not, as counsel for the respondent suggested in the factum he filed, an agreement to agree, which, as a matter of law is not binding.

[22] Finally, in order to proceed with the project, it was necessary that a “Minor Site Plan Amendment” application be prepared. There was a fee. The planning consultant requested, and Helmi Abdel Rahman arranged for, payment to be made by the applicant. The respondent took an active role in the applicant proceeding with its plans. Its representative, Syed Sabi Ahsan, signed the application as owner of the site.

[23] In summary, the payment and acceptance of the deposit, the due diligence along with the identification and retaining of consultants, the advertising by the applicant in company with the request for its membership list and the making of the planning application paid for by the applicant and signed on behalf of the respondent establish that the parties were acting under, and in compliance with, the agreement signed on May 13, 2014. They both acted as if it was the formal and final agreement between them.

[24] Despite this, the respondent says the circumstances are unclear. The uncertainty is demonstrative of a mixed understanding of what transpired. It was submitted that these differences can only be resolved through a trial.

[25] As counsel for the respondent sees it, a closer consideration of the evolution of the arrangement reveals that it was never intended that the document signed on May 13, 2014 would be the final and formal agreement. From the outset, it was known and accepted by the parties that lawyers would be required to complete a contract. At the time the first version of the document was prepared in July 2013, it was clear that it was not to be a “Legal contract”. It reflected the understanding that lawyers would be needed before the document could be finalized:

This MOU is not a Legal Contact. It is merely an instrument to document the understanding of The Parties, from which to construct a legally binding contract. Items may be added, subtracted or amended as required by the Solicitors of The Parties.

[26] When this statement was removed, it was replaced by the requirement that a “formal agreement” be made. According to Syed Sabi Ahsan, the inclusion of this term meant that lawyers were to approve the agreement (Cross-examination of Syed Sabi Ahsan: Questions 270-271). The difficulty is that, while the parties upon the signing of the agreement acted in response to their obligations under it, there is nothing they did that would serve to confirm the understanding that there was no agreement and would not be until lawyers became involved. To my mind, the removal of the reference to lawyers in the April 13, 2014 version and continued in the May 13, 2014 document suggests that changes had been made and that lawyers were no longer needed to finalize the agreement. The applicant acknowledged that Syed Sabi Ahsan had noted that he wanted a lawyer to approve the deal, but went on to say this was not a requirement and no specific request that it become one was made. It was something the respondent was free to undertake on its own but it was not part of any agreement or arrangement between the parties (Cross-examination of Helmi Abdel Rahman: Questions 158-165).

[27] Counsel for the respondent submitted there were “four categories of evidence” that supported his theory. He began by referring to the affidavit sworn by Syed Sabi Ahsan. As I understood it, this was an effort to lay the groundwork for why lawyers were necessary to the completion of the agreement. In his affidavit, Syed Sabi Ahsan referred to the highly-regulated nature of the burial and internment industry. Counsel drew the attention of the court to the Funeral Burial and Cremation Services Act, 2002, S.O. 2002, C. 33 as a means of confirming the complicated regulatory scheme. Counsel submitted that the statutory obligations demonstrated why lawyers were needed and stands to confirm the respondent’s competing theory of the case. This would be a matter of interest to the parties. There is a certain wisdom in the idea that parties to a contract such as this should be aware of the regulatory requirements that apply to cemeteries. This having been said, there is nothing in the arrangement between the parties, nothing they did, wrote or agreed to as a result of the duties the statutes and regulations impose that obliges lawyers to be involved before a formal agreement could be made. The fact is the document signed on May 13, 2014 deals with the regulatory obligations. It makes clear they are to be complied with:

Any and all terms shall adhere to the requirements of the Cemetery Regulation Act, and all applicable Federal, Provincial and Municipal legislation.

[28] It also says that compliance is primarily the responsibility of the applicant, not the respondent which is now asserting that lawyers were required in order to deal with this concern before a formal agreement could be made. I say this is primarily the responsibility of the applicant because the document, as signed, does allow for the applicant to contract with the respondent to supply any services necessary to meet the statutory requirements. It says:

MGCC [the Applicant] shall be free to operate Phase VI, including conduct of Open/Close operations by its own employees or by its appointed contractors from time to time as long as adequate machinery and standards are utilized. MGCC shall be required to meet all statutory and insurance requirements. Alternatively MGCC may contract such service to TMCC [the Respondent] at pre-agreed prices.

[29] Counsel for the respondent noted that Syed Sabi Ahsan deposed in his affidavit that without the inclusion of the clauses evidencing the need to negotiate and execute a formal agreement, he would not have signed the May 13, 2014 document. The problem is that this is what he says now. It is not consistent with what the respondent did in the days after the document was signed.

[30] Counsel for the respondent moved on to the second of his four categories of evidence. He suggested that the atmosphere of the negotiations were informal and friendly. Counsel for the respondent saw this as a further indication that lawyers would be needed. They would be required to turn informal negotiations into a formal agreement. In my view, the proposition that the negotiations took place in a warm and friendly atmosphere adds nothing substantive to the submission that the agreement between the parties was such that lawyers would be required to review and approve the agreement before it could be binding on them.

[31] Counsel went on to propose that the question of the involvement of lawyers was raised before May 13, 2014. This may be so. First, it was raised in the context of the original draft, the one dated July 2013 which made specific reference to items that would be added or subtracted by solicitors for the parties (see: para. [25], above). As already noted, this was removed from the subsequent versions. How its inclusion was interpreted by Helmi Abdel Rahman at the time is no longer helpful. Nonetheless, it was referred to by counsel for the respondent (Factum of the Respondent, para. 36, quoting the Cross-examination of Helmi Abdel Rahman: Questions 193-194). In his cross-examination, Helmi Abdel Rahman agreed that the topic came up “on both sides” but he repeated, as already noted, that it was not made a requirement or a condition of the agreement (see: para. [26], above, and the Cross-examination of Helmi Abdel Rahman: Questions 170-183).

[32] Counsel for the respondent noted that Helmi Abdel Rahman “…always thought lawyers would look at what we do” (Cross-examination of Helmi Abdel Rahman: Question 214). Counsel failed to point out what preceded and succeeded this comment. In the question immediately before this statement, it becomes clear that what was being put to Helmi Abdel Rahman was the July 2013 version. Even then, Helmi Abdel Rahman was of the view that the use of lawyers was not the subject of a mutual requirement that had to be satisfied before a contract could be made; rather, it was an individual opportunity available to either of the parties if they required. For his part, Helmi Abdel Rahman said he did not require it (Cross-examination of Helmi Abdel Rahman: Question 213). In the lines that follow the statement, Helmi Abdel Rahman makes clear that the agreement between the parties did not require a lawyer to approve or review the document before it could become a binding agreement (Cross-examination of Helmi Abdel Rahman: Questions 215-229).

[33] There is nothing in what was said that demonstrates any agreement that lawyers were required, as part of the arrangement between the parties, to approve or review the agreement before it would become binding on them.

[34] This takes me to the third of the four categories of evidence on which counsel for the respondent relied. He drew the attention of the court to minutes of the meeting of the Board of Directors of the applicant which took place on May 3, 2014. One of those present observed that:

We will still have another round of confirming or revising this agreement, when the lawyers check it from the legal point of view.

[35] Counsel for the respondent sees this as an admission by the applicant that lawyers were to be involved. This is nothing more than a statement made by one individual in a private meeting. It doesn’t bind the party or suggest that it was bound by any agreement to involve lawyers. The person who evidently said this is identified as “V.P.” This does not correspond with the initials of any of the individuals noted as being present. Presumably, it refers to the person holding the position of Vice President. There is no indication of who that was, what information he or she had or whether he or she had the authority to speak for the organization. It ignores what was said immediately before and after the sentence quoted. Before the quotation, V.P. notes that the point of controversy, still open to negotiation, related to signage the applicant was not permitted to put on the outside gate. There is no suggestion that the possibility of a comprehensive re-examination of the agreement remained. To the contrary, after the sentence quoted, V.P. evidently observed “…we have negotiated hard, we have a good agreement”. I note that May 3, 2014, the day of the meeting, was within the four-week period set aside for the preparation of the “formal agreement”. No negotiations took place over the course of that period which suggests that, in the end, the parties were satisfied with the agreement they had made and, as said by Helmi Abdel Rahman, they did not require lawyers.

[36] The executive of the applicant met on June 17, 2014. The secretary is reported as having said:

We need to hire a lawyer either way to go over the purchase agreement and for the final signed agreement. Any communication between TMCC [the Respondent] and MGCC [the Applicant] needs to be overseen by our lawyer before we send anything to them.

[37] Counsel for the respondent submitted that this stands as recognition by the applicant there was still a final agreement to be signed. It does not. First, this is just one of several statements made during the course of this meeting which discuss the possible involvement of lawyers. Taken together, they offer a variety of views. One suggests that what is in the agreement “is the law” and concludes “[t]here is no danger because they [the Respondent] are responsible”. Another suggests: “We need to think of questions to ask the lawyer”, but does so with an eye to “[i]nternet consultation from online lawyers who charge small fees.”

[38] Ultimately, the Executive Committee “…decided unanimously to retain a lawyer. We agreed to send our purchasing agreement to our lawyer this week or next week.” This does not reflect the fulfillment of an undertaking found in any agreement. It is the sort of individual concern or “requirement” referred to by Helmi Abdel Rahman during his cross-examination (see: paras. [26] and [31], above). Either party could review the agreement with lawyers, but it was their individual decision whether or not to do so. There was no legal obligation that this had to be done before the contract could be considered final.

[39] The fourth “category of evidence” which counsel for the respondent identified dealt with communication between the parties.

[40] Counsel for the respondent referred the court to an e-mail exchange which took place on June 24, 2014. At 6:44 p.m., Syed Sabi Ahsan wrote to Helmi Abdel Rahman saying, among other things:

We are pleased that MGCC has accepted the Agreement and is ready to proceed with the formal agreement.

As the month of Ramadan is almost upon us, it is best if we put pressure on our respective lawyers to get the formal agreement done on time.

[41] At 11:19 p.m., Helmi Abdel Rahman replied, in part:

…Our lawyers need more time. You force me to find another lawyer…

[42] Counsel for the respondent takes this to be an acknowledgement that the formal agreement had not been signed and that lawyers on both sides were to be involved. This ignores the context. The e-mail sent at 6:44 was preceded by one delivered at 1:32 p.m. by Helmi Abdel Rahman to Syed Sabi Ahsan. It says:

Today marks the end of the Due Diligence period stipulated in the Agreement in respect of phase 6 at TMCC; we are pleased to notify you that we accept the Agreement signed by the Board of TMCC and GMCC on May 13, 2014.

There is a further period of 7 day [sic] to close the deal, [sic] We ask your consent to extend this period by 10 more days to allow our two lawyers to communicate. [sic] please confirm you consent as soon as possible.

[43] This e-mail makes it plain that this exchange confirms that the parties were acting on the basis that the document signed on May 13, 2014 was the formal agreement. The due diligence period was to begin upon the signing of the formal agreement. It was to run for forty-five days. June 24, 2104 is forty-two days after May 13, 2014. The math may be wrong but it is difficult to contest the conclusion that the due diligence period had begun with the execution of the document on May 13, 2014. The seven-day period from the end of the due diligence period to closing is a term found in the May 13, 2014 document. More importantly, the earlier e-mail demonstrates that, in this ribbon of three e-mails, the parties are not dealing with lawyers for the purpose of finalizing a formal agreement but to assist in the closing of an agreement that was already in place.

[44] Counsel for the respondent also relied on an e-mail sent by Syed Sabi Ahsan on June 7, 2014 to Helmi Abdel Rahman expressing concern about the “marketing campaign” of the applicant. It suggests the marketing material needed clarification and that the price for which plots were being offered was not sustainable and was misleading. None of this is contrary to the existence of an agreement. Rather, it suggests there was one, but that it was being breached. However, the e-mail goes on to say that, as of its date, the due diligence period was underway and that a formal agreement needed to be signed and that, without one, there would be no contract. This was said (written) three weeks after the document of May 13, 2014 was signed, after the deposit had been received, after the due diligence period as indicated by Syed Sabi Ahsan had commenced, after he had provided names of consultants to Helmi Abdel Rahman, after consultants had been retained to help the applicant and after the membership list had been requested by the respondent. It is not clear what motivated this change, but it was inconsistent with the actions that had been taken further to the signing of the document on May13, 2104.

[45] This takes me back to the idea that what the parties did is more important than what they said. Actions do speak louder than words. The statements relied on by the respondent, particularly when used out of context and without concern for the circumstances in which they were made, cannot set aside the actions of the parties taken in response to the execution of the document signed on May 13, 2014.

[46] There is no doubt that the court has the authority to determine that a matter involving the interpretation of a contract or the intention of the parties should be converted to a trial. This may occur where credibility is an issue (see: 2219338 Ontario Ltd. v. Grill It Up Restaurants Inc. 2012 ONSC 6621, 222 A.C.W.S. (3d) 627; and, Colosimo v. Geraci 2004 BCSC 636, 15 C.P.C. (6th) 126). This need not be done unless it is necessary to decide the case. To the contrary, the trial courts are being directed that, where it is appropriate, cases should now be decided without reliance on trials which are both protracted and expensive:

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance requires simplified and proportionate procedures for adjudication, and impacts the role of counsel and judges. This balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

This requires a shift in culture. The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found.