CITATION: Crossview Developments Inc. v. 22624443 Ontario Limited, 2016 ONSC 647

COURT FILE NO.: CV-15-521880

DATE: 20160428

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CROSSVIEW DEVELOPMENTS INC.

Plaintiff

– and –

2262443 ONTARIO LIMITED

Defendants

Allan Sternberg and Joseph Figliomeni, for the Plaintiff

David A. Taub and Robert S. Choi, for the Defendant

HEARD: September 25, 2015

M. D. FAIETA j.

reasons for decision

INTRODUCTION

[1] On this motion for summary judgment the Plaintiff, Crossview Developments Ltd. ("Crossview"), seeks an order for specific performance to compel the Defendant 2262443 Ontario Limited (“226) to grant Crossview a leasehold interest in premises municipally known as 10731 Yonge Street, Richmond Hill, Ontario (the “Property”) in accordance with the provisions of an agreement to lease dated November 21, 2014 (“Agreement”).

[2] The Agreement contained a number of conditions, one of which was in favour of Crossview and two of which were in favour of 226. 226 submits that the Agreement is null and void due to the operation of the conditions.

[3] In addition to a two volume compendium of documents, the following evidence was filed by the parties on this motion:

• Affidavit of Shahrokh Nourmansouri, sworn September 2, 2015;

• Affidavit of Yisrael Reichman, sworn August 21, 2015;

• Affidavits of Hadi Bakhtiari, sworn April 1, 2015 and September 14, 2015;

• Affidavit of Myer Betel, sworn September 2, 2015;

• Transcript of the cross-examinations of the above affiants as well as the transcript of the cross-examinations of Sam Agha, held April 8, 2015, and Reza Danayan, held September 11, 2015.

[4] This motion raises the following issues:

• Does the Agreement bind the parties?

• Is 226 estopped from relying on the conditions of the Agreement and denying the existence of a binding agreement?

• If so, is Crossview entitled to specific performance?

[5] For the reasons that follow, I have granted Crossview’s motion for summary judgment.

BACKGROUND

[6] Hadi Bakhtiari ("Bakhtiari") has authority over 226’s business operations including the marketing and leasing of the Property to prospective tenants. Bakhtiari’s father, Asghar Bakhtiari, is the sole shareholder, officer and director of 226.

[7] Sam Agha is an officer, director and shareholder of Crossview. Nourmansouri is a shareholder of Crossview. Agha operates automotive dealerships. Nourmansouri is a real estate developer. Agha testified that Crossview and its affiliated companies, such as Suzuki of Newmarket, are part of a substantial real estate development and automotive business.[^1] In August 2014, Agha approached Chrysler Canada Inc. to ascertain its interest in re-establishing a Chrysler dealership on the Property. Agha secured a Chrysler, Dodge, Jeep and Ram dealership conditional on securing a lease of the Property.

[8] In September 2014, Agha contacted Reza Danayan, a sales agent with Royal LePage Your Community Realty, to inquire about leasing of the Property. In turn, Danayan contacted his friend, Bakhtiari, to inquire whether 226 would be interested in leasing the Property to Crossview. Bakhtiari agreed to enter lease negotiations with 226. 226 retained Royal LePage and Danayan as its real estate broker and agent, respectively.

[9] Crossview advised Bakhtiari that it intended to use the Property as a Chrysler dealership. Crossview stated that it would spend millions of dollars to demolish a large portion of the existing building and construct a new dealership facility.

Draft Agreement to Lease - September 19, 2014

[10] Crossview forwarded an agreement to lease, dated September 19, 2014, and executed on October 21, 2014. 226 did not accept this proposal. However, the parties continued to negotiate the terms of this offer until the latter part of November, 2014.[^2]

Agreement to Lease - November 21, 2014

[11] Crossview delivered a further offer to lease the Property dated November 21, 2014, which it executed on November 22, 2014. This offer was accepted by 226 on Monday, November 24, 2014. The Agreement to Lease provided for the following:

o A lease term of ten years commencing January 15, 2015;

o The Property shall only be used for used and new car sales;

o Monthly base rent of $13,000.00 for the first three months of the lease then a monthly base rent of $26,000.000 for the following 57 months and monthly base rent of $28,000.00 payable for the remaining 60 months of the lease;

o An option, exercisable by Crossview, to lease the Property for an additional 60 months at a monthly base rent of $28,000.00;

o A deposit of $75,710.00 to be delivered by Crossview within 24 hours of acceptance of the Agreement;

o The existing tenants will stay for two months after closing (January 15, 2015) and the Landlord will collect the rent for those two months. [Section 22]

[12] The Agreement contained one condition for the benefit of Crossview (due diligence condition) and two conditions for the benefit of 226 (solicitor review condition and financial statement review condition).

Due Diligence Condition [Section 16]

This Agreement to Lease shall be conditional for a period of thirty (30) days from the full acceptance of this Agreement to Lease, in favour of the Tenant only, upon the Tenant satisfying itself, in its sole and unfettered discretion as to the Tenant’s intended use of the property. In this regard, the Landlord authorizes the Tenant to enter upon the Leased Premises at any time or times during the thirty (30) day conditional period to do inspections of the Leased Premises. The Tenant shall have the right to waive its condition within the above noted time frame, by delivering notice in writing to the Landlord that it is in fact waiving the said condition. In the event that the Tenant does not provide the Landlord with notice in writing that it is waiving the aforesaid condition with the thirty (30) day period, then the within Agreement to Lease shall become null and void and neither party shall have any further obligation to the other whatsoever and the deposit paid shall be forthwith repaid to the Tenant without interest or deduction.

After acceptance of this agreement, the Tenant, its agents, employees, consultants, contractors, surveyors or other persons acting on its behalf shall have the right to enter on the Property from time to time for the purpose of inspecting, surveying, investigating and conducting such tests including soil tests and to generally obtain such information as the Tenant may require and the Tenant shall make good any damage to the Property by reason thereof. The Landlord by execution of this Agreement does hereby provide its written authorization for such purposes and agrees to provide such further written authorization as may be required by the Tenant, forthwith upon request.[^3]

Solicitor Review Condition [Section 17]

The Parties agree that the within Offer to Lease is conditional in favour of the Landlord for a period of two (2) business days from the day of acceptance, upon the Landlord’s solicitor approving the Agreement to Lease. In the event that the Landlord does not provide to the Tenant written confirmation that he [sic] Landlord is waiving this condition within the above noted time frame, then the within Agreement to Lease shall become null and void and neither party shall have any further obligation to the other whatsoever.

Financial Review Condition [Section 19]

The Tenant shall provide within five (5) days of acceptance of the Offer, its Financial Statements for its most recent fiscal year end. If such Financial Statements shall be found by the Landlord, in its sole discretion, to be unsatisfactory, this Agreement to Lease may, at the sole discretion of the Landlord, be terminated and declared null and void and the deposit shall be returned to the Tenant in full without interest or deduction.

The Subsequent Discussions Between the Parties

[13] Myer Betel is 226’s lawyer. On November 26, 2014, Ari Reichman, counsel for Crossview, sent the following email to Betel:

We act for Crossview Developments Inc. in connection with the attached agreement to lease and understand that you act for the Landlord. Can you confirm that the Landlord has waived the condition in Section 17 of Schedule “A” and provide us with the draft lease for our review and comment?

[14] Betel did not respond to Reichman’s email.

[15] Reichman sent a further email to Betel on December 1, 2014 which states:

I am just following up on the below. Can you please advise in regards to the waiver of the Landlord’s condition and provide us with an initial draft of the lease?

[16] Once again, Betel did not respond to Reichman’s second email.

[17] In September 2015, after the commencement of this action, Betel stated that he:

“…had not approved the Agreement to Lease and the Solicitor Review Condition had not been waived by 226 Ontario, so I was unable to give Reichman the confirmation that he sought, either on November 26, 2014, or at any time thereafter”. [Emphasis added.]

[18] Nevertheless, both parties (including their lawyers) continued to take steps pursuant to the Agreement.

[19] On December 1, 2014, Crossview provided its financial statements to 226’s agent, Danayan, as required by the Financial Review Condition. These statements showed that Crossview had assets of $10.00 and liabilities of $17,307.00 as of June 30, 2014. Danayan states that Bakhtiari repeatedly told him that he was concerned about Crossview’s financial ability to complete the proposed multi-million dollar demolition and construction project at the Property.[^4]

[20] On December 3, 2014, a cheque in the amount of $75,710.00 from Sweetbriar Estates Inc., delivered as the deposit on behalf of Crossview, was deposited by 226’s real estate broker, Royal LePage. Danayan testified that he believed that the Agreement was “still alive” at the time that this cheque was deposited.[^5]

[21] On December 4, 2014, Betel advised Reichman by telephone that Crossview’s financial statement was inadequate because it appeared to be a shell company.

[22] On December 4, 2014, Agha provided Danayan with a copy of the financial statement for Minthollow Estates Inc., an affiliate of Crossview, as of October 31, 2013. It showed assets of about $21 million, liabilities of about $27 million and a net deficit of about $6 million. Bakhtiari advised Danayan that he was unhappy with Minthollow’s financial statement as well.

[23] On December 5, 2014, the principals of 226 and Crossview met. In attendance were Agha, Nourmansouri, Bakhtiari, Bakhtiari’s father and Danayan. Danayan states that the parties discussed 226’s financial concerns however the “issue remained unresolved”.[^6]

[24] On December 8, 2014, the Korea Exchange Bank of Canada issued a Letter of Interest to 226. This document confirmed that the Bank was prepared to place a new first ranking mortgage on the Property in the amount of $3 million or 60 percent of the appraised value of the Property, whichever was less. The Agreement was given to the Bank by 226 in support of its mortgage application. On December 10, 2014, the Property was appraised at $6 million based on a direct comparison approach of similar car dealership properties and at $5.6 million based on an income approach based on the leased rental rate reflected by the Agreement. A charge in the amount of $3,030,000.00 was registered on the Property in favour of the Bank on December 31, 2014. This charge replaced two other charges of the same principal amount which bore considerably higher interest rates.

[25] On December 10, 2014, during Crossview’s 30 day due diligence period, Reichman advised Betel of several amendments to the Agreement that the parties had agreed upon in order to address Crossview’s concerns with the Agreement:

I have been advised that our clients have agreed to some changes to the offer to lease. Can you please revise the offer to reflect the following:

1. The environmental clause must state: The Lessor represents and warrants that the property is in compliance with all environmental laws. The Lessor covenants and agrees to Indemnify and save harmless the Lessee and those for whom in law the Lessee is responsible from all claims relating to or arising from any hazardous substances which are at any time…upon the Premises…”

In order to provide clarity as to the responsible party...the Lessee shall commission a Phase 1 report by a reputable environmental consultant…which report shall act as a baseline. A second Phase 1 will be conducted at the expiration of the Term. The Lessee shall indemnify the Lessor in respect of any hazardous substances attributable solely to the Lessee as reflected by the second Phase 1.

2. NDA: The Lessor covenants and agrees to obtain, forthwith upon execution of the Lease, a non-disturbance agreement, acceptable to the Lessee, from any mortgagee or encumbrancer of the Premises.

3. All alterations, decorations, additions, tenant improvements, fixtures, furnishings and equipment installed or placed in or on the Premises by or on behalf of the Lessee and however affixed shall be the personal property of the Lessee during the Term and any renewals thereof. The Lessee may at the end of the term or any renewals thereof remove its tenant’s improvements, fixtures, furnishings and equipment and otherwise “debrand” the Premises;

4. Section 17 [Solicitor Review Condition] should be deleted or waived.

5. Section 22 is to be deleted. The concept now is that so long as the existing tenant is out by January 15, 2015 the Lessee will take possession of the Premises on that date. The Lessor can extend the Commencement Date on at least five days’ written notice to the Lessee to as late as January 31, 2015 if it cannot provide vacant possession on the 15th. However, if the Landlord has not provided vacant possession by the 31st, the lease is voidable in the Lessee’s sole and absolute discretion.

[26] On December 11. 2014, Betel advised Reichman that the proposed environmental clause was unacceptable. He stated:

Your environmental clause cannot be inserted in its present form.

We provided you with the report from our environmental engineer, that states the readings of the test holes. That is what the Lessor can warrant. That level, I am advised is satisfactory for a car dealership. It may not be acceptable for a kindergarten. I understand that your clients wish to operate a car dealership, so for that use the soil condition is warrantable and satisfactory.

If this is acceptable we can move forward. Let me know.

[27] Betel advised Reichman that he would ask their environmental consultant, Bruce Brown, to draft an environmental clause that would address the interests of both 226 and Crossview.

[28] Also on December 11, 2014, Bakhtiari advised Danayan as follows:

Why you guys back and fourth after having enough time to prepare the lease.

Reza, with all the respect for our friendship but I can’t do anything about the lease this is what I told you from the beginning I’m still not satisfy what financial statement and environmental clause as I told to Mr. Mansory [sic] I need my land the same condition as it is today by end of the term, so please advise me if we can NOT do it this way I will consider that the deal has been cancelled. [Emphasis added.]

[29] On December 15, 2014, Danayan sent the following text message to Agha expressing concern regarding the unresolved environmental and financial issues:

Landlords lawyer sent an email…Mr. Mansouri lawyer only asked for a revised lease agreement while we still have following items outstanding and not covered between parties – environmental clause base on a new report – a financial statement to be acceptable to landlord or guaranties of completing work on the property by contractors insurance coverage. Pls advise.

[30] On December 16, 2014, Brown accepted the environmental study assignment and advised that a Phase 1 report, to be prepared at Crossview’s expense, would not be available before the end of January 2015.

[31] On December 16, 2014, Betel’s assistant sent the following message to Reichman:

Please be advised as follows:

1. Bruce Brown has done assessment on subject property.

2. Your clients are using Brown on another downtown site

3. Your clients wish to retain Brown on this site as well

4. My client agrees provided my client receives copies of all Reports and Data

5. Test results to be strictly confidential and confidentiality agreement be entered into between Landlord and Tenant

6. Environmental assessment to be done during the due diligence period.

7. The site is to be returned in same or better condition on Termination.

If this is satisfactory Myer can prepare the amendments.

Please advise. [Emphasis added.]

[32] On December 16, 2014, Reichman responded:

Our client has advised that he is in agreement in principle with what you have outlined below. However, I have been advised that Bruce Brown will not be available to complete a Phase 1 ESA for the site until the end of January 2015. As part of the redraft of the offer to lease, please allow for due diligence period to expire February 9, 2015.

We would be please to finalize the lease agreement during the due diligence period so that once due diligence has been waived we can move forward expeditiously.

[33] Betel did not respond until December 23, 2014. He stated:

Re: Dec 12the letter from you.

We are resolved on environmental issue.

Fixturing;

Your requirements are totally unacceptable to L.L.

All improvements to building to remain.

Trade fixtures may be removed, provided any damage to building is repaired.

Signage and advertising material must be removed provided any damage is repaired.

Discuss with your clients and advise.

[34] A few hours later on December 23, 2014, Reichman responded:

I think your proposal below re: improvements will be ok, but I need to get instructions from my client to be certain. He is out of town until early January. In the interests of time, I suggest proceeding on the basis below.

If you need further certainty, then let us agree to touch base in early January to wrap this up as expeditiously as possible.

[35] On December 23, 2014, the parties signed an Amendment to the Agreement. The Amendment was prepared by Danayan at Agha’s request. Danayan signed the Amendment on behalf of 226 at Asghar Bakhtiari’s request.[^7] The Amendment deleted the Due Diligence Condition and replaced it with a Due Diligence Condition that made the Agreement to Lease conditional for a period of 50 days rather than 30 days as had been the case. As result, the Agreement became null and void if Crossview did not waive this condition by January 13, 2015.

[36] Bakhtiari states that Agha required the Amendment to show Chrysler that Crossview was still negotiating an offer to lease. He also states that 226 did not intend to waive any of the conditions in its favour when it signed the Amendment.[^8]

[37] On December 29, 2014, Reichman advised Betel as follows:

Further to the below, our client is in general agreement with your proposal re: improvements, although he does want to see the revised offer to lease before making a more firm commitment in that regard.

Please confirm when you expect to provide the revised offer to lease.

[38] On December 29, 2014, Betel responded to Reichman:

You have all the terms.

You have the Environmental provisions.

You have the fixturing terms.

Please revise with your client, try and make it reasonable for Landlord, and we will subject to my clients approval, go forward.

My assistant is away and I can’t redo the offer.

I can however read and edit.

[39] On December 30, 2014, Betel advised Reichman:

I spoke with my client this AM.

I am advised that;

Your clients are waiting for approval by Chrysler for use of subject property.

He has agreed that they can have until Jan 14 to firm up a deal.

There seems little point in doing documents until Jan 14/15.

We have discussed and agreed mostly re Environment as well as Fixtures.

Please confirm receipt.

Discuss with you clients and let me know where we are apart. [Emphasis added.]

[40] On December 30, 2014, Reichman advised Betel that he had prepared a further draft of the Agreement on December 30, 2014. He stated:

I had already completed most of the offer to lease by the time I received your email. As I will be out of the office until January 12, 2015 I thought it prudent to complete the offer so that if approval is obtained before I get back you can review the offer in the meantime. As such, please see the draft offer to lease attached for your review and comment.

Please note that this offer is still subject to review and approval by my client.

[41] On January 13, 2015, Bakhtiari sent the following text message to Danayan to advise Crossview that there would be no deal:

Bakhtiari: As I told you I got another offer from Mr. Mike Marx who was working on this property before you and Mr. Mansori. He brought me an offer some time in Aug but the offer didn’t go true [sic] because of the term of the lease. Since I convince my dad for 10 years term so I said Yes when he called me this time. He emailed me the signed offer today early [sic] than I expect. So I’m going to see Myer tomorrow to see if his offer satisfy [sic] our needs. Please be advice [sic] Mr. Mansori’s offer is dead base [sic] on keep breaking promises and his last Lowyer’s [sic] advice ‘we didn’t wave [sic] the condition that means the offer is dead”. So if even this offer not gonna [sic] work you will receive the new offer with new conditions for Mr. Mansori

Danayan: So the aspect for the last offer is not acceptable?

Bakhtiari: There are cupel [sic] things must be chang [sic]: 1. Financial statement 2. Fixturing 3. Environmental 4. Leather [sic] of credit amount 5. Expenses. Thank you.[^9]

[42] On January 14, 2015, at 9:25 p.m., Crossview signed a Waiver of the Due Diligence Condition found in the Agreement. The waiver was sent by letter dated January 15, 2015 from Reichman to Betel.

[43] On January 15, 2015, Betel replied to Reichman that the Agreement had expired prior to the delivery of the waiver.

[44] On February 18, 2015, the following email was sent by 226’s current counsel, David Taub, to Crossview’s current counsel, Allan Sternberg:

In accordance with paragraph 19 of Schedule “A” to the Agreement to Lease, this email constitutes formal notice to the Tenant that the Landlord is exercising its discretion to find that the Tenant’s Financial Statements are unsatisfactory. Therefore, the Agreement to Lease is hereby terminated and declared null and voided by the Landlord under paragraph 19. The Agreement to Lease has not already become null and void because the tenant was late in waiving its conditions as set out in prior correspondence. To be clear, reliance on the unsatisfactory financial statements is an alternative position to the Landlord’s first position that the Tenant failed to waive the condition in time.

The Tenant is therefore entitled to the return of the deposit in full without interest or deduction.

ANALYSIS

[45] A motion for summary judgment is governed by Rule 20 of the Rules of Civil Procedure. Summary judgment shall be granted if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[46] On a motion for summary judgment a court must consider the evidence submitted by the parties and it may, unless the interests of justice dictate otherwise, weigh the evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence.

[47] In Hryniak v. Maudlin[^10] the Supreme Court of Canada stated:

… the motion judge should ask whether the matter can be resolved in a fair and just manner on a summary judgment motion. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[48] The onus is on the moving party to show that there is no genuine issue requiring a trial. Each side must put its “best foot forward” with respect to the existence or non-existence of material issues.[^11] A motions judge is entitled to assume that the record contains all the evidence that the parties would present if there were a trial.[^12]

[49] This motion raises two broad issues: 1) does the Agreement bind the parties; and 2) should specific performance be granted?

Issue #1: Are The Parties Bound By The Agreement?

[50] 226 submits that it is not bound by the Agreement for the following reasons:

• Financial Review Condition: The Agreement was terminated on February 18, 2015 when counsel for 226 notified counsel for Crossview that it had decided to exercise its right to terminate the Agreement on the grounds that Crossview’s financial statements were unsatisfactory;

• Solicitor Review Condition: The Agreement was null and void as of November 27, 2014 as a result of the operation of the Solicitor Review Condition because 226’s lawyer did not provide Crossview with written confirmation that he approved the Agreement;

• Due Diligence Condition: The Agreement was null and void as of January 14, 2015 as a result of the operation of the Due Diligence Condition because Crossview did not notify 226 that it had waived this condition within 50 days of the date of the Agreement.

Was the Agreement Terminated by 226’s Letter Dated February 18, 2015 Related to the Financial Review Condition?

[51] The Financial Review Condition gives 226 the discretion to terminate the Agreement if it determines that Crossview’s financial statements are unsatisfactory. Under the Agreement there is no expiry date on this right of termination.

[52] 226 submits that the Agreement was terminated on February 18, 2015, when counsel for 226 notified counsel for Crossview that it had decided to exercise its right to terminate the Agreement on the grounds that Crossview’s financial statements were unsatisfactory.

[53] Despite the early and frequent concerns expressed by Bakhtiari regarding Crossview’s financial fitness, 226 did not terminate the Agreement in reliance on the Financial Review Condition until it had retained litigation counsel and long after Crossview had waived the Due Diligence Condition.

[54] In Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 2014 SCC 53, at para. 47, the Supreme Court of Canada stated that the interpretation of a contract has evolved towards a practical, common-sense approach that is not dominated by technical rules of construction. The Court stated:

The overriding concern is to determine the ‘intent of the parties and the scope of their understanding’…To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning:

No contracts are made in a vacuum: there is always a setting in which they have to be placed. . . . In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.

(Reardon Smith Line, at p. 574, per Lord Wilberforce)

[55] In order to interpret the Agreement in a commercially sensible manner, a time limit on the exercise of the Financial Review Condition must be implied such that 226’s right to termination under this condition must be exercised no later than prior to the completion date of the lease of the Property that was provided in the Agreement.[^13] The completion date was January 15, 2015. In my view 226’s reliance on the Financial Review Condition is ineffective given that its notice of termination was delivered after the completion date.

Is the Agreement null and void because 226 did not deliver notice that it had waived the Solicitor Review Condition?

[56] The Solicitor Review Condition provides that the Agreement is conditional upon 226’s solicitor approving the Agreement within two days of the date of the Agreement. It also provides that the Agreement is null and void unless, within that 2 day period, 226 provides written confirmation to Crossview that it has waived this condition.

[57] 226 submits that the Agreement was null and void as of November 27, 2014 because it did not notify Crossview that it had waived the Solicitor Review Condition.

[58] Crossview submits that 226 is estopped from denying that the Agreement is binding because 226 conducted itself in such a way as to lead Crossview to believe that the Agreement was “alive” throughout that period. Crossview submits that it acted on this belief in expending considerable time and money in satisfying the Due Diligence Condition and pursuing the Chrysler dealership.

[59] Crossview relies on the principle of promissory estoppel and, in particular, the following statement by Lord Denning in Crabb v. Arun District Council, [1976] 1 Ch. 179 (C.A.) at pages 187-188:

If I may expand what Lord Cairns L.C. said in Hughes v. Metropolitan Railway Co. (1877) 2 App.Cas. 439, 448: "it is the first principle upon which all courts of equity proceed," that it will prevent a person from insisting on his strict legal rights whether arising under a contract, or on his title deeds, or by statute when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties.

What then are the dealings which will preclude him from insisting on his strict legal rights? If he makes a binding contract that he will not insist on the strict legal position, a court of equity will hold him to his contract. Short of a binding contract, if he makes a promise that he will not insist upon his strict legal rights then, even though that promise may be unenforceable in point of law for want of consideration or want of writing - then, if he makes the promise knowing or intending that the other will act upon it, and he does act upon it, then again a court of equity will not allow him to go back on that promise: see Central London Property Trust Ltd. v. High Trees House Ltd. [1947] K.B. 130 and Charles Rickards Ltd. v. Oppenhaim [1950] 1 K.B. 616, 623. Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights knowing or intending that the other will act on that belief and he does so act, that again will raise an equity in favour of the other; and it is for a court of equity to say in what way the equity may be satisfied. The cases show that this equity does not depend on agreement but on words or conduct. [Emphasis added.]

[60] The principles of promissory estoppel were described by the Supreme Court of Canada in Maracle v. Travellers Indemnity Co. of Canada[^14] as follows:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607, Ritchie J. stated, at p. 615:

It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.

This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641, at p. 647. McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances. [Emphasis added.]

[61] Accordingly, Crossview must establish that:

• 226, by its words or conduct, made an unambiguous promise or assurance which was intended to affect their legal relationship and to be acted on;

• Crossview, in reliance on that promise or assurance, acted on it or in some way changed its position.

[62] In my view the following behavior by 226 were unambiguous representations that it would not rely on its strict legal rights to treat the Agreement at an end effective November 26, 2014 as a result of its failure to waive the Solicitor Review Condition.

[63] First, and most significantly, 226 extended the time for the Due Diligence Condition under the Agreement on December 23, 2014, almost one month after it now states that the Agreement had come to an end;

[64] Second, 226, by an email from Betel, by email extended the time for the Due Diligence Condition under the Agreement on December 30, 2014;

[65] Third, Crossview’s deposit of $75,710.00 was cashed by 226’s broker, Royal LePage, on December 3, 2014. If the Agreement had come to an end effective November 26, 2014, then Crossview’s deposit should not have been accepted and deposited by Royal LePage on December 3, 2014. In any event, this deposit should have been returned to Crossview however that step was not taken prior to Crossview’s waiver of the Due Diligence Condition on January 14, 2015;

[66] Fourth, Betel did not respond to two emails from Reichman on November 26, 2014 and December 1, 2014, which asked whether 226 had waived the Solicitor Review Condition. By failing to respond, and given their ongoing discussions, 226 led Crossview to believe that it was not relying on the Solicitor Review Condition;

[67] Fifth, for much of December 2014, the parties and their counsel discussed amendments to the Agreement to address their respective concerns. In my view, they proceeded on the basis that the Agreement had not been terminated as a result of the Solicitor Review Condition. For instance:

• the email from Reichman to Betel dated December 10, 2014 requested “changes” to the “offer to lease” (which is how Reichman referred to the Agreement), the reply from Betel dated December 23, 2014 and the exchange of emails between Reichman and Betel on December 29, 2014. By December 29, 2014, it appeared that the parties had reached a consensus on amendments to the Agreement as Betel stated that “… my assistant is away and I can’t redo the offer. I can, however, read and edit.”

• Bakhtiari’s email to Danayan on December 11, 2014 indicates that, at that time, he believed that the Agreement had not been terminated as Bakhtiari expresses some frustration with the discussions and states that he will consider the “deal has been cancelled” if he is not satisfied with the financial statement and the environmental clause in the Agreement.

[68] Crossview submits that it incurred costs of about $250,000.00 to obtain approval from Chrysler for the dealership at the Property, including architecture fees of about $55,000.00 during the period November – January 2015. Crossview submits that it would not have incurred these fees had 226 not represented that it would not be enforcing its legal rights under the Solicitor Review Condition.

[69] I am satisfied that Crossview acted on the representations that the Solicitor Review Condition would not be enforced by incurring costs and expenses in pursuing the approval of Chrysler for a dealership at the Property.

[70] Accordingly, I conclude that 226 is estopped from taking the position that the Agreement was null and void because it did not notify Crossview that it had waived the Solicitor Review Condition.

Is the Agreement null and void because Crossview failed to waive the Due Diligence Condition within the time period provided by the Agreement?

[71] The Due Diligence Condition provides that the Agreement is null and void unless Crossview waives this condition within 30 days from the date of the acceptance of the Agreement.

[72] The Due Diligence Condition was extended by written Amendment to the Agreement that was signed by the parties on December 23, 2014. It deleted the Due Diligence Condition and replaced it with a new Due Diligence Condition that was the same in all respects as the original Due Diligence Condition other than it gave Crossview 50 days, rather than 30 days, to waive this condition. As a result, the last day to waive the Due Diligence Condition was January 13, 2015.

[73] By email dated December 30, 2014, Betel advised Reichman that he had spoken to his client, presumably Bakhtiari, who advised him that Crossview could have until January 14, 2015 to “firm up a deal” given that the date for completion of the Agreement was January 15, 2015. In my view, Betel’s assurance was given for the purpose of extending the Due Diligence Condition in the Agreement which was the only condition in Crossview’s favour.

[74] Danayan was told by Bakhtiari on January 13, 2015 that he had received an offer to lease the Property from another person. This information appears to have spurred Crossview into action.

[75] Crossview delivered a waiver of the Due Diligence Condition to Danayan on January 13, 2015 that was conditional on 226 agreeing to several amendments to the Agreement contained in a letter that accompanied the waiver. Danayan was unable to contact 226.

[76] On January 14, 2015 Reichman forwarded the letter to Betel. Betel advised that he had no instructions to deal with the letter.

[77] Undeterred, on January 14, 2015, at 9:25 p.m., Crossview unconditionally waived the Due Diligence Condition. The Waiver was sent by letter dated January 15, 2015 from Reichman to Betel:

Further to the attached, which we are advised was delivered to the Landlord as of yesterday’s date, please be advised that our client has waived the due diligence condition contained in Section 16 of Schedule “A” of the Agreement to Lease dated November 21, 2014. This shall constitute sufficient delivery of notice in writing.

We hereby request that you, immediately, provide us with the Landlord’s lease containing those terms set forth in the Agreement to Lease. Furthermore, please be advised that the Tenant wants immediate vacant possession of the Premises. Please advise as to where the Tenant may pick-up the keys.

[78] On January 15, 2015 Betel replied to Reichman:

…The Agreement to Lease was acknowledged by all parties to be at an end and you were preparing a new offer to lease the Premises with a closing date in March, 2015. Notwithstanding your letter of today’s date, there is no agreement.

Primarily because your client revised the agreement to Lease and has been negotiating and continued to negotiate up until January 14, 2015 when he purported to waive the condition and then went on to make all new terms. With respect, you cannot suck and blow at the same time. You have no deal.

[79] In my view, 226 is estopped from taking the position that the Agreement was terminated by Crossview’s failure to waive the Due Diligence Condition by January 13, 2015 because 226 represented that Crossview had until January 14, 2015 to waive this condition. I find that Crossview relied on this representation as I infer from its actions on January 13, 2015 and January 14, 2015 that had it not been told by 226 that it had until January 14, 2015 to waive this condition, then Crossview would have unconditionally waived this condition on January 13, 2015 rather than wait until January 14, 2015 to do so.

[80] These circumstances are similar to those found in Owen Sound Public Library Board v. Mial Developments Ltd., 1979 CanLII 1624 (ON CA), 26 O.R. (2d) 459 (C.A.). In that case although a builder was entitled to terminate its building contract if it did not receive payments within a certain time, the Ontario Court of Appeal held that the effect of an undertaking by the builder to obtain an amendment to the contract was to suspend the running of the time period.

[81] The fact that Crossview sought to amend the Agreement during the extended Due Diligence period did not have the effect of terminating the Agreement, given that it ultimately decided to accept the terms of the Agreement which caused it some concern rather than have no Agreement at all. Further, the evidence does not show that the parties viewed the Agreement as being “dead” as a result of Crossview’s attempt to re-negotiate certain terms of the Agreement during December 2014, given that the Agreement was amended by the parties on December 23, 2014 in order to give Crossview additional time to waive the Due Diligence Condition.

[82] Accordingly, I conclude that the Agreement was not terminated as a result of Crossview’s delivery of its unconditional waiver of the Due Diligence Condition on January 14, 2015.

Issue #2: Is Crossview Entitled To Specific Performance?

[83] Damages are the usual remedy for a breach of contract. An order requiring specific performance of a contract is an equitable remedy that is only granted where damages for breach of contract would not be a complete remedy. In respect of a contract for the sale of land, the remedy of specific performance is available if “…the property is unique to the extent that its substitute would not be readily available” thereby preventing a plaintiff from purchasing an alternative property in mitigation of his or her losses. See Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 22. Uniqueness, which requires the assessment of whether a property has “qualities that make it especially suitable for the proposed use by the plaintiff that cannot be reasonably duplicated”, is to be measured both subjectively and objectively. An objective assessment of uniqueness requires that a “reasonable person familiar with the facts surrounding their purchase and sale agreement would consider the property to be unique”. See Gillespie v. 1766998 Ontario Inc., 2014 ONSC 6952, 247 A.C.W.S. (3d) 714, at paras. 2 and 32-33. These principles are equally applicable to a contract for the lease of land.

[84] Crossview submits that the Property is unique for the following reasons:

• Chrysler’s agreement to grant the right to operate a Chrysler dealership on the Property is contingent on Crossview securing a lease of the Property;

• The Property is well situated in a highly-trafficked commercial thoroughfare at the intersection of Yonge Street and Elgin Mills Road in the Town of Richmond Hill;

• There are no similar sized properties with exposure to a commercial thoroughfare available for lease in the immediate vicinity;

• It will be used and has been approved for use by the Town of Richmond Hill as an automobile dealership;

• No alternative premises located in the area of the Property will be able to get a zoning permit entitling use as an automobile dealership;

• Chrysler has designated the Property as a suitable location for a Chrysler dealership based on the Property’s distance from other Chrysler dealers and Chrysler’s interest in protecting the territorial rights of its dealers;

• Given the Property’s historical use as a Chrysler dealership and its current use as a used car dealership, Crossview expects little marketing efforts will be necessary in order to generate immediate sales at the Property.[^15]

[85] The above evidence was unchallenged.

[86] 226 submits that the Property is not unique to Crossview because it is not the beneficiary of the Chrysler deal. 226’s submission is misguided as it asks this Court to focus on the form rather than the substance of the various arrangements related to arranging for a dealership to be established on the Property. It ignores the realities of business and the use of the corporate form(s) to operate a business. Agha is both the directing mind of Crossview and the directing mind behind the proposal to obtain and operate a Chrysler dealership on the Property. For purposes of determining whether specific performance should be granted it is immaterial that the approval from Chrysler was issued to Agha but that the Agreement is in Crossview’s name.

[87] 226 relies upon this Court’s decision in 2296608 Ontario Inc. v. DHMK Properties Inc. 2014 ONSC 2875 which held that an assignee of an offer to purchase an investment property did not have standing to seek specific performance because the assignment had not occurred by the time the motion for specific performance was heard. The DHMK case is distinguishable because Crossview is both a party to the Agreement and seeks specific performance.

[88] In my view, Crossview has established that the Property is unique and that its substitute would not be readily available. Accordingly, I grant specific performance of the Agreement.

CONCLUSIONS

[89] This action raises no genuine issue requiring a trial. This motion for summary judgment is granted. The Agreement is binding on the parties. Specific performance is granted.

[90] Crossview shall provide its written costs submissions, not to exceed three pages in length exclusive of an outline of costs and any settlement offers, within two week of today’s date. 226 shall deliver its reply submissions within four weeks from today’s date on the same terms.

Mr. Justice M. D. Faieta

Released: April 28, 2016

[^1]: Transcript of Cross-Examination, Sam Agha, page 28, Questions 89-94.

[^2]: Affidavit of Shahrohk Nourmansouri, sworn September 2, 2015, para. 9.

[^3]: This statement of the due diligence condition reflects the handwritten changes that replaced a twenty day period for inspection with a thirty day period.

[^4]: Affidavit of Reza Danayan, sworn September 11, 2015, para.6.

[^5]: Transcript of Cross-Examination, Reza Danayan, Page 32, Question 133.

[^6]: Affidavit of Reza Danayan, sworn September 11, 2015, para.6.

[^7]: Transcript of Cross-Examination, Reza Danayan, Page 50, Questions 223-227.

[^8]: Second Affidavit of Hadi Bakhtiari, sworn September 14, 2015, para.3.

[^9]: Second Affidavit of Hadi Bakhtiari, sworn September 14, 2015, Exhibit 1.

[^10]: [2014] S.C.J. No. 7, 2014 SCC 7, at para. 22.

[^11]: Papaschase Indian Band No. 136 v. Canada (A.G.), 2008 SCC 14, [2008] 1 S.C.R. 372, para 11.

[^12]: Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, paras. 17-19.

[^13]: See Energy Fundamentals Group Inc. v. Veresen Inc., 2015 ONCA 514, at para. 30, where the Ontario Court of Appeal stated that “a contractual term may be implied “on the basis of the presumed intentions of the parties where necessary to give business efficacy to the contract or where it meets the ‘officious bystander test.’”

[^14]: 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, paras. 13-14.

[^15]: Affidavit of Shahrohk Nournamsouri, sworn September 2, 2015, para. 7.