SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Drew Jordan Maharaj v. Nadine Robinson
BEFORE: Bloom, J.
COUNSEL: Mark Wainberg, Counsel for the Applicant, Drew Jordan Maharaj
Jide Oladejo, Counsel for the Respondent, Nadine Robinson
HEARD: November 23, 2015
E N D O R S E M E N T
I. INTRODUCTION
1The Applicant seeks a declaration that an agreement of purchase and sale dated June 21, 2010 between himself and the Respondent in respect of the premises at 1399 Hearst Boulevard in Milton, Ontario remains in full force and effect.
2Under this agreement, the Applicant is the purchaser, while the Respondent is the vendor. When the agreement was signed, there were two persons who signed as vendors, the Respondent and her mother, Jasmine Lawrence Robinson, but at the time of the hearing of the Application only the Respondent was an owner of the premises. The Application at bar is made pursuant inter alia to Rule 14.05(3)(d), and the Respondent does not contest the Court’s jurisdiction to decide this matter.
II. FACTS
3The agreement of purchase and sale provided for a sale price of $535,000.00, a deposit of $ 5000.00 which was paid, and a closing date of no later than July 15, 2015. Moreover, attached to it was an agreement to lease referred to both in argument and in these reasons as an agreement to lease or a lease. The Applicant asserts that the attachment arguably did not form part of the purchase and sale agreement, while the Respondent asserts that they constituted together one agreement (I will refer to that alleged one agreement as the “package agreement”).
4Under the agreement to lease, which like the purchase and sale agreement was dated June 21, 2010, the Applicant, his mother, Rupa Maharaj, and her husband, the Applicant’s stepfather, Kevin Reid, were the lessees, while the Respondent and her mother were the lessors.
5Further, the agreement to lease was later amended to provide that it contained an “option of buying the property after 1 yr. from commencement of lease.” The term of the lease commenced July 15, 2010, but there is some doubt about its length, since there is a dispute about whether a handwritten amendment to the term (which was originally 2 to 5 years) was agreed to by the parties.
6Also attached to the agreement of purchase and sale was Schedule A. The agreement of purchase and sale stated that Schedule A “form(s) part of this Agreement.” Schedule A provided for the terms of payment being, in addition to the $ 5000.00 deposit, $ 2200.00 per month of which $ 1800.00 was on account of rent and $ 400.00 was on account of the purchase price. The agreement to lease repeated the monthly rental figure of $2200.00, and also called for payment of $ 4400.00 as a deposit and as prepayment of the first and last month’s rent.
7The rental payments were chronically late, although paid. There is also a dispute as to whether a number of letters alleged by the Respondent to have been sent by Jasmine Lawrence Robinson in respect of the late payment of the rent, were received by the Applicant. Exhibit C to the affidavit of the Respondent sworn August 4, 2015 includes 7 such letters from Jasmine Lawrence Robinson to the tenants, calling for an end to the late rental payments. Whether these letters were received by the Applicant or not, they did not explicitly purport to terminate the purchase and sale agreement or lease.
8A letter dated June 24, 2015 was sent by Simeon Oyelade, lawyer for the Respondent, to Robert Saunders, lawyer for the Applicant. It referred to the lease, and purchase and sale agreement, including stating that pursuant to the latter the Applicant had had the option “to purchase the property on or before July 6, 2015.” It also asserted that as a result of the chronic late payments of rent and for other reasons the lease and agreement to purchase had been terminated, converting the presence of the Applicant only to “occupancy.” The letter asserted, “Several letters of request for rent payments were sent to your client, both by regular and registered mails in order to continue the lease agreement. The Leassor [sic] eventually wrote that the Agreement of lease with an option to purchase has been changed to occupancy only thereby ending the option to purchase.”
III. APPLICABLE LEGAL PRINCIPLES
9The parties cite as applicable to the case at bar two alternative sets of legal principles.
10The Applicant contends that the principles which govern the situation are those related to fundamental breach of contract and anticipatory breach of contract. He cites in particular the following analysis of those principles set out by the Ontario Court of Appeal in Spirent Communications of Ottawa Limited v. QuakeTechnologies (Canada) Inc., 2008 ONCA 92:
Anticipatory and fundamental breaches -- The applicable legal principles
35As the trial judge correctly stated: (1) only a fundamental breach by Spirent would have given Quake the right to treat the Agreement as at an end; and, (2) a fundamental breach is one which deprives the innocent party of substantially [page727] the whole benefit of the contract. See, among other cases, Place Concorde East Limited Partnership v. Shelter Corp. of Canada Ltd., 2006 16346 (ON CA), [2006] O.J. No. 1964, 211 O.A.C. 141 (C.A.).
36As the trial judge also correctly noted, this court has repeatedly stated that there are five factors that can be considered when determining whether conduct has deprived the innocent party of substantially the whole benefit of the contract. The five factors are: (1) the ratio of the party's obligations not performed to that party's obligations as a whole; (2) the seriousness of the breach to the innocent party; (3) the likelihood of repetition of such breach; (4) the seriousness of the consequences of the breach; and (5) the relationship of the part of the obligation performed to the whole obligation. See Place Concorde, supra.
37I would add this. When considering Spirent's conduct, it was important to keep in mind that what was involved was an anticipatory breach of contract. An anticipatory breach sufficient to justify the termination of a contract occurs when one party, whether by express language or conduct, repudiates the contract or evinces an intention not to be bound by the contract before performance is due. See Pompeani v. Bonik Inc. (1997), 1997 3653 (ON CA), 35 O.R. (3d) 417, [1997] O.J. No. 4174 (C.A.). To assess whether the party in breach has evinced such an intention, the court is to ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by it. See McCallum v. Zivojinovic (1977), 1977 1151 (ON CA), 16 O.R. (2d) 721, [1977] O.J. No. 2341 (C.A.). Having said that, when determining whether such an intention has been evinced, the courts rely on much the same analysis as they do in respect of claims of fundamental breach. That is, in determining whether the party in breach had repudiated or shown an intention not to be bound by the contract before performance is due, the court asks whether the breach deprives the innocent party of substantially the whole benefit of the contract.
53Repudiation does not automatically bring a contract to an end. Rather, it gives the innocent party the right to elect to treat the contract as at an end. If that election is made, the parties are relieved from further performance and the innocent party may sue [page731] for damages. As a general rule, the innocent party must make the election and communicate it to the repudiating party within a reasonable time. See Place Concorde, supra, at p. 155 O.A.C.
11On the other hand, the Respondent contends that the applicable legal principles are those which relate to a contract in which “full performance” as opposed to “substantial performance” is a condition precedent to the exercise of an option to purchase. The Respondent cites the following analysis from Novotny v. Fowler, 2009 9759 (ONSC):
9The Lease Option Agreement between the parties states at para. 4:
This Indenture further witnesseth that in consideration of the premises and the mutual covenants herein contained and provided that all the terms and covenants as set forth herein, which are required to be fulfilled and performed by the Lessee, have so been fulfilled and performed the Lessee shall have an option and the right to purchase the premises free and clear of all encumbrances within the time for acceptance herein limited and under the terms and conditions as herein set forth.
10The Lease Option Agreement also included covenants requiring the respondent to pay rent, prohibiting him from making any alterations to the premises without the written consent of the applicant, and not to do anything that would make void any insurance on the premises or cause any rate increase to be charged for such insurance.
11The respondent did not pay rent as required, and he made alterations to the premises without the consent of the applicant. Regardless of that, he contends that he substantially performed the contract.
12In Sail Labrador Ltd. v. Challenge One(The), 1999 708 (SCC), [1999] 1 S.C.R. 265 Binnie J. said at p. 6:
The question of whether a contractual term is satisfied by substantial performance or whether strict (or “complete” or “exact”) performance is required, is a matter of interpretation. Everything turns on the intention of the parties as expressed (in this case) in the charter party. Here, the contracting parties stipulated “full performance” as a condition precedent to the exercise of the option, and this stipulation should be respected by the courts. The words “all obligations” refer to all of the things required under the contract, and the words “full performance” must therefore refer to the sufficiency of performance of each of them. Substantial performance is less than full performance, according to the ordinary meaning of the words. An option is a unilateral obligation, irrespective of whether it is contained in a unilateral or a bilateral contract… While in some contracts the parties can be interpreted to have agreed to the option being governed by the more flexible standard of “substantial” performance, they did not do so here. However, on a proper interpretation of the charter party, the conditions precedent to the exercise of the option were satisfied in “full” (or, in the instance of the banking arrangements, the owners were estopped from saying otherwise), and the charterers were thus entitled to exercise the option.
13In the case of this Lease Option Agreement, the respondent was chronically in arrears of rent. Further, in cutting a hole in the roof of the property without the consent of the applicant, he breached the Lease Option Agreement.
14Payment of the rent and preservation of the premises were conditions precedent to the right to purchase the property. Substantial compliance with the terms of the Lease Option Agreement is not a factor in this case as the contract between the parties requires full performance as a condition precedent to the exercise of the option.
IV. ANALYSIS
12For purposes of my analysis, I will accept the Respondent’s position that the purchase and sale agreement and lease constituted one agreement, which I have referred to as the package agreement. In the case at bar there is no indication that full performance was intended by the parties as a condition precedent to the exercise by the Applicant of his rights under the purchase and sale agreement. I find, therefore, that the principles relating to fundamental breach of contract and anticipatory breach are the appropriate lens through which to view the case at bar.
13The Respondent alleges that there were three violations of the package agreement between the parties which entitled her to terminate the purchase and sale agreement. These alleged breaches were: (1) the chronically late rental payments; (2) the use of the premises for business purposes; and (3) the alteration of the electrical panel on the premises. The Respondent also contends that the purchase and sale agreement as amended required that the Applicant complete the purchase after one year of the lease.
14There is no doubt that the rental payments were continually late, although ultimately made. As to the allegation that business use of the premises in question by the Applicant breached the package agreement between the parties, I am not prepared to make that finding given the uncertain state of the evidence on the point, including a reference to business use in paragraph 8. of the lease. Similarly, the evidence regarding the alteration of the electrical panel does not allow me to infer a breach of the package agreement between the parties, especially in light of the expert evidence tendered in the form of a letter dated August 17, 2015, exhibit G to the affidavit of Rupa Maharaj sworn August 17, 2015.
15In any event, even if the Respondent had the right to terminate the package agreement for fundamental breach of it, she did not do so and communicate that termination to the Applicant in a reasonable time. Her alleged conversion of the lease into an “occupancy” was not done in a manner which would reasonably convey to the Applicant the termination of the package agreement in a reasonable time after alleged breaches of it, even assuming that her letters were received.
16I also conclude that properly construed together the purchase and sale agreement and lease allowed for a completion of the sale up to July 15, 2015.
17I, therefore, grant the Applicant the declaration that he seeks that the purchase and sale agreement remains in full force and effect.
V. COSTS
18If the parties are unable to agree on costs, they are to make submissions in writing of no more than 3 pages, excluding a bill of costs. The Applicant is to serve and file his submissions within 2 weeks from the release of these reasons, and the Respondent is to serve and file her submissions within 2 weeks from service of the Applicant’s submissions.
Bloom J.
DATE: December 2, 2015
CITATION: Maharaj v. Robinson, 2015 ONSC 7539
COURT FILE NO.: 2748/15
DATE: 2015 12 02
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Drew Jordan Maharaj v. Nadine Robinson
BEFORE: Bloom, J.
COUNSEL: Mark Wainberg, Counsel for the Applicant, Drew Jordan Maharaj
Jide Oladejo, Counsel for the Respondent, Nadine Robinson
ENDORSEMENT
Bloom, J.
DATE: December 2, 2015