Court File No.: CV-18-592444
Motion Heard: March 2/18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Zoeco Inc., Plaintiff
-AND-
Chryssaitis, Defendant
BEFORE: Master L. Abrams
COUNSEL: G. Tighe, for the plaintiff 416-865-6636, f.
R. Trifts, for the defendant 416-482-2599, f.
Reasons for Decision
The Background
[1] The plaintiff is a corporation that owns a property municipally known as 1792 Avenue Road. Its property is directly adjacent to the property here at issue: 1796 Avenue Road. 1796 Avenue Road is owned by the defendant and leased to Madeline’s Bridal and Evening Wear Ltd. under a 2013 lease.
[2] The principal of the plaintiff, Mr. James Richardson, says that, in late January/18, he was contacted, by telephone, by Ms. Marinis, the niece of the owner of 1796 Avenue Road (the “niece”), inquiring as to whether he might be interested in purchasing the property. He viewed the property, with the niece, on January 26/18 and advised in writing that his company, the plaintiff, was offering payment of $1,450,000.00--with a 15-day closing and inspection.
[3] The niece confirmed that the lease with Madeline’s contained a right of first refusal and that she, therefore, had provided Madeline’s with notice of the plaintiff’s offer: this on January 29/18. The following day, she confirmed that the tenant “decided not to purchase the building”. She also advised that there was a competing offer that had been made (not by the tenant) for a higher price. On behalf of the plaintiff, Mr. Richardson responded, in writing: “[P]lease accept this as my counter offer of $1,480,000 with 15 day closing. My inspection request remains in place”.
[4] On February 1/18, the plaintiff delivered an offer to purchase the property on an OREA Form 100, with the terms being those discussed. The offer was made irrevocable by the buyer until 5 p.m. on the 2nd of February/18 and contained two provisions of note: 1. an agreement to pay a deposit to the deposit holder--the (not-yet-identified) seller’s lawyer, within 2 days following acceptance of the offer; and 2. a representation and warranty that the tenant had waived its right of first refusal in respect of the purchase of the property.
[5] In response--on February 2/18 at 9:33 p.m.--the niece wrote to Mr. Richardson advising that it was “time for a celebratory drink” because the seller, her uncle, had “signed [the] offer”. Though much has been made on the motion as to the timing of the niece’s email, the email is silent as to when the offer was said to have been signed. From Mr. Richardson’s perspective, it could well have been signed at some time earlier in the day (or, even, on the preceding day). The niece indicated that the offer would be forwarded to an unidentified lawyer and invited Mr. Richardson to “proceed with inspection”.[^1] On the following day, Mr. Richardson asked the niece to inquire of the tenant as to when his inspector might be able to access the premises; and, he requested a copy of the survey and proof of roofing repairs that had recently been completed. On the same day, the niece advised Mr. Richardson that she had been in touch with the tenant. She forwarded repair documentation and keys to Mr. Richardson. A time was confirmed for the inspection on February 4/18.[^2]
[6] On February 5/18, the niece advised that the tenant had changed its mind about purchasing the property (i.e. the principal of the tenant “went into panic mode” and “had second thoughts”) and was choosing to prepare an offer. Indeed, at 7:44 p.m. on February 5th, she said that the tenant’s offer had been submitted that afternoon. It is noteworthy (and, at first blush, curious) that the tenant’s offer filed on this motion is dated February 8/18.
[7] On February 9/18, the niece wrote that, after receiving the plaintiff’s formal offer, the offer was forwarded to the tenant and the tenant decided to purchase the property. It was as at then, she said, that the plaintiff’s offer was considered to be “null and void”.
[8] Mr. Richardson responded with consternation and suggested that the plaintiff’s lawyer and the defendant’s lawyer speak. No lawyer was identified by the defendant, but the plaintiff’s nephew orally advised that, by 9 a.m. on February 16/18, an undertaking would be given that the defendant would not deal with the property. No such undertaking was provided by the owner of the property; and, for fear that the defendant would deal with the property with no regard for the plaintiff, the plaintiff moved--on notice--for leave to register a certificate of pending litigation.
[9] That motion is now before me.
The test
[10] On a motion for leave to issue a certificate of pending litigation, the court must determine that a triable issue has been raised as to whether the party registering the certificate of pending litigation has a reasonable claim to an interest in the land. The issue is not one of likely success (see: 1152939 Ontario Ltd. v. 2055835 Ontario Ltd., [2007] O.J. No. 488 (S.C.J.)). Further, and as the defendant says in his factum: “In determining whether there is a reasonable claim to an interest in land, the motions court must not simply rely on the pleadings or accept affidavits uncritically. The court has a duty to examine whether, on the whole of the evidence, a reasonable claim to an interest in land has been made out (see: para. 69 and the two cases cited in support therefor). Also to be considered are the Dhunna factors.
[11] I agree with the plaintiff when it says that the plaintiff’s claim “is not frivolous and vexatious and the evidence gives rise to a triable issue or a reasonable claim as to whether the plaintiff has an interest in the land” (Thompson Centres Inc. v. Hyde Park Limited Partnership, 2010 ONSC 718 (at para. 33)).
[12] The defendant owner of the property is 92 years old. That Mr. Richardson did not have cause for concern when the owner’s niece appeared to be representing her uncle in dealings with the property does not give me pause on this motion--given that Mr. Richardson personally knew the owner and had been promised an opportunity to make an offer on his property, and given that the niece acted in a manner that accorded with her having real or ostensible authority (i.e. being the person who first contacted Mr. Richardson to inquire as to whether he might be interested in purchasing the property; being the person who forwarded a copy of the lease and copies of repair documents to him; being the person who made inquiries of the tenant as to when an inspection might take place; and being someone who reported on conversations that she said she had with the defendant).
[13] When the niece advised that the plaintiff’s formal offer was signed (an offer which did little more than record, on OREA Form 100, the parties’ earlier written exchanges), the plaintiff had no reason to believe that it was signed other than in a timely fashion or that there was any issue with the tenant (or with the representation and warranty that the tenant had waived the right of first refusal). Indeed, the conduct of the parties, on and after February 2/18 and until the “null and void” email, was consistent with the plaintiff’s understanding that the parties had a valid and binding contract for the purchase and sale of property. And while the niece now says that she mistook “the willingness of [her uncle] to accept the [plaintiff’s] offer and confused it with his signing the offer”, there is no evidence from the owner, her uncle, as to what he did or didn’t know.
[14] No affidavit was sworn by the defendant in response to this motion. The plaintiff asks that an adverse inference be drawn, notwithstanding the age of the defendant and the short turnaround time for the completion of responding materials. I agree. The niece deposes as to what her uncle did/didn’t do and said/didn’t say. His evidence is key. I note that there is no evidence before me as to the defendant being incapable of swearing an affidavit. Indeed, he continues to act as a commercial landlord and only just signed an agreement of purchase and sale with the tenant—this in mid-February/18.
[15] Further, and in any event, though concern is now being raised by the defendant as to the plaintiff’s failure to provide the defendant with a deposit cheque, the agreement stipulated that the cheque would be provided two business days after the agreement was accepted and it would be delivered to the defendant’s lawyer—a lawyer who, as late as February 9/18, had not been identified for the plaintiff.
[16] I note, too, that the deposit was not due until February 6/18, if the defendant accepted the offer on February 2/18 (as the niece originally said); yet, it was on February 5/18 that the niece advised that the tenant was preparing an offer. Relying on Whitehall Estates Ltd. v. McCallum et al., 1975 CanLII 1017 (B.C.C.A.), the plaintiff submits that in this case, as in Whitehall Estates, “…the vendor, before the time for the performance of the condition, made it impossible for the [plaintiff] to perform the condition and indicated clearly he would not perform the contract in any event. This…freed the [plaintiff] from the requirement of compliance and entitled him to sue”. The plaintiff says that there is a reasonable argument to be made, and I agree, that the agreement of purchase and sale was repudiated--before performance was due and where performance depended on the positive obligation of the defendant to advise as to whom the deposit was to be paid. The irrevocability clause in the agreement of purchase and sale was a clause to safeguard the interests of the plaintiff. The plaintiff did not have reason to believe that the agreement was not signed by the defendant in a timely fashion, particularly given that confirmation that it had been signed was provided on February 2nd.
[17] The plaintiff says that the property is unique to it. There is a reasonable argument to be made that this is so. The property is located directly adjacent to property owned by it—property that it uses as its business headquarters. Damages for a failed sale involving a property on the stretch of Avenue Road where the property at issue is situate might be relatively easy to quantify. But, damages for a failed sale involving property directly adjacent to the plaintiff’s business headquarters (housed in a building that the plaintiff owns)? Less so. And, that the plaintiff is a company that invests in real estate is not determinative of the issue of uniqueness; but, it is indicative of the plaintiff not being a shell corporation.
[18] As for the balance of convenience, there is a real risk that the defendant will transfer title to the property to the tenant (or some other purchaser), given that the tenant has submitted an offer that would see the defendant paid more by it than by the plaintiff (though the right of first refusal clause requires only an election to purchase the property for the same price and on the same terms and conditions offered by a prospective purchaser). Quaere, parenthetically, whether the tenant’s offer was made in accordance with the right of first refusal provision in the lease?
[19] With a certificate of pending litigation in place, the tenant’s lease is not affected and the defendant will be permitted to sell the property, in the fullness of time, to the plaintiff, the tenant or otherwise.
[20] The tenant was given notice of this motion and, plaintiff’s counsel says, made no comment as to any concerns or terms it would have the court impose. There is no credible evidence before me that, if the plaintiff is granted its motion, “there will be another lawsuit”, as posited by the defendant.
Disposition
[21] For all of these reasons, leave to register a certificate of pending litigation on title is granted. In making his submissions, Mr. Tighe suggested that his client would be prepared to pay its promised deposit ($148,000.00) into court, to the credit of this action. This it is to do, by March 12/18.
[22] Failing agreement as to the costs of this motion, I may be spoken to.
Master L. Abrams
Released: March 5/18
[^1]: It is of note, that the defendant’s lawyer was never identified and, indeed, as late as February 9/18, the niece indicated that she had spoken with one lawyer and researched five others until she finally settled on a lawyer (who remained unidentified).
[^2]: Offer, acceptance, performance: according to the plaintiff.