Union Building Corporation of Canada v. Markham Woodmills Development Inc.

CITATION: Union Building Corporation of Canada v. Markham Woodmills Development Inc., 2017 ONSC 4514

COURT FILE NO.: CV-16-564599

DATE: 20170725

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

UNION BUILDING CORPORATON OF CANADA

Applicant

– and –

MARKHAM WOODMILLS DEVELOPMENT INC.

Respondent

COUNSEL:

Gavin J. Tighe and Bill R. Michelson, for the Applicant

Francy Kussner and Jane Scholes, for the Respondent

HEARD: May 11, 2017

REASONS FOR JUDGMENT

LEDERER J.

[1] The Respondent, Markham Woodmills Development Inc. (“Woodmills”) sought to sell land it owned in the City of Markham. It entered into an Agreement of Purchase and Sale with the Applicant, Union Building Corporation of Canada (“Union Building”). The former is a wholly owned subsidiary of SmartCentres Inc., a well-known, sophisticated and highly visible real estate developer. The latter was incorporated by Unifor, formerly the Canadian Auto Workers (a trade union), for the purpose of holding and managing its real estate.

[2] The land that was the subject of the agreement was part of a larger parcel owned by Woodmills. The price, as agreed to by the parties was $3,960,000. To complete the sale there would have to be a severance. The Agreement of Purchase and Sale required the vendor (Woodmills) to apply to the Committee of Adjustment for the severance and to satisfy any conditions imposed, each at its sole expense. No one can predict with certainty what conditions the Committee of Adjustment may include as part of any decision it may make. The Agreement of Purchase and Sale provided Woodmills with protection against the untoward. In the event that the conditions of the consent to sever were “onerous or unreasonable” such that the vendor (Woodmills) was not prepared to satisfy them, the vendor could offer to the purchaser, (Union Building), the opportunity to satisfy the conditions at purchaser’s cost or, in the alternative, to terminate the agreement.[^1]

[3] In this section of Markham (the Cathedral district), as part of the development process, a developer of land must enter into a Cost Sharing Agreement.[^2] Where parts of a block of land that has been designated for development are owned by different parties it will be necessary to equitably divide the costs of providing the services and infrastructure required to allow the block to be developed. This would include local services, as examples, schools, parks, roads and the oversizing of water and sewer pipes such that the lands furthest from the regional services will pay those that are closest for the additional capacity necessary to allow the pipes to be extended and service the more distant lands. These costs are distinct from development charges which, as a general rule, apply across the municipality and are intended as the developers’ contribution to region wide infrastructure and services.

[4] Woodmills, as the vendor, applied for the severance. It was granted but subject to nine conditions. Among them was the condition that the “Owner sign the Cathedral West Cost Sharing Agreement and written acknowledgment of such from the Trustee be provided”.[^3] Pursuant to the terms of the Cost Sharing Agreement, a Trustee was to “co-ordinate, supervise and administer” the Agreement.[^4] The condition entailed not just signing the Agreement but paying the cost sharing obligation attributable to the lands being severed ($407,582). As Woodmills sees it, this condition, particularly the requirement to pay, rendered the conditions “onerous or unreasonable”. It commenced and subsequently abandoned an appeal to the Ontario Municipal Board. The timing for any prospective hearing of the appeal would have been at or after the date the sale was to close. Woodmills sought a reconsideration by the Committee of Adjustment. It wished the condition to be “changed”.[^5] The request was refused. Woodmills approached Union Building asking that the agreement be amended so that it reflected what Woodmills saw as the intention of the agreement: that charges or costs associated with developing the land, as opposed to merely selling it, be paid by the purchaser. After all, the purchaser would be the party developing the property. I note the obvious. There is nothing, at least as a general rule, which obliges a purchaser of land to develop it. It is not uncommon for land to be purchased, held as an investment and resold. Be that as it may, Union Building, as the purchaser refused. The parties negotiated a resolution. Union Building agreed to sign the agreement and pay the cost sharing obligation subject to retaining the right to seek repayment from Woodmills. As part of this arrangement Woodmills acknowledged that it would not rely on any understanding that, as of the closure of the transaction, the conditions had merged with the agreement.

[5] By this application Union Building seeks and asks this court to order that the $407,582 it has paid be returned to it by Woodmills. The central question to be determined is whether the condition obliging the “owner” to enter into the Cost Sharing Agreement and pay the cost sharing obligation was “onerous or unreasonable”. If it was, Woodmills was within its rights to refuse to satisfy the condition and put to Union Building the choice of satisfying the condition or withdrawing from the Agreement of Purchase and Sale. This being so, no order that Woodmills make repayment should be made. On the other hand, if, as a result of the requirement to pay the cost sharing obligation, the imposition of the conditions were not “onerous and unreasonable”, the contractual requirement that the vendor satisfy the conditions at “its sole expense” would stand. It would remain the obligation of Woodmills to make the payment in furtherance of that obligation and, accordingly, it should be required to indemnify Union Building. In such a circumstance, it would be appropriate for an order for repayment to be made.

[6] The parties agree that the jurisdiction of the Court to interpret the words “onerous or unreasonable” as they appear within the Agreement of Purchase and Sale is found in r. 14.05 (3)(d).[^6] The Applicant proposed that there was further jurisdiction to be found in the Vendors and Purchasers Act s. 3(1) and s. 4.[^7] The Respondent does not accept that these sections have any application to this case. The parties acknowledged that this disagreement was without much purpose. Rule 14.05(3)(d) provides the court with the jurisdiction to resolve this application.

[7] The interpretation of a contract is a search for the intention of the parties at the time the agreement was made. If the words of the contact are clear there is no need to go further:

The cardinal interpretive rule of contracts, including guarantee contracts, is that the court should give effect to the intention of the parties as expressed in their written agreement. Where that intention is plainly expressed in the language of the agreement, the court should not stray beyond the four corners of the agreement.[^8]

[8] It has been suggested that in most, if not all cases, it is necessary to go further and consider the words in the context in which (1) they are used; and (2) the contract was made. With respect to the first the contract should be considered as a whole:

It is unquestionable that the object of interpretations of all written instruments is to ascertain the intention of the parties thereto as expressed in the instrument itself. To ascertain the true intention of the parties, however, one must look at each provision in the context in which it is found and, in construing it, regard must be had to the language used in that and other parts of the document to avoid inconsistency. [^9]

The deed must be read as a whole in order to ascertain the true meaning of its several clauses, and the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible.[^10]

and, as to the second:

[I]n determining what was contemplated by the parties, the words used in a document need not be looked at in a vacuum. The specific context in which a document was executed may well assist in understanding the words used. It is perfectly proper, and indeed may be necessary, to look at the surrounding circumstances in order to ascertain what the parties were really contracting about.[^11]

[9] What is the context in which this Agreement of Purchase and Sale was entered into? The context is the process of land development in the City of Markham. It begins with the City of Markham Official Plan. As has already been noted the Official Plan makes clear that for land to be developed in this area of Markham (the Cathedral West Community) at some point on the path to development the applicable Cost Sharing Agreement must be entered into (see para. [3] fn. 2 above). But when is it anticipated that this obligation crystalizes? The Official Plan says “Prior to development approval…” (see fn. 2 above). What does “development approval” refer to? This term is defined by the Official Plan:

Development approval means approval of development in the form of a draft plan of subdivision or condominium, zoning by-law amendment, minor variance, site plan or severance.[^12]

[10] It is apparent that that the requirement to sign the Cost Sharing Agreement could be imposed at any time “prior to” any of the listed approvals each or several of which could be necessary before any particular property is ready to be developed. Counsel for Woodmills submitted that the idea of development was irrelevant and not helpful in determining the intent of the parties. The conditions at issue were what the Committee of Adjustment imposed in granting the severance. The severance was made only in reference to the sale of the property and not with respect to its development. As the vendor, Woodmills had no intention of taking part or playing any role in the development of the property. The problem is that the Official Plan makes clear that severance is a step towards development. It is included as a “development approval”. It may be that the signing of a Cost Sharing Agreement will be required before a severance is allowed to proceed. In response it is said, on behalf of Woodmills, that to require this as a condition to be satisfied when all that is contemplated is severance and sale is inconsistent with the general practice in Markham and that to require it in these circumstances is, therefore, onerous and unreasonable. In supporting this submission counsel pointed to information provided to it by the engineer under the Cost Sharing Agreement.[^13] At the time (2012) the engineer was Cole Engineering Group Ltd. Among other things the engineer advised that the cost sharing obligations would have to be paid “prior to site plan approval”[^14] or would be due “upon site plan approval”.[^15] Site plan approval is much further along the development approval process than severance. On this basis it is said that Woodmills could not reasonably have anticipated that the Committee of Adjustment would ignore the past and require that the cost sharing obligation be made a condition of the granting of the severance. Moreover, at the time of the reconsideration by the Committee of Adjustment, Woodmills was provided with a Memorandum to the Committee of Adjustment dated August 10, 2016. The document itself makes no reference to who prepared it. It is addressed to Ornella Richichi who identified herself in an affidavit she swore on February 9, 2017, as Executive Vice President of Woodmills. The Memorandum is said, by her, to have been “from City staff”.[^16] It observes:

Staff have remained consistent when processing “lot creation” applications throughout the Cathedral Community by requiring confirmation of the trustee of “membership in good standing” prior to final approval. In all other instances, these “lot creation” approvals have been in the form of plans of subdivision.[^17]

[11] Ornella Richichi repeats that, in the past, the only instances of a requirement to enter Cost Sharing Agreements where lots were created were in plans of subdivisions. She explains that “a plan of subdivision is a detailed application by developers for approval of multiple lots to be developed into a subdivision.”[^18] This stands as confirmation that the past practice was to call for the Cost Sharing Agreement to be executed and the cost sharing obligations paid later in the development process. This does not detract from the policy of the official plan which makes clear that a “severance” as opposed to a “plan of subdivision” can be the catalyst for these obligations to be fulfilled as a condition of approval. Both are specifically referred to (see para 9 above).

[12] Counsel for Woodmills made another submission in this regard. She pointed out that as part of the process of development it is generally the case that a zoning by-law, or an amendment to whatever zoning by-law is in place, be passed. So it is in this case. The practice of the City of Markham has been to put in place a holding provision, as part of the by-law, demonstrating that it is not effective until certain conditions are met. A common condition is that the applicable Cost Sharing Agreement be signed and the cost sharing obligations fulfilled. This stands as another indication that the reasonable expectation was that there would be no condition obliging Woodmills, as the vendor, to undertake these two steps as a condition of severance allowing it to close the sale. A zoning by-law specific to the parcel owned by Woodmills was passed by the council of the City of Markham five days after the release of the original decision of the Committee of Adjustment.[^19] The zoning by-law was subject to a hold which could not be removed until the owner had entered the Cost Sharing Agreement and was up to date with its obligation to pay.[^20] I shall return to the zoning by-law and holding provision later in these reasons. As will become clear, this application turns on the zoning by-law and the reference to it in the Agreement of Purchase and Sale.

[13] The Applicant (Union Building) sees this situation differently. The contract is specific. Union Building relies on the provision that it is for the vendor (Woodmills) to apply for and satisfy any conditions attached to the granting of the severance “at its sole expense”.[^21] As counsel for Union Building sees it, Woodmills cannot have been surprised by the imposition of the condition. The description of a subdivision as an application for the development of multiple lots (see para. [11] above) fails to account for what the Cost Sharing Agreement says. It describes a plan of subdivision as follows:

“Plan of Subdivision” or “Subdivision Plan” means a plan subdivision registered pursuant to the Planning Act, and also includes any Lands whose development is permitted by reason of the registration of a plan of condominium pursuant to the Condominium Act, or by reason of a severance obtained for development purposes and the execution of a site plan agreement or other development agreement pertaining to such lands pursuant to the Planning Act (and in the case of such severance, a plan of subdivision shall be deemed to have been registered against such lands, or any part thereof, at the time that such severance becomes final) or in respect of any development in respect of which none of the foregoing apply, upon the transfer of municipal/community services and/or lands to the Town or other applicable authority, as certified by the Engineer.[^22]

[Emphasis added]

[14] This definition perceives the possibility of a “plan of subdivision” including the severance of a single parcel where the severance is obtained for “development purposes”. The Agreement of Purchase and Sale suggests the development Union Building was considering for the site. It defines the “Purchaser’s Intended Development” as:

…a three storey office building of approximately 65,000 square feet with approximately 300 surface parking stalls…[^23]

[15] The submissions of counsel for Union Building propose that these provisions indicate that a requirement that the Cost Sharing Agreement be signed and the obligations under it be fulfilled could be imposed as condition of the granting of the severance needed to complete the sale.

[16] This is confirmed by the fact that it was the Trustee appointed to oversee that agreement who requested that the condition be approved. On June 13, 2016, prior to the hearing by the Committee of Adjustment, the Trustee submitted a letter to the Committee requesting that as a condition to the severance, Woodmills be required to enter into the Costs Sharing Agreement and meet the obligations it imposed. The Trustee was examined in preparation for the hearing of the application now before the Court. He explained that the severance, under the provisions of the Cost Sharing Agreement, was a development event and triggered the requirement that Woodmills, as the property owner, become a signatory to the Cost Sharing Agreement and contribute its pro rata share under it.[^24] This shows that the Trustee was confident that the owners of the land to which this Cost Sharing Agreement applied should have understood the possibility that requiring these things be done could be imposed as a condition of the severance.

[17] The problem with these competing analyses is that while they consider the context and some provisions of the Cost Sharing Agreement they fail to account for the Agreement of Purchase and Sale, which, after all, is the contract to be interpreted. It is the intention behind the Agreement of Purchase and Sale which is at issue. I begin with a general observation against which its words should be measured. When land is bought or sold it could be anywhere on the road from being bare, with none of the applicable approvals through to having all of the approvals necessary for development. It stands to reason and as a general proposition it must be understood that the more steps that have been taken, that is to say the more of the necessary approvals that have been obtained, the more valuable the land will be; the more it could be sold for and the more it would cost to buy it. The question here is: what do the words of the Agreement of Purchase and Sale say that would express an intention as to the state of the land that was being purchased and sold?

[18] Woodmills, as the vendor, relies on the assurances received from the consultants it retained and the engineer that the expectation was that there would be no requirement to sign the Cost Sharing Agreement or pay the obligations under it until there was an application for site plan approval. This would be among the last of the approvals required before development could begin.[^25] The Agreement of Purchase and Sale makes no reference to Site Plan control. It was not a consideration in defining where in the development process the land was to be at the time of sale. It was not to be that far down the process. How far did the parties, by their agreement, intend it to be?

[19] Both parties, the vendor and the purchaser, rely on the Agreement of Purchase and Sale and submit that pursuant to clause 17 of the Agreement of Purchase and Sale[^26] severance of the parcel to be sold was the point in the process of approving development to which the land was to have progressed. The difficulty is that they disagree as to the implication of that conclusion. The vendor (Woodmills) says the intention was the severance of the land for the purpose of sale. The purchaser (Union Building) says it was more than that. This was a subdivision made “for development purposes” and that the property was to be sold with the intention to build a three storey, 65,000 square foot building with 300 parking stalls established (see para. [14] above).

[20] To interpret the Agreement of Purchase and Sale the law instructs it be considered as a whole. Is there any other term or provision that that can assist in resolving this dilemma? I return to the issue of zoning and how the Agreement of Purchase and Sale deals with that step in the development process. Clause 19 states:

Zoning

The Purchaser acknowledges that the Property is currently zoned “Agricultural” and is designated as Business Park Corridor by the Official Plan of Markham. The Purchaser intends to construct a three storey office building of approximately 65,000 square feet with approximately 300 surface parking stalls (“Purchaser’s Intended Development”). This Agreement shall be conditional until August 1, 2016 upon the Vendor obtaining Zoning in the Final Form required for the Purchaser’s Intended Development of the Property. For the purposes of this Agreement, Zoning in Final Form shall mean an Official Plan amendment and/or rezoning of the Property re-designating and rezoning the Property to permit the Purchaser’s Intended Development and such redesignation and rezoning being in full force and effect, with all appeal periods having expired without appeals, or all appeals having been determined to the satisfaction of the Purchaser without any further right of appeal. The required zoning change is to be undertaken at the sole cost and responsibility of the Vendor. Such rezoning may be completed prior to the Closing Date, but in the event that such rezoning is not completed, the Vendor or at its sole discretion may extend the Closing Date to such a time when the rezoning has been completed and is in force and effect. In such case, the Vendor shall notify the Purchaser in writing of the successor rezoning, and the Closing Date shall be amended to reflect thirty (30) days from such event. In the event that that Vendor is unable to obtain the necessary rezoning by December 1, 2016 then this agreement shall become null and void and the Vendor shall return all Deposits to the Purchaser with interest and without penalty.

[Emphasis added]

[21] This clause makes it plain. The parties intended that this land be rezoned to account for the “Purchaser’s Intended Development”. It was, at the time the Agreement was entered into, zoned “Agricultural”. By the date of closing it was to be zoned “…in the Final Form required for the Purchaser’s Intended Development of the Property”. The significance of this requirement is made clear by the understanding that, in the event that the required zoning was not in place by the date set for closing, that date was first to be extended and if not in place by December 1, 2016, the Agreement to become null and void. The intention that it was the Vendor’s responsibility to pay the costs associated with the rezoning is specifically expressed in the Agreement. It was to be at the Vendor’s “sole cost and responsibility.” The rezoning was to be “in full force and effect.”

[22] As has already been noted in these reasons, the rezoning was undertaken. It was complete but it was not “in full force and effect”. There was a hold in place. The purchaser would be unable to act on its intended development. The condition to be satisfied for the hold to be lifted and for the required zoning to be “in full force and effect” was the entry into the Cost Sharing Agreement” and the payment of the accompanying obligations. This was the place in the development approval process where the land was to be at the time of the sale. The intention of the parties as expressed in the Agreement they entered into, was that the land would be rezoned and that zoning operational at the time of the sale. The Agreement is clear, it was the responsibility of the vendor to have such zoning in place at the time of the closing and to make the necessary payments to accomplish that end.

[23] The substantive issue that remains is whether the exception for conditions that were “onerous or unreasonable” has any application. It does not.

[24] Counsel for Union Building relies on the inquiries made of the engineer, by Woodmills, in 2012, as well as earlier advice Woodmills received from engineers it had independently retained. From this, counsel points out, Woodmills was aware of the Cost Sharing Agreement and the nature and value of the obligations that came with it.[^27] This was confirmed by the Trustee. He was examined in preparation for this application. He said that Woodmills was fully aware of its obligations under the Cost Sharing Agreement “to the dollar” long before it entered into the Agreement of Purchase and Sale. The Trustee explained that the Group Engineer had “massive spread sheets of Cost-Sharing Obligations” that the engineer had passed on to Woodmills.[^28] The consultants retained by Woodmills advised that the Cost Sharing Agreement fairly reflected the costs allocated to the lands owned by Woodmills with “some exceptions and issues” which are set out[^29]. On this basis counsel says that Woodmills cannot have been surprised by the substance of the condition that before the sale could be completed the owner (still Woodmills) would have to sign the Cost Sharing Agreement and pay the obligations it imposed.

[25] What this knowledge underscores is that the value of the property being sold would go up in accordance with the costs of the approvals that had been obtained. In simple terms it is money that the purchaser, as a developer, would not have to spend. A proper valuation of the sale price would include a consideration of what it would cost to get the land to the place, in the approval process, required by the Agreement of Purchase and Sale. There is evidence that Union Building, as the purchaser, understood this or, at least accounted for the cost associated with joining the Cost Sharing Agreement and paying the obligations that came with it in its consideration of the values associated with the purchase price. Robert Orr, identified as the Secretary Treasurer of Union Building, swore an affidavit. In it, among other things he deposed:

Neither [Union Building] nor its lawyer, Mr. Jones were ever advised by Woodmills that acquiring the Unifor Land carried with it the additional monetary obligations to satisfy West Cathedral and the CSA, all of which were outside the four corners of the Purchase Agreement, and that [Union Building] would be responsible for paying the costs associated with the CSA. [Union Building] expected that any costs associated with severing and servicing the undeveloped Unifor Land was subsumed in the purchase price and that Woodmills would otherwise have disclosed that Unifor might be expected to pay additional sums beyond the purchase price in order to complete the real estate transaction.[^30]

[26] On its face one might wonder how it could be that Woodmills could be responsible for explaining the terms of the Agreement of Purchase and Sale to the representatives of Union Building. It may be that, in making this statement, Robert Orr was relying on the requirement found in clause 17 of the Agreement of Purchase and Sale that any application being made in furtherance of obtaining the necessary severance (the property could not be sold without it) be delivered to the purchaser for its written approval prior to being passed on to the Committee of Adjustment or to the City of Markham.[^31] There was some disagreement between the parties as to whether this notice was given and, to the extent that any information was provided, whether it was sufficient to comply with this term of the Agreement of Purchase and Sale. To the purchaser the alleged failure amounted to and contributed to an allegation of bad faith it asks the Court to recognize. The Vendor says it complied. The agent acting for Union Building on the transaction was advised of the application and its progress.[^32] I am not prepared on the record before me to make any finding as to the presence or absence of bad faith. For one thing it is not readily apparent what information was distributed and when. In the circumstances, the differences raise issues of credibility which, in the absence of viva voce evidence, I am unable and unprepared to resolve. It does not matter. The issue in this case is not determined by an understanding of the application of clause 17 of the Agreement of Purchase and Sale. Rather it is the requirement found in clause 19 that the zoning for the intended development of the purchaser be in place and be “in full force and effect” (see para. [20] above) at the time the property was sold. It is for this reason that I accept the statement found in the affidavit of Robert Orr that Union Building was correct to expect “…that any costs associated with…the servicing the undeveloped Unifor Land was subsumed in the purchase price” (see para. [25] above).

[27] Robert Orr was cross-examined as to whether his “expectation” that any costs associated with severing the land was subsumed in the purchase price came from clause 17. In his response he did not accept the proposition:

A. I don’t know that. My understanding of it was that there were no other costs in order for us to complete this transaction.

Q. And where does that understanding come from?

A. From my knowledge of reading the purchase agreement. From the --

Q. Which --sorry. You didn’t do that until August 2016

A. From the meetings that we have had. I did it prior to the meetings with our legal counsel. And it would have been part of the review of us challenging that we had to pay the $407,000….[^33]

[28] What followed thereafter was a discussion between counsel as to whether the expectation of Robert Orr that the cost of severing the land was subsumed in the purchase price had been answered. There was no concession that this understanding came from clause 17. In the end counsel for Union Building ascribed the understanding of Robert Orr to the reading of the entire agreement. Counsel for Woodmills made one further try, this time not referring to severing but to “servicing” the land:

Q. Where did your expectation that any costs associated with servicing the land were subsumed in the purchase price come from?

A. I don’t -- I mean, I really don’t have an answer for that. It was my understanding that we complete the transaction for a set price and, as a result of that deal, we were going to become owners of that property for the price that we had paid.[^34]

[29] What arises from this exchange is the confirmation that, as the principles of contract interpretation dictate, adherence should be given to a reading of the contract as a whole. While Robert Orr made no reference to clause 19 (the term where Zoning is referenced) it is the whole Agreement that drove his understanding that the cost of servicing were subsumed in the agreement.[^35]

[30] I accept that those representing and acting for and in the interests of Woodmills were surprised to find that, as the Vendor, it was required to enter the Cost Sharing Agreement and comply with the financial obligations it imposed but that surprise does not render the provision “onerous or unreasonable”. The parties were both quick to turn to dictionary definitions of these words in an effort to assist the court as to the meaning that should be ascribed to them. Whatever they may be taken to stand for, it cannot be that the failure to understand the obligations of the contract, one that was freely entered into, allows the vendor to transfer an obligation, one that the contact dictates it is to fulfill, to the purchaser because that obligation is a payment the vendor did not take into account when the price was set. If that is enough to render the obligation “onerous or unreasonable” the vendor would be permitted to step away from an improvident deal made through its own miscalculation, error or failure.

[31] In this case Woodmills as the purchaser says that any requirement that it pay the cost of entering the Cost Sharing Agreement would be “onerous and unreasonable” because the payment demanded ($407,582) was “…more than ten percent of the purchase price under the [Agreement of Purchase and Sale].” [^36]

[32] There is no evidence to suggest that the a cost of $407,582 represented an unreasonable cost[^37] for the share of the services to be provided under the Cost Sharing Agreement attributed to the parcel of land that was the subject of the sale. In the absence of context it is not possible to assess whether $407,582 is “onerous”[^38]. For example if the sale price was twice what Woodmills paid for the land, its profit would be one half of what it received (it received $3.96 million, one half would be $1.98 million). With the cost of the obligations under the Cost Sharing Agreement accounted for the profit would be in excess of $1.5 million. It is hard to see how this could be seen as onerous. To put it simply, taking the value of the obligation as a percentage of the sale price is not sufficient to demonstrate that it would be onerous to require the vendor to pay it.

[33] For the reasons reviewed the application is granted. Woodmills is ordered to pay to Union Building $407,582 plus pre-judgment and post-judgment interest as provided for in the Courts of Justice Act.

[34] The parties were unprepared to make submissions as to costs. If they are unable to agree I will consider written submissions on the following terms:

(1) on behalf of the Applicant, no later than 15 days after the release of these reasons, such submissions to be no more than 4 pages double spaced exclusive of any Bill of Costs, Costs Outline or case law that may be provided.

(2) on behalf of the Respondent, no later than 10 days thereafter, such submissions to be no more than 4 pages double spaced exclusive of any Bill of Costs, Costs Outline or case law that may be provided.

(3) on behalf of the Applicant, if necessary in reply, no later than 5 days thereafter, such submissions to be no longer than 2 pages double spaced.

Lederer J.

Released: July 25, 2017

[^1]: Agreement of Purchase and Sale (23rd day of July, 2015) at clause 17 quoted at fn. 27 herein

[^2]: The policies specific to the Cathedral district are found in the Markham Official Plan at Policy 9.5. Policy 9.5.5 (Developers’ Group Agreement); states:

Prior to development approval, development proponents shall be required to enter into developers’ group agreement(s), where appropriate in the Cathedral district, to ensure the equitable distribution of the costs of community and infrastructure facilities such as schools, parks, open space, enhancement and restoration of natural features, roads and road improvement, internal and external services, and stormwater management facilities.

[^3]: Committee of Adjustment: Notice of Decision, June 23, 2016 at Condition 3

[^4]: Cathedral West Community: Cost Sharing Agreement at clause 5.03(a)

[^5]: Letter dated July 14, 2016 to Development Services Commission (Rosanna Punit, Secretary-Treasurer, Committee of Adjustment) from Todd Pierce, Director, Land Development

[^6]: The rule states:

14.05 (3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

[^7]: R.S.O. 1990, c. V.2 Section 3(1) says:

A vendor or purchaser of real or leasehold estate or the vendor’s or purchaser’s representative may at any time and from time to time apply to the Superior Court of Justice in respect of any requisition or objection or any claim for compensation or any other question arising out of or connected with the contract, except a question affecting the existence or validity of the contract, and the court may make such order upon the application as may be considered just.

and

s. 4 says:

Every contract for the sale and purchase of land shall, unless otherwise stipulated, be deemed to provide that,

(a) the vendor is not bound to produce any abstract of title, deed, copies of deeds or other evidence of title except such as are in the vendor’s possession or control;

(b) the purchaser shall search the title at the purchaser’s own expense and shall make any objections thereto in writing within thirty days from the making of the contract;

(c) the vendor has thirty days in which to remove any objection made to the title, but if the vendor is unable or unwilling to remove any objection that the purchaser is not willing to waive, the vendor may cancel the contract and return any deposit made but is not otherwise liable to the purchaser;

(d) taxes, local improvement rates, insurance premiums, rents and interest, shall be adjusted as at the date of closing;

(e) the conveyance shall be prepared by the vendor and the mortgage, if any, by the purchaser and the purchaser shall bear the expense of registration of the deed and the vendor shall bear the expense of the registration of the mortgage, if any;

(f) the purchaser is entitled to possession or the receipt of rents and profits upon the closing of the transaction

[^8]: KPMG Inc. v. Canadian Imperial Bank of Commerce, 1998 1908 at para. 3 leave to appeal to S.C.C. refused [1999] S.C.C.A. No. 36, [1999] 2 S.C.R. vi (S.C.C.) as quoted in Geoff R. Hall, Canadian Contractual Interpretation Law, Second Edition LexisNexis 2012 at p. 11

[^9]: Bowater Newfoundland Ltd. v. Newfoundland & Labrador Hydro 1978 CarswellNfld 26, [1978] N.J. No. 14, 15 Nfld. & P.E.I.R. 301 at para. 8 as quoted in Geoff R. Hall, Canadian Contractual Interpretation Law, Second Edition, supra (fn. 21) at p. 12

[^10]: Chamber Collier Co. v. Troyerould (1915) 1 Ch. 268 at p. 272 as quoted in Geoff R. Hall, Canadian Contractual Interpretation Law, Second Edition, supra (fn. 21) at p. 12

[^11]: White v. Central Trust Co. 1984 3002 (NB CA), 1984 CarswellNB 38, [1984] N.B.J. No. 147, 140 A.P.R. 293, 17 E.T.R. 78, 25 A.C.W.S. (2d) 258, 54 N.B.R. (2d) 293, 7 D.L.R. (4th) 236 at para. 33 as quoted in Geoff R. Hall, C directed to the sale of the property Canadian Contractual Interpretation Law, Second Edition, supra (fn. 21) at p. 13

[^12]: Markham Official Plan: (Ch. 11) Interpretation p. 11-8 to 11-9

[^13]: The Cathedral West Cost Sharing Agreement identifies the Engineer in clause 1.01 (p) as follows:

“Engineer” means the engineer, planner or other person or firm appointed from time to time to fulfill such functions Consulting Ltd.

[^14]: Affidavit of Ornella Richichi, sworn February 9, 2017 at Exhibit C (E-mail, dated September 12, 2012 from Cole Engineering Ltd. to SmartCentres Inc.)

[^15]: Affidavit of Ornella Richichi, sworn February 9, 2017 at para. 17

[^16]: Affidavit of Ornella Richichi, sworn February 9, 2017 at para. 30

[^17]: Affidavit of Ornella Richichi, sworn February 9, 2017 at Exhibit I

[^18]: Affidavit of Ornella Richichi, sworn February 9, 2017 at para. 30

[^19]: The Notice of Decision from the Committee of Adjustment was dated June 23, 2016 and the zoning by-law was passed on June 238, 2016.

[^20]: The zoning by-law notes:

The effect of this by-law is to permit employment and open space uses on the lands.

The lands are subject to a (H) Hold zone which may not be removed until the following condition has been met:

The Owner shall provide the City with a written acknowledgement from the Trustee, appointed pursuant to the Cathedral West Community Cost Sharing Agreement, as amended (the “Cathedral CSA”), confirming that the Owner had entered into the Cathedral CSA and/or is in good standing with the Cathedral CSA.

[^21]: Agreement of Purchase and Sale (23rd day of July, 2015) at clause 17

[^22]: The Cathedral West Cost Sharing Agreement identifies the Engineer in clause 1.01 (gg)

[^23]: Agreement of Purchase and Sale (23rd day of July, 2015) at clause 19

[^24]: Examination of Andrew Orr (the Trustee) Q. 129 and Q. 137-142. (The letter of June 13, 2016 referred to is found at Exhibit E of the Affidavit of Ornella Richichi, sworn February 9, 2017)

[^25]: The policies specific to the Cathedral district are found in the Markham Official Plan at Policy 9.5. The current form of the Official Plan does not appear to make any specific reference to a site plan for this parcel; however, the general requirements at Policy 6.1.8 (Urban Design and Sustainable Development) note at policy 6.1.8.9:

To require the submission of site plans to demonstrate how the comprehensive design of a development site and the building(s) located on it will address Markham’s built form, height and massing guidelines and the policies of section 6.1.8 of this Plan.

The Site Plan Control By-law no. 262-94 notes at section 1:

All lands situated within the boundaries of the Town of Markham are hereby designated as a Site Plan Control area.

And defines development as:

DEVELOPMENT means:

(a) the construction, erection or placing of one or more buildings or structures on land; or,

(b) the making of an addition or alteration to a building or structure that has the effect of substantially increasing the size or usability thereof; or,

(c) the laying out and establishment of a commercial parking lot, or of sites for the location of three or more trailers as defined in clause (a) of [paragraph 101](https://www.canlii.org/en/on/laws/stat/rso-1990-c-m45/latest/rso-1990-c-m45.html) of [Section 210](https://www.canlii.org/en/on/laws/stat/rso-1990-c-m45/latest/rso-1990-c-m45.html) of the [Municipal Act R.S.O. 1990, c.M.45](https://www.canlii.org/en/on/laws/stat/rso-1990-c-m45/latest/rso-1990-c-m45.html) or of sites for the location of three or more mobile homes as defined in [clause 46(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-p13/latest/rso-1990-c-p13.html) of the [Planning Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-p13/latest/rso-1990-c-p13.html); or,

(d) the laying out and establishment of commercial outdoor recreational facilities including golf courses, driving ranges, sports fields and the like; or,

(e) the laying out and establishment of outdoor patios associated with restaurants.

The definitions of development make clear that site plan control comes late in the development process.

[^26]: Clause 17 of the Agreement of Purchase and Sale, in its entirety says:

This Agreement is subject to the express condition that this Agreement is effective only if the provisions of [Section 50](https://www.canlii.org/en/on/laws/stat/rso-1990-c-p13/latest/rso-1990-c-p13.html) of the [Planning Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-p13/latest/rso-1990-c-p13.html) (Ontario), as amended from time to time, have been complied with. Forthwith following the date the size and configuration of the Property has been determined, the Vendor, at the Vendor’s sole expense, shall make application for the consent of the Committee of Adjustment for the City of Markham in order to permit the conveyance of the Property to the Purchaser in accordance with the subdivision control provisions of the Planning Act and shall proceed diligently using all reasonable efforts to successfully complete the application.

All conditions imposed in the severance consent shall have been complied with on or before the Closing Date. The Vendor shall satisfy all conditions imposed in connection with the severance consent at its sole expense provided that such conditions are not onerous or unreasonable. In the event that the conditions of consent are onerous and unreasonable and as a result the Vendor is not prepared to satisfy the conditions imposed in the severance consent, the Purchaser at the Vendor’s sole and unfettered discretion shall have the option of satisfying the conditions imposed in the severance consent at the cost of the Purchaser. If by October 30, 2016 (the “Severance Date”) the necessary consent is not given, or if the approval is given but conditions are attached which the Vendor is not prepared to satisfy for the reasons stated herein (and the Purchaser does not elect to satisfy, upon having been given the option to do so), or if approval is given but is appealed and the Vendor is not prepared to defend such appeal, this Agreement shall be null and void, the Deposit and any accrued interest thereon shall be returned to the Purchaser and neither party shall have any further obligation to the other respecting this Agreement.

The Vendor shall prepare the reference plan(s) required in order to effect the severance consent at its sole cost and expense, which reference plan shall be subject to that Purchaser’s written approval, acting reasonably.

Prior to submitting any materials to the Committee of Adjustment for the City of Markham in respect of the severance consent, the Vendor shall first deliver same to the Purchaser for the Purchaser’s written approval, such approval not to be unreasonably delayed or withheld. The Vendor shall keep the Purchaser informed of all matters in connection with the severance process and shall provide the Purchaser with copies of all materials in respect thereof.

[^27]: E-mail dated September 21, 2012 from Cole Engineering Ltd. to SmartCentres Inc. and Cross-examination of Ornella Richichi, March 23, 2017 at Q. 75

[^28]: Examination of Andrew Orr Q. 83-Q. 91

[^29]: Letter dated May 18, 2012 from Sernas Associates to SmartCentres at p. 2. I feel obliged to point out that the Applicant’s Factum at para. 42 suggests that these consultants distinguished “some minor exceptions and issues.” (emphasis added). The word “minor” does not appear in the letter from the consultant.

[^30]: Affidavit of Robert Orr, sworn February 16, 2017 at para. 7

[^31]: See fn. 27 where clause 17 of the Agreement of Purchase and Sale is quoted in its entirety.

[^32]: Factum of the Respondent Markham Woodmills Developments Inc. at para. 29

[^33]: Cross-examination of Robert Orr, March 27, 2017 at Q.75 to Q.81

[^34]: Ibid at Q. 83

[^35]: A full understanding of the costs of servicing would also reflect on who was to pay “development charges”. As a general proposition development charges deal with servicing at a regional level. Cost Sharing Agreements are more local. They deal with servicing the specific land in association with other lands nearby that will benefit directly from the same infrastructure (for example pipes) and other services (for example schools and community centres). No issue of the responsibility to pay development charges was raised. It was said, on behalf of Woodmills, that Union Building anticipated that it would be responsible for “municipal development charges” (see Factum of the Respondent Markham Woodmills Developments Inc. at para. 65). This would be consistent with the zoning by-law. The hold was to be lifted not after all the servicing had been paid for but after the Cost Sharing Agreement had been signed and the owner shown to be in good standing under its terms (see fn. 21)

[^36]: Factum of the Respondent Markham Woodmills Developments Inc. at paras. 3 and 54

[^37]: Woodmills referred to the definition of the word “reasonable” as found in The Dictionary of Canadian Law 4th ed. (Toronto: Thomson Carswell 2011) at 1075:

A “rational inference from evidence or established truths.”

Woodmills went on to say that an “unreasonable” obligation is one that is other than reasonable (see Factum of the Respondent Markham Woodmills Developments Inc. at para. 56)

For its part Union Building cited Black’s Law Dictionary 10th ed., p. 1772 in referring to the word “‘unreasonable’ as going beyond the limits of what is reasonable or equitable. In other words, something that is ‘unreasonable’ is irrational or capricious” (see Factum of the Applicant, Union Building Corporation of Canada at para. 63)

[^38]: Woodmills referred to the definition of the word “onerous” as found in The Dictionary of Canadian Law 4th ed. (Toronto: Thomson Carswell 2011) at 882:

“An obligation which outweighs or exceeds its advantage” (see Factum of the Respondent Markham Woodmills Developments Inc. at para. 53)

For its part Union Building cited Black’s Law Dictionary 10th ed., p. 1262 in referring to the word “onerous” as:

“excessively burdensome or troublesome, causing hardship…or being or involving obligations that outweigh the advantages. (see Factum of the Applicant, Union Building Corporation of Canada at para. 62).