CITATION: Aloe-Gunnell v. Aloe et al., 2016 ONSC 1492
COURT FILE NO.: 21119/A2
DATE: 2016-03-01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TIIU MARI-ANN ALOE and VALVE ELISABETH ALOE-GUNNELL Plaintiffs
– and –
ESTATE OF VALDEKO ALOE, LEMBIT PETER ALOE, TOOMIS ERKI ALOE, ALO LUMBER AND BUILDING SUPPLIES, JOHN ALO DEVELOPMENTS LIMITED AND ALO CONSTRUCTION CO. Defendants
Ms. Tiiu Marie-Ann Aloe, for Self Valve Elisabeth Aloe-Gunnell, for Self
Mr. William Scott, Counsel for the Defendants - Appearing as Agent for Ms. Tiiu Marie-Ann Aloe on this motion
HEARD: February 26, 2016
REASONS ON MOTION FOR DIRECTIONS
JUSTICE M. VARPIO
[1] This motion, brought by both parties, seeks directions with respect to the severance and transfer of certain property from the defendants to the plaintiff, Ms. Valve Aloe-Gunnell. The parties seek an Order from me as to whether the transfer of the property as it is currently zoned fulfills the obligations described in Koke J.'s March 11, 2011 Order which states:
In lieu of any share in the New York property or proceeds of the sale to Scenic Hudson, or any other party, Val Aloe is to be deeded the New York property (approximately 3.43 acres) being the commercial area subject to the conservation easement only, after the severance is obtained which is to be applied for, forthwith.
Any party may ask for further directions from the Court in Sault Ste. Marie.
[2] The parties agree that it was always within their contemplation that approximately 3.43 acres of property would be transferred to Ms. Aloe-Gunnell and that said land was always thought to be zoned entirely as commercial property. Subsequent to the entering of the consent Order, the parties discovered that the acreage zoned for commercial development was less than 3.43 acres (3.042 acres). As such the defendants have agreed to transfer 3.43 acres of property to Ms. Aloe-Gunnell and have included .388 acres of residentially-zoned property to make up the difference. On February 13, 2015, the defendants' counsel undertook to have the 0.388 acres re-zoned for commercial development. As will be seen below, the defendants have not formally undertaken this process.
[3] For the reasons described herein, I find that the parties always intended to transfer an area of commercially-zoned property, and were not concerned with the specific acreage of the property save and except as it affected the property's fair market value. Further, I also find that the parties were not concerned about the zoning of said property save and except as it affected the property's fair market value. The parties presented no evidence as to how the property value was affected by zoning issues despite having had ample opportunity so to do. Accordingly, I direct the parties that a transfer of the property as it is currently zoned satisfies the March 11, 2011 Order.
[4] However, I also find that the defendants must comply with the undertaking given by their counsel prior to transferring said property. Their counsel undertook on February 13, 2015 to re-zone the remaining 0.388 acres to permit commercial use. Counsel has provided me with no reason to absolve the defendants from their responsibility in this regard. As such, prior to transferring the property, the defendants will re-zone the remaining 0.388 acres.
FACTS
[5] The procedural history of this matter is lengthy and unfortunate. I have previously described this history, as have Koke J. of this Court and Sharpe J.A. and Huscroft J.A. of the Ontario Court of Appeal. No further recitation of history of this matter is needed for the purposes of these reasons and except to say that a considerable portion of the delay in this matter lay at the feet of Ms. Aloe-Gunnell.
[6] The litigation was commenced in the early 2000's and was putatively settled on March 11, 2011 pursuant to a consent Order entered into before Koke J. As noted above, in exchange for the settlement of her claims, Ms. Aloe-Gunnell was to "be deeded the New York property (approximately 3.43 acres) being the commercial area subject to the conservation easement only.” (the "Transferred Property"). The Transferred Property was to be severed from a larger property, the remaining portion of which was to be retained by the defendants. In turn, the defendants had a deal to sell the remaining property to an environmental group named Scenic Hudson.
[7] For five years, the settlement has been bogged down by findings of contempt, lawsuits launched in other jurisdictions and other problems.
[8] It is accepted by the parties that all parties believed that the approximate 3.43 acres described in the Order were zoned for exclusive commercial use. Subsequent to entering into the settlement, the parties discovered that the commercial area measured only 3.042 acres (a .388 acre difference - or 11.3% of 3.43 acres). The defendants have agreed to transfer 3.43 acres to Ms. Aloe-Gunnell by adding a further .388 acres of residentially-zoned property to her. This .388 acres is property is adjacent to the 3.042 acres. I note that an accurate property survey is filed with the Court as Exhibit 2.
[9] During the course of the protracted court proceedings, counsel for the defendants made the following undertaking on February 13, 2015:
MR. SCOTT: No, but I’m just going to do the semantics. When we sever this, Your Honour, what we have to do is this. We’re going to get – we have three different figures now for the acreage. The people that – the original acreage should have been 3.53 acres, not 3.43. Ms. Aloe had somebody in Michigan look at a survey and they came up with 2.9 acres. Scenic Hudson did their own, they had a surveyor assess it, they’re at 3.3 acres. So we’re very close. I don’t believe – we have two people saying it’s close to 3.3, 3.54, so we’re close. So here’s how it works – we’re in charge of the severance, the subdivision, so we’ll apply, we have the survey done, we’re going to get the acreage calculated, and then if there has to be a sliver – and this acreage, like the property...
THE COURT: Mr. Scott, keep finishing that thought – if there has to be a sliver, that then...
MR. SCOTT: Yeah, we will move the line down because we can pick the line.
THE COURT: Will, will you...
MR. SCOTT: And...
THE COURT: ...can you come up with some sort of a statutory declaration on behalf of your clients today to provide to Ms. Aloe-Gunnell indicating that that’s precisely what you’ll do once all the parties can get a – once there’s an appropriate survey.
MR. SCOTT: And...
THE COURT: And as an aside, Ms. Aloe-Gunnell, based upon, you know, some of the findings Justice Koke has made, frivolous lawsuits, second finding of contempt, I simply note it’s unusual that your survey happens to be the one that’s the statistical outlier. I just leave that as an aside, okay. All I’m looking to do is to say are you in a position where you can get or are you willing to undertake to get signatures or whatever it is that needs to be done to provide Ms. Aloe-Gunnell with sufficient comfort that she’s going to get that 3.43 acreage?
MR. SCOTT: Yes. Yes, we can do – we’ve offered to do that. My friend...
THE COURT: I don’t care about the ex post facto. I don’t care about what happened before. This lawsuit has gone on for so long now, okay, I don’t care.
MR. SCOTT: As part of the severance application, there’s a portion along the bottom, it has to be rezoned commercial, that little sliver, we will do that as part of the severance; you can do that at the same time. But the - what’s happening now is Ms. Aloe-Gunnell is going to get the frontage, there’s not going to be any money so they – there’s no point in him hanging on to the quit claim. That’s only for the release of money.
THE COURT: But you having given the undertaking, and Ms. Aloe, you’re representing yourself, so he can represent his clients, he can’t represent you. You have no problem with that form of an undertaking? That in other words, that if, if for some reason there was a mis-survey, the 3.43 zoned commercial as described in the March 11 order, actually turns out to be 2.7, that you’re willing to move the line down so that it’s 3.43 to get this done?
MS. ALOE: Your Honour, my only difficulty with the undertaking is that I have released my shares in Alo Construction, have I not, and I have no power to effect...
MR. SCOTT: Yeah, Alo Construction...
MS. ALOE: ...if those measures occur. Remember, I’m really on...
THE COURT: Okay, so...
MR. SCOTT: She’s not involved in that, Your Honour...
MS. ALOE: ...it’s strictly Alo Construction.
MS. ALOE: ...I’m just in support of.
THE COURT: It’s strictly – so you have no standing in this.
MS. ALOE: No.
THE COURT: Okay, that’s fine. So that – so in other words, so she’ll get land, now the question is going to become with respect of the zoning and how the zoning would happen, okay.
MR. SCOTT: There’s another issue.
THE COURT: Let me just stop for one second. Are you two gentlemen content that if there becomes an issue with who should do the zoning, you guys just come back in front of me?
MR. SCOTT: No, we’ll do the zoning. We’ll agree to do – because it’s going to be part of our severance.
THE COURT: So you’ll do the zoning if there’s an issue.
MR. SCOTT: We’re the applicant, yes. And the issue is we may not even need to do the rezoning, because that little strip is going to be in a conservation easement along the back and it can’t be used for anything – there’s more limited uses. We don’t know from New York whether they even need to rezone that; they may not, but if it is, we’ll rezone it. [Emphasis added].
[10] The defendants thus began inquiring into the zoning process in Highland Falls, New York. One email from Scenic Hudson dated March 20, 2015 from the Senior Land Project Manager at Scenic Hudson stated:
Recall that the Conservation Easement to be placed on the lands Val is to acquire limits [sic] will prohibit development in the rear of the property. This area of no development largely overlaps with that portion of the property Val is to receive that is not currently zoned commercial. Therefore, there would be no utility to securing a rezone of this land from residential to commercial, as those lands cannot be developed. I should think this will prove useful in establishing with the Court that there is no responsibility to secure a rezone?
[11] On July 16, 2016, an email exchange was passed between the defendants’ counsel, Scenic Hudson and an individual named Mr. Paul Keller (whom the motion materials do not identify). Mr. Keller responds to a question posed by defendants’ counsel as follows:
As a point of information, the Planning Board [governing the transferred property] has no power to change the zoning of any parcel. In order to amend the zoning map to convert a bit of the residential zone to commercial, only the elected Town Board may do so. That is not an easy task as you must convince them that it [sic] the change is needed and is consistent with the general zoning plan of the Town. Thereafter they would have to pass a local law amending the zoning map after first securing an advisory opinion from the Orange County Planning Board. I am not suggesting that it is impossible – just that it will take time and persuasion [emphasis added].
[12] Since then, the zoning application has largely sat dormant since counsel for the defendants has advised me that the Town of Highland Falls is opposed to the rezoning application. I am advised that such opposition will stop a re-zoning application in its tracks. There is no admissible evidence in the record indicating as such, however. The materials before me on the motion provided no indication as to whether the rezoning application was even formally commenced. It should be noted, however, that Mr. Peter Aloe deposes that Ms. Aloe-Gunnell has been in constant communication with the Town of Highland Falls and that such alleged hectoring may account for the Town of Highland Falls’ purported position.
[13] The parties brought separate motions before me in September of 2015 seeking, inter alia, directions as to the deeding of the Transferred Property and the effect of the zoning issues upon same. The portion of the motions dealing with other issues that have been adjourned to a later date.
[14] Mr. Scott for the defendants argued that a transfer of mixed zoning property is substantially compliant with the March 11, 2011 Order of Koke J. He indicated that the defendants have undertaken best efforts to provide Ms. Aloe-Gunnell with that which was contemplated in the Order but that such a transfer is a practical impossibility given Highland Falls' aversion to the zoning request.
[15] Prior to appearing at the hearing, Ms. Aloe-Gunnell filed a Notice of Intention to Represent Herself. In her submissions, Ms. Aloe-Gunnell indicated that:
- She wanted the defendants to live up to their undertaking prior to effectuating the transfer;
- She believed that the 3.43 acres were zoned commercially, but was unsure if this was a mutual mistake. She stopped short of alleging fraud as against the defendants;
- She was concerned about the effect of the mixed zoning upon the property's value or potential future use but provided the Court with no evidence in this regard. She claimed that she did not have time to assemble the necessary evidence.
[16] It should also be noted that both parties agree that the deeded property will be subject to the conservation easement. It was unclear from the parties' submissions as to whether or not they are ad idem with respect to the effect of the easement. During his submissions, Mr. Scott indicated that the conservation easement was such that Ms. Aloe-Gunnell could not develop that portion of the Transferred Property that was subject to same. Ms. Aloe-Gunnell disagreed and stated that the only restrictions flowing from the easement had to do with road visibility, the cutting of trees and a height requirement. No evidence was placed before me as to the effect of this easement on the property (i.e. I have no idea as to how many trees are on the land subject to the easement, its visibility lines from the road, the economic impact of the easement upon the value of the property, etc.).
[17] In an affidavit filed three days before the hearing of the motion, Mr. Peter Aloe deposed that there was now some urgency to the determination of this issue in so far as Scenic Hudson has indicated to his New York agents that the environmental group is re-considering its purchase of the defendants' remaining share of the property given the litigiousness of the process and the length of time it has taken to complete the severance. If some finality is not brought to the matter within the next few days, counsel submits, the sale could be scuttled.
LAW
Consent Orders and Substantial Completion
[18] It must first be noted that the March 11, 2011 Order was a consent Order. When dealing with consent Orders, the Courts typically treat them akin to a judicially-blessed contract. Monarch Construction Ltd. v. Buildevco Ltd. 26 C.P.C. (2d) 164 stands for the proposition that "a consent judgment is final and binding and can only be amended when it does not express the real intention of the parties or where there is fraud. In other words, a consent judgment can only be rectified on the same grounds on which a contract can be rectified" (para 3).
[19] This principle has been recently applied by this Court: Anderson v. Lamontagne [2015] O.J. No. 5279; Verge Insurance Brokers Ltd. v. Sherk [2015] O.J. No. 3413;
[20] It is well-settled law that parties to a contract must meet their obligations to a level of substantial completion: H. Dakin & Co., Limited v. Lee, [1916] 1 K.B. 566 (Div. Ct.). In Dakin, the Court stated:
It seems to me, however, from the authorities that where a building or repairing contract has been substantially completed, although not absolutely, the person who gets the benefit of the work which has been done under the contract must pay for that benefit. On the other hand, if the builder has refused to complete his work, or if the work done is of no use to the other party, or if the work is something entirely different from what was contracted for, then the builder can recover nothing.
[21] In Clark v. Bulmer et al (1843), 11 M. & W. 243, 152 E.R. 793 and Fairbanks Soap Co. v. Sheppard 1951 85 (ON CA), [1951] O.R. 860 (Ont. C.A.), the Courts had to look at the parties' intentions and actions - as opposed to the strict wording of the contracts - to determine whether or not the impugned party had substantially completed its contractual obligations.
Undertakings
[22] The law of undertakings was summarized by Pierce J. in Hudson v. Andros [2010] O.J. No. 2525 at paras 19 to 25:
Black's Law Dictionary, 7th edition, s.v. "undertaking" defines it as a "promise, pledge or engagement."
The nature of an undertaking is quoted by G.B. Smith in Professional Conduct for Canadian Lawyers (Toronto: Butterworths, 1989), at p. 203 as follows:
An undertaking is the promise given by a solicitor through a written statement, a verbal communication or inferred from his acts, or any combination thereof, in reliance on which promise the recipient of the undertakings gives up to the solicitor or to another party, a document or right, or performs an act which that recipient would not have done were it not for the receipt of the promise from that solicitor.
An undertaking binds the lawyer to do something that the circumstances of the pledge do not permit him or her to do immediately. It may be to supply documents, make inquiries, answer a question, discharge a mortgage, or act in a way promised in the undertaking. It is an exception to the general principle that a promise made without consideration is unenforceable. No particular form of words is required to form an undertaking.
The nature of an undertaking was described by the court in Bogoroch & Associates v. Sternberg (2007), 2007 41889 (ON SCDC), 229 O.A.C. 284 (Div. Ct.), at para. 23:
Solicitors' undertakings are matters of utmost good faith. They are traditionally given to expedite and facilitate the furtherance or conclusion of matters upon which solicitors are engaged on behalf of their clients. These efficiencies result in savings of lawyers' time that can be passed on to clients. Time is spent more efficiently and work is done more smoothly. Because of that, solicitors must be able to rely upon undertakings, which are promises given by one solicitor to another to do or refrain from doing an act.
The court will enforce an undertaking given in the lawyer's professional capacity as part of its inherent jurisdiction to control its process. The undertaking is also enforceable in order to uphold the honour of the bar. While undertakings are typically exchanged by lawyers, I conclude that an undertaking given in the lawyer's professional capacity may be enforced by the court when it is given to a non-lawyer, in order to underscore the professionalism of the bar. However the court will not compel the performance of an undertaking simply because it is made by a lawyer in a non-professional context; see: Wilson v. Beatty (1885), 12 O.A.R. 253 (C.A.).
Unlike contractual obligations, an undertaking does not require consideration to be binding. The undertaking is binding personally on the lawyer who has given it unless the undertaking states in unambiguous terms that it is the client who has made the undertaking. In the case of ambiguity, the undertaking is deemed to be that of the solicitor personally. Consequently, a lawyer should not give an undertaking that he or she cannot personally fulfill. Even though the client may change lawyers, the undertaking continues to bind the client and can be enforced after the retainer of the first counsel ends. See: Lysyk, Dodek and Hoskins, Barristers and Solicitors in Practice, LexisNexis Canada Inc. 2009, (looseleaf). Undertakings are not limited to the litigation process but are used in other areas of law such as real estate.
Honouring an undertaking is also a professional obligation as set out under Rule 6.03(10) of the Rules of Professional Conduct promulgated by the Law Society of Upper Canada.
The rule states:
6.03(10) A lawyer shall not give an undertaking that cannot be fulfilled and shall fulfill every undertaking given.
[23] Thus, undertakings are of significant importance to the proper functioning of the legal profession and it seems to me that they must be honoured in all reasonable circumstances.
ANALYSIS
[24] Firstly, I must determine what were the true intentions of the parties in entering into the March 11, 2011 consent Order. The parties appear to agree that the intention of the parties was to transfer the property as an economic entity. That is, there is no "magic" to the 3.43 acres in question. It is not intended to be held as a vacation property. There is no evidence that the 3.43 acres has personal and/or emotional value to Ms. Aloe-Gunnell. Instead, the property was to be deeded to Ms. Aloe-Gunnell because its economic value was such that she saw was willing to accept same in settlement of her claims. Her submissions before me dealt exclusively with the economic impact of the zoning upon the property she was to receive.
[25] I reject Ms. Aloe-Gunnell's submission regarding her inability to procure evidence as it relates to the economic effect of the zoning. Five years that have passed since the March 11, 2011 Order. Six months that have passed since the filing of the instant motion. Indeed, Ms. Aloe-Gunnell (along with the defendants) sought directions and, as such, it should have been in her contemplation that such evidence would be necessary. Simply put, Ms. Aloe-Gunnell knew this would be an issue and had ample time to get evidence before the Court.
[26] Ms. Aloe-Gunnell is receiving 3.43 acres as contemplated by Koke J.'s Order despite the fact that the precise size of the property was never entirely certain as evidenced by the inclusion of the word "approximately" in the Order.
[27] The parties chose the words "commercial area" to describe the property to be transferred. While the parties agree that everyone believed that the entire area was zoned commercially, the choice of words nonetheless supports the view that the crucial aspect of the settlement was the receipt of the commercial area in question. Put another way, it was not crucial that Ms. Aloe-Gunnell receive 3.43 acres of commercially-zoned property. Instead, Ms. Aloe-Gunnell was to receive the commercial area, which was believed to be approximately 3.43 acres. While the difference in these two positions is subtle, it is nonetheless vital. If there was evidence before the Court that Ms. Aloe-Gunnell required at least 3.43 acres of commercially-zoned property to commence a specific project, it would be clear to me that the parties' intention was as Ms. Aloe-Gunnell suggests.
[28] However, that is not the case. Instead, Ms. Aloe-Gunnell's submissions make clear that her concern is that the mixed zoning will affect the Transferred Property's fair market value. She has furnished no evidence to suggest that the transfer of 3.43 acres of which 88.7% is zoned commercially (as opposed to 100%), will in any way materially diminish the value of the Transferred Property.
[29] As such, and given the efforts undertaken by the defendants to ensure that Ms. Aloe-Gunnell receives 3.43 acres as contemplated by the Order (despite the use of the term "approximate"), I find that a transfer as contemplated by the survey filed as Exhibit 2 to this motion would constitute substantial completion of Paragraph 1 of Koke J.'s March 11, 2011 Order.
[30] The matter does not, however, end at this juncture. As Ms. Aloe-Gunnell made clear, the defendants undertook, through their solicitor, to re-zone the remaining .388 acres to permit commercial use. Undertakings given by counsel are vital and important parts of the legal process. In order for the legal system to work effectively, a lawyer's word must be her or his bond. Counsel advises me that a zoning change is a practical impossibility given the Village of Highland Falls' opposition to Scenic Hudson’s acquisition. While that may well be the case, the evidence filed before me demonstrates that the defendants have undertaken little or no effort to comply with this undertaking. I also note that materials indicate such a rezoning, while difficult to achieve, is not necessarily impossible. Equally, I have no evidence in the file from Scenic Hudson indicating that they will walk away from the sale if the Transferred Property is not deeded to Ms. Aloe-Gunnell forthwith (or any other affidavit evidence that complies with the rules regarding swearing affidavits upon information and belief). As such, I have no basis to relieve the defendants of their undertaking since I have no basis for finding that it would impossible to comply with the undertaking.
ORDER
[31] For the foregoing reasons, I hereby direct that, prior to transferring the impugned 3.43 acres to Ms. Aloe-Gunnell, the defendants will comply with their undertaking and re-zone the impugned 0.388 acres to "commercial".
[32] If such a re-zoning proves to be a practical impossibility, the defendants are free to come back before me with admissible evidence in an attempt to explain their position.
[33] Finally, with respect to costs of this particular argument (i.e. the intertwined transfer and zoning issues), the result is split and I will not order costs.
Justice M. Varpio
Released: March 1, 2016
CITATION: Aloe-Gunnell v. Aloe et al., 2016 ONSC 1492
COURT FILE NO.: 21119/A2
DATE: 2016-03-01
ONTARIO
SUPERIOR COURT OF JUSTICE
TIIU MARI-ANN ALOE and VALVE ELISABETH ALOE-GUNNELL Plaintiffs
– and –
ESTATE OF VALDEKO ALOE, LEMBIT PETER ALOE, TOOMIS ERKI ALOE, ALO LUMBER AND BUILDING SUPPLIES, JOHN ALO DEVELOPMENTS LIMITED AND ALO CONSTRUCTION CO. Defendants
REASONS ON MOTION FOR DIRECTIONS
Released: March 1, 2016