Tang v. Toma, 2016 ONSC 7352
COURT FILE NO.: 16/59334
DATE: 2016-11-25
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Wei Tang, Applicant
AND: Emil Toma, 2440-2460 Old Bronte Road Inc. and 2454 Old Bronte Road Inc., Respondents
AND RE: Emil Toma, 2440-2460 Old Bronte Road Inc. and 2454 Old Bronte Road Inc., Applicants
AND: Wei Tang, Respondent
BEFORE: Mr Justice Ramsay
COUNSEL: Ms C. Yamashita for Tang; Ms A. Habas for Toma and companies
HEARD: November 24, 2016
ENDORSEMENT
[1] Tang (“the Applicant”) agreed to buy and Toma (“the Respondent”) agreed to sell a piece of real estate in Oakville. Tang applies for a declaration that the agreement of purchase and sale is valid and an order for specific performance. Toma applies for a declaration that the agreement is void.
[2] Specific performance is readily dealt with. This is a commercial transaction. As Mr Tang admitted on cross-examination, only money is at stake. There is nothing unique about the property. By buying three adjoining properties that adjoin two others that he and his partner own, he would acquire a 2-acre building lot. There are plenty such lots in the GTA. The appropriate remedy, if any, is damages: Paramadevan v. Semelhago, 1996 CanLII 209 (SCC), [1996] 2 SCR 415.
[3] Toma is a builder. In January 2016 Toma acquired three adjoining residential properties on Old Bronte Road in Oakville. Tang was a real estate agent and investor. His real estate licence expired in August 2016. The properties are zoned for multi-use development. Over the course of 2016 twice Toma and Tang were involved in negotiations to sell the property. Both times an agreement was not reached. During the course of negotiations Toma told Tang that he had obligations to the current tenants of the residences. Toma also sent Tang an environmental report that Tang says he opened electronically but did not read. It revealed that one of the properties had been insulated with urea formaldehyde.
[4] In late September 2016 negotiations began anew. The agreement that is the subject matter of these applications was negotiated between Toma on the one hand and Tang and Renée Carlson, a real estate agent who had been in business with Tang as such, on the other. The purchase price was $6.2 million. Tang was required to pay an initial deposit of $100,000 within 24 hours. Tang and Carlson drafted the offer of purchase and sale. They omitted to remove the standard vacant possession clause, which Toma did not notice. He had removed the vacant possession schedule, but not the standard clause in paragraph 2 of the agreement. The standard urea formaldehyde clause remained in the agreement as well.
[5] On September 28, 2016 at 3:02 pm Tang accepted Toma’s offer by email. At 6 pm Toma got a better offer.
[6] Tang did not know where to send the deposit. He asked Toma several times for his lawyer’s contact and bank information. On September 30, Toma’s lawyer sent the bank information to Tang and Tang paid the deposit.
[7] A financing term was included in the agreement. It read:
This Offer is conditional upon the Buyer arranging at the Buyer’s own expense a new first charge\mortgage satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in the Agreement of Purchase and Sale or any Schedule thereto not later than 11:59 pm on fifteenth fifth business day upon acceptance that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.
The buyer agrees to pay a further sum of $250,000 to the seller’s lawyer by negotiable cheque at the time of notification of fulfilment or removal of the condition pertaining to Mortgage financing as an additional deposit to be held in trust pending completion or other termination of this Agreement. This amount is to be credited towards the purchase price on completion of this transaction.
[8] On September 30, 2016, Toma’s lawyer wrote to Tang’s lawyer to acknowledge receipt of the $100,000. He also said:
My client has expressed concerns to me that your client’s agent has not been communicating clearly to her (sic) the information he has shared regarding certain issues relating to these properties. Therefore, I want to bring those to your attention …
The APS has a deletion in Schedule A relating to vacant possession. Unfortunately, that same deletion was not carried forward in paragraph 2 of the OREA printed form and should have been since vacant possession will not be given on closing. … Two of the tenants have rights of possession of 12 months, after which notice to vacate can be given on six months’ notice. Thus the earliest vacant possession can be obtained is 18 months. The third property has a term of six months before notice to vacate can be given.
My client has also advised your client’s agent that one of the houses contains UFFI. We will not be remediating same and your client will have to assume that property as is on closing.
[9] Tang’s lawyer replied:
Our client is willing to proceed on the basis which you have outlined below [i.e. as in para. 6] but it requires compensation as a result of your client’s misrepresentations.
Accordingly, our client is willing to proceed with a $100,000 abatement to the purchase price. Please confirm by no later than 4:00 pm today so that our client can assess its position.
Toma’s lawyer replied on October 5, 2016 that there had been no misrepresentation and reminded Tang’s lawyer, “Your client has a condition which expires at 11:59 pm today. Please advise further as to whether he will waive on the condition or if we are to return the deposit.”
[10] The condition to which the lawyer referred was the financing condition set out in para. 5 of this endorsement.
[11] Ms Carlson emailed a waiver of the financing condition to Toma and his lawyer on October 5, which was the fifth business day, at 9:10 pm. The accompanying text said only, “Enclosed please find a waiver on the above properties. Thank you for your business.” It made no mention of the second deposit. Ms Carlson deposed that she drove to downtown Toronto with a cheque to see if Toma’s lawyer had a drop box, but the office turned out to be in a high rise to which she could not gain access.
[12] On October 6, 2016 at 2:18 pm Tang’s lawyer emailed Toma’s lawyer to ask for banking information to wire the deposit. Information was given and on October 6 at 2:21 pm the deposit was wired. On October 7, 2016 Toma’s lawyer wrote to Tang’s lawyer to say that the agreement was an end because Tang had not submitted the additional deposit “at the time” of delivery of the waiver.
[13] On October 11, 2016 Tang’s lawyer emailed Toma’s lawyer to respond. He said that their position was that they had until 11:59 pm on October 5 to waive the financing condition. Strict application of the requirement for contemporaneity would lead to impossibility of performance. Furthermore, it was not a fundamental breach of contract. The lawyer did not mention Ms Carlson’s evening ride to Toronto. For that reason I do not believe that it happened. Moreover, the evidence Tang has provided does not show that he had the means to make a $250,000 deposit contemporaneously. He would have had to borrow the money from Ms Carlson’s line of credit, which is what I infer he did, the next morning.
[14] On October 13, 2016 Tang’s lawyer wrote a last time. He said,
As you know your client has been attempting to repudiate its obligations under the agreement for some time. We understand that it failed to properly document vacant possession and UFFI issues, and is accordingly acting in bad faith in attempting to take advantage of any possible technical issue it can find.
All that aside, our client is willing to complete the transaction on the following basis:
Our client will accept the existing tenancies on the basis that six months’ notice to vacate can be given to at least two of the tenants, and that the third tenant must vacate no later than March 31, 2018. Our client will require copies of the existing lease or tenancy terms, wherever they may be set out, whether in an APS or a separate lease, for its review and acceptance by no later than October 18, 2016; and
All UFFI representations and warranties will be removed.
Please confirm your client’s agreement.
[15] The Respondent did not agree. Both deposits were returned.
[16] The Applicant says that he did not breach the second deposit clause of the contract. If he had until a time when law offices are closed to waive the financing condition he must have been meant to have a reasonable time to get a cheque to the lawyer once the law office opened. I do not accept the necessity of this argument. The words used are just as capable of meaning that if he chose to waive the financing condition outside office hours he had to have arrangements in place to pay the second deposit outside office hours.
[17] The Respondent says that “at the time” means “at the time.” There is case law to support that position but I am dealing with a contract between parties. I must look at the words used in the context of the factual matrix to determine what they meant. Other cases with other contracts and parties are of limited use.
[18] The Respondent had resisted a financing clause in negotiations. He was in a hurry for the money and he had said so. He only agreed to a financing clause after reducing 15 days to 5 days, which is not a long time to raise six million dollars. The Respondent had reason to be concerned whether the buyer was serious. Twice before negotiations had failed to produce an agreement. The property was marketable and the Respondent had other options. Tang was not an institutional buyer with undoubted assets. The clause in question, apart from the strikeover of fifteen and insertion of five, was drafted by Tang and Carlson, but I do not think that it comes down to contra proferentum. I conclude that the parties intended that once Tang got financing he had to waive the condition and hand over the money by the time indicated. If that involved making arrangements to deliver a cheque after hours, he had at least to ask how to do so. He never did. Furthermore I infer that he was not in a position to write a cheque until the next day, which is not the same thing as being unable to deliver it.
[19] I do not accept that the Applicant was entitled to rely on the Respondent’s acquiescence in the late payment of the first deposit. There was a clear reason for that which did not apply to the second deposit. The Applicant did not know where to send the first deposit. By October 5 the Applicant knew exactly where the deposit had to go.
[20] I also think that Tang poisoned the relationship beyond hope when he accused Toma of misrepresentation. But that took place after the agreement had already been entered into. It did not inform the parties’ understanding of what the words meant, although it justified Toma’s concerns after the fact.
[21] Taking the clause in question in context of the entire contract, including the standard time-is-of-the-essence clause it contained and in the context of the factual matrix I conclude that when midnight came on October 5 the contract became void on its terms as intended by the parties. It is not necessary to resort to the doctrine of fundamental breach.
[22] I note as well, looking at the correspondence from Tang’s lawyer set out in para. 15 of this endorsement that as late as October 13 the Applicant was still negotiating the terms of the purchase and sale. The Applicant himself was not willing to proceed without new terms that would deal with the tenants. I infer that he accepted that the agreement of purchase and sale was no longer in force.
[23] I dismiss Tang’s application and grant Toma’s application.
[24] The parties may make brief written submissions to costs, the Respondent within 7 days and the Applicant within 7 days thereafter.
J.A. Ramsay J.
Date: 2016-11-25