COURT FILE NO.: 11616/17 DATE: 2018/08/20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Donald Henry Labatte and Susan Claire Labatte, Plaintiffs (Responding Parties) -and- Jon Ogryzlo and Lynn Ogryzlo, Defendants (Moving Parties)
AND RE: Jon Ogryzlo and Lynn Ogryzlo, Plaintiffs by counterclaim -and- Donald Henry Labatte, Susan Claire Labatte, and Royal Lepage Niagara Real Estate Centre Inc., Brokerage, Defendants to the counterclaim
BEFORE: The Honourable Justice T. Maddalena
HEARD: August 2, 2018 at Welland, Ontario
COUNSEL: Ronald N Brady, for the Plaintiffs/Defendants to counterclaim Labatte J. Ross Macfarlane, for the Defendants/Plaintiffs by counterclaim
SUMMARY JUDGMENT MOTION ENDORSEMENT
The Issues
[1] The defendants Jon and Lynn Ogryzlo (moving parties) seek summary judgment against the plaintiffs Donald Henry Labatte and Susan Claire Labatte (responding parties).
[2] More specifically, the defendants seek an order dismissing the plaintiffs’ claims, rescinding the Agreement of Purchase and Sale (“APS”) on the grounds of failure to disclose and material misrepresentation, as well as the return of a $5,000.00 deposit.
[3] The plaintiffs oppose the motion and seek to move the matter to a trial under the simplified procedure provided in Rule 76 of the Rules of Civil Procedure.
[4] No one appeared at this motion on behalf of Royal Lepage Niagara Real Estate Centre Inc., Brokerage.
Background
The Property at York Street, Thorold
[5] At all material times, the plaintiffs were legal owners of the property municipally described as 7 York Street, Thorold (“the York property”).
[6] On or about 2004, the plaintiffs added, built, and maintained in their backyard an enclosed sunroom, a concrete patio, hot tub, wooden deck, park bench, sandbox, fencing, and landscaping that were all partially or completely on lands not owned by them, but leased from Trillium Railway Co. Ltd. (“the Trillium property”).
[7] It is important to note that the location of the sunroom doors left no setback from the property line between the York property and the Trillium property. This meant that one could not step out of the sunroom doors without encroaching on the Trillium property. The only access through the sunroom doors was to the Trillium property.
[8] The Committee of Adjustment for the City of Thorold had reduced the minimum easterly setback requirements from 7.5 metres, as required by the by-law, to .15 metre to permit the sunroom addition to legally comply.
License Agreement
[9] On or about July 3, 2007, the plaintiffs entered into a license agreement with Trillium Railway Co. Ltd. (“Trillium”). This license agreement permitted the plaintiffs to use a 17-foot wide strip of land situated to the east of the York property for their personal use for a term of 10 years commencing June 22, 2007.
[10] The license agreement between the plaintiffs and Trillium confirmed Trillium as owner of the 17-foot strip of land and the plaintiffs as desiring a license from Trillium to have use of the 17-foot wide strip of land. Section 2 of the license agreement between Trillium and the plaintiffs states as follows:
“The Premises may be occupied and used by LICENSEE solely for the purpose of LICENSEE’S personal use for a term commencing June 22 2007, and continuing for 10 years thereafter, unless this Agreement is sooner terminated as hereinafter provided.”
[11] In Section 4 the license agreement provided further that Trillium could terminate the agreement at any time by giving notice not less than 60 days prior.
[12] Termination of the agreement (Section 5) further provided that the “Licensee shall quit the premises and shall remove therefrom all structures, property, and materials installed in, on or attached to the Premises.”
[13] The license agreement is personal to the plaintiffs and Trillium. It has no provision for assignment or renewal.
[14] Attached to the license agreement was a “sketch” showing the location of the 17-foot wide Trillium property in relation to the York property and its improvements.
[15] The plaintiffs were signators to this agreement with the Trillium Railway Co. Ltd. effective July 3, 2007. [1]
Agreement of Purchase and Sale
[16] The plaintiffs had been owners of the York property since on or about January 23, 1989. They were considering on or about July 2016 downsizing and acquiring a new, smaller accommodation.
[17] The plaintiffs’ property was not on the market when a local realtor from Royal Lepage, Anthony Longo (“Longo”), advised the plaintiffs that he knew of persons who may be interested in purchasing their property. Subsequently, the plaintiffs agreed to allow the defendants to conduct an inspection of the York property.
[18] The first inspection of the property occurred on July 22, 2016 when the defendant Lynn Ogryzlo and Ted Luciani met the plaintiffs at the York property. (The defendant Lynn Ogryzlo is the niece of the then Mayor of Thorold, Ted Luciani.) The realtor was not available and did not attend for this first meeting.
[19] What took place at this meeting became largely in dispute between these parties.
[20] In their current pleadings, the plaintiffs depose that, at this meeting with Lynn Ogryzlo and Ted Luciani, they specifically informed the defendants of the boundaries of the York property and, specifically, the 17-foot strip of land pertaining to the license agreement with Trillium. The defendant Lynn Ogryzlo and Ted Luciani both depose that there was no discussion at this meeting of any property lines, markers, encroachments, or setbacks, and specifially no mention at this meeting whatsoever regarding the license agreement with Trillium. The defendant Lynn Ogryzlo and Ted Luciani both depose that to them, at this inspection, the York property clearly appeared to include what they later discovered to be the Trillium property.
[21] As a result of the inspection on July 22, 2016, the parties on July 26, 2016 entered into an agreement of purchase and sale. The defendants were to purchase the York property for $407,500.00 with a closing date of January 27, 2017. The defendants paid a $5,000.00 deposit. The closing date was later amended to October 7, 2016.
[22] The defendants stated that at the time of the execution of the APS they knew nothing regarding the license agreement between the plaintiffs and Trillium.
[23] The defendant Lynn Ogryzlo visited the property on September 7, 2016 to meet with the plaintiffs. The defendant states that while discussing the hot tub at this meeting, the plaintiff Donald Labatte mentioned briefly that the hot tub was built on “leased land”. The defendant deposed in the affidavit sworn August 4, 2018 as follows:
“… This was the first time that we had heard anything about the existence of a ‘lease’, which we later learned to be the Trillium License ….”
[24] The defendants state that upon learning about the leased lands, they immediately commenced making inquiries of the realtor and also of Trillium. By September 14, 2016, the defendants were given a copy of the Trillium license agreement.
[25] The plaintiffs make no reference in their evidence to the September 7, 2016 meeting.
[26] On September 20, 2016 the defendants stated that they visited the York property for the first time with full knowledge of the Trillium license agreement. They decided that they did not wish to proceed with the purchase as it was not what they had bargained for in the APS. The plaintiffs did not execute a release nor return the deposit and insisted that they, the plaintiffs, had informed the defendants of the Trillium property on the July 22, 2016 visit when Lynn Ogryzlo inspected the property with Ted Luciani. The plaintiffs state that at the meeting of July 22, 2016 “issues with the boundary lines of the property and access to the Trillium lands were specifically and correctly addressed in the course of conversation which occurred between Lynn Ogryzlo and Susan Labatte… During the inspection reference was made to the license agreement entered into with Trillium Railway Co. Ltd. ….”
[27] The plaintiffs further stated that the presence of Ted Luciani, Mayor of Thorold, could address any concerns regarding the ownership of the property. The plaintiffs relied on Luciani, who was Mayor of Thorold and a member of City Council for 18 years, to address all of the defendants’ concerns.
[28] The plaintiffs are now suing the defendants for damages as a result of failure to complete the APS.
The Law
[29] Rule 20.04(2)(a) of the Rules of Civil Procedure provides as follows:
20 .04 (2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence;
[30] Further, Rule 20.04(2.1) of the Rules of Civil Procedure states as follows:
(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[31] Therefore, effective January 1, 2010 the former test of “no genuine issue for trial” has been replaced with “no genuine issue requiring a trial”.
[32] The responding party in a summary judgment motion must provide evidence of specific facts showing that there is a genuine issue requiring a trial. The court under the new test has the authority to weigh the evidence, evaluate credibility, and draw reasonable inferences from the evidence.
[33] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, the Court stated as follows in para. 43:
The Ontario amendments changed the test for summary judgment from asking whether the case presents “a genuine issue for trial” to asking whether there is a “genuine issue requiring a trial”. The new rule, with its enhanced fact‑finding powers, demonstrates that a trial is not the default procedure. Further, it eliminated the presumption of substantial indemnity costs against a party that brought an unsuccessful motion for summary judgment, in order to avoid deterring the use of the procedure.
[34] Further, in para. 49 the Court stated as follows:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. 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.
[35] The Supreme Court has also set out in Hryniak a “roadmap/approach” to a motion for summary judgment as outlined in para. 66:
On a motion for summary judgment under Rule 20.04 of the Rules of Civil Procedure, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a) of the Rules of Civil Procedure. If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2) of the Rules of Civil Procedure. She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[36] I adopt all of the aforementioned regarding the new test and roadmap for summary judgment motions.
Analysis
[37] The plaintiffs’ position is that the defendants were clearly advised on July 22, 2016, prior to the execution of the APS, of the license agreement with Trillium. The defendants state that they first learned of some issue regarding “leased lands” on September 7, 2016 and were not provided with information regarding the Trillium license agreement until September 14, 2016 when they actually received a copy of the agreement.
[38] As with many cases these days, a review of the electronic email communication is helpful and instructive to the court.
Email exchange July 30, 2016 from Longo to defendants In this email Longo confirms to the defendants that the lot size is “85 feet x 98 feet more or less”. In this email exchange there is no mention of the Trillium lands and it is clear that the realtor Longo, who was the listing agent for the plaintiffs, had no knowledge of the license agreement.
Email exchange of August 4, 2016 between defendant Lynn and Longo There is discussion regarding Lynn obtaining permission to enter the premises to measure for furniture but no reference to anything pertaining to the Trillium lands. This occurred just after the defendants executed a “Notice of Fulfillment of Conditions” dated July 30, 2016.
Amending agreement to the APS dated August 16, 2016 The closing date was amended from January 27, 2017 to October 7, 2016.
Emails August 26 – 29, 2016 between Longo and the defendants This involved discussion of the need for a listing agreement so that the defendants could take this document to their bank for financing purposes. There was no mention with respect to the Trillium property, and the property size was again described as 85 feet frontage by 98 feet depth more or less.
Email September 8, 2016 The defendant Lynn Ogryzlo wrote to Longo stating, “I think we may have a disclosure problem” and referenced the leasing of the property in the front of the Labatte home from Trillium. She further stated in the email, “We were totally unaware of this incumbrance on the property by a third party.”
Second email September 8, 2016 - from Longo to the defendants In this email the realtor simply advises that he will have to look into the issue and advise further.
Email of September 10, 2016 from Longo to the defendants It is clear that Longo spoke to the plaintiffs regarding the Trillium lands. The email states, in part, “The railroad lease, as I understand from my conversation with Don, is that they pay a nominal fee to the railroad, as do the other nearby owners to ‘use’ the upper bank and maintain it …” What is notably absent from this email is that there is no evidence of the plaintiffs stating to Longo that they have already disclosed the Trillium license agreement to the defendants at their first meeting on July 22, 2016, so the defendants cannot be nor should they now be surprised.
Email of September 12, 2016 from the defendant Lynn Ogryzlo to Longo This email confirms commencement of a flurry of activity and inquiries by the defendants to City of Thorold, Trillium Railway and Service Ontario with regard to the Trillium property. This is not consistent, in anyway, with the defendants having knowledge of the Trillium license agreement on July 22, 2016. It is clearly consistent with them learning about the Trillium property on September 7, 2016.
Email exchanges September 13, 2016 between Longo and the defendant Lynn Orgyzlo The defendants are voicing additional concerns with respect to a gas line which may be under the sunroom and front porch.
Additional email September 13, 2016 from the defendant Lynn Ogryzlo to Longo This email was copied to the defendants’ lawyer Nigel Watson requesting, among other things, the Trillium contract.
Further email September 13, 2016 from Michael Mann, solicitor for the plaintiffs to Nigel Watson, solicitor for the defendants This email stated that a copy of the Trillium license agreement has been provided to Longo who will in turn provide it to the defendants. It is notable again that in this email there is no mention that it is the plaintiffs’ position the defendants already knew about the Trillium property on July 22, 2016.
Email September 14, 2016 from Longo to the defendants This email confirms the defendants have, as of this date, now received a copy of the Trillium license agreement. In the September 14, 2016 email, Longo referenced a meeting with the plaintiffs a day earlier, i.e. September 13, 2016. Again, what is notable is that there is no evidence in any of the email communication that the plaintiffs had disclosed the license agreement to the defendants on July 22, 2016.
Email September 23, 2016 This is correspondence from counsel for the defendants to counsel for the plaintiffs seeking rescission of the APS as a result of the recent disclosure and what the defendants termed as “significant misrepresentations”.
Email September 25, 2016 by counsel for the plaintiffs to counsel for the defendants In this email communication, the counsel for the plaintiffs has raised, for the first time, that the position of the plaintiffs is that they clearly made the disclosure at the July 22, 2016 meeting. [2]
[43] The court on a summary judgment motion is able to weigh evidence, make findings of credibility, and draw reasonable inferences from the evidence. First, there is no dispute that Longo did not learn of the Trillium license agreement until after the September 7, 2016 meeting between the defendant Lynn Ogryzlo and the plaintiffs. He has described the lot size as 85 feet x 98 feet more or less. It is clear based on this evidence that the plaintiffs did not disclose the existence of the license agreement to the realtor. They clearly should have done so. He was their listing agent.
[44] Secondly, the actions taken by the defendants and the flurry of activity and inquiries that were made shortly after the September 7, 2016 are completely consistent with the defendants having first learned about “leased lands” at the September 7, 2016 meeting.
[45] Lynn Ogryzlo’s note to the realtor about a “disclosure problem” occurred immediately after the September 7, 2016 meeting.
[46] This is not consistent with the defendants having knowledge of the Trillium license agreement on July 22, 2016 as pleaded by the plaintiffs.
[47] Further, the plaintiffs gave no evidence about the September 7, 2016 meeting, which was referenced by the defendants. Further, they do not say that meeting did not occur. I have only the defendants’ evidence of that meeting, which I accept. The actions of the defendants following September 7, 2016 are completely consistent with the defendants’ position.
[48] Further, based on the evidence, I find that the actions of the plaintiffs are not consistent with their position that they made full disclosure on July 22, 2016. Indeed, if this had been the case, one would have thought that it would have been of paramount importance for them to state, at every opportunity, when the defendants were making their inquiries, that the plaintiffs had already disclosed to them the particulars of the license agreement on July 22, 2016. In fact, the plaintiffs only so stated for the first time through their counsel, after they received notification from the defendants of their intent to rescind the APS. I conclude that all of the evidence clearly points to the plaintiffs’ first disclosure of the Trillium property taking place September 7, 2016. I do not find the plaintiffs’ evidence that disclosure was made July 22, 2016 as credible.
[49] Further, a survey was requested by the defendants of the plaintiffs on more than one occasion. Although no official survey was available, the plaintiffs did have in their possession a “sketch” which was attached to the Trillium license agreement which was not produced to the defendants until September 14, 2016. This was clearly in the plaintiffs’ possession and should have been produced at the defendants’ first request, which I find was made on July 22, 2016.
[50] Further, the plaintiffs rely on the fact that Ted Luciani, who was the uncle of the defendant Lynn Ogryzlo, and who was Mayor of Thorold, should have known about the Trillium property in his capacity as mayor or as a councillor for the City of Thorold. The plaintiffs state in paragraph 15 of their affidavit as follows:
“While [we] were certain we had provided complete and correct information with respect to the ownership of the property, we also felt that the presence of Ted Luciani, the Mayor of Thorold at that time and a member of the Thorold City Council for eighteen (18) years would allow Ted Luciani to address any concerns the Oryzlos [sic] might have with respect to the ownership of the property.”
[51] In paragraph 16 of the plaintiffs’ affidavit sworn May 10, 2018, the plaintiffs state that in 2002, while Luciani was a member of the Thorold City Council, the City of Thorold entered into a by-law to authorize the execution of a license agreement with Trillium Railway Co. Ltd. A copy of that particular license agreement is dated December 3, 2002 with Robin Davidson as Mayor [3]. However, that license agreement dealt with a “Welland Canal Walkway and Bicycle Path”. It clearly did not deal with the same lands at issue here.
[52] The licensing agreement dealing with the lands at issue has only the plaintiffs and Trillium Railway Co. Ltd. as signators. [4] The City of Thorold was not a party to the license agreement pertaining to the 17 feet of land at issue here.
[53] The evidence of Ted Luciani, which I accept, is consistent with the evidence of the defendants, which I also accept.
Conclusions
[54] The evidence which I accept as credible is that the defendants first learned of the “leased lands” at the meeting on September 7, 2016.
[55] I find the actions of the defendants which followed the September 7, 2016 meeting completely consistent with the defendants learning of the licensing agreement on September 7, 2016, not on July 22, 2016.
[56] I find the actions of the plaintiffs are clearly and completely inconsistent with the position taken by them that they made full and complete disclosure on July 22, 2016.
[57] The plaintiffs were absolutely duty bound to make this disclosure to the defendants prior to the defendants exectuing the APS.
[58] The failure on the part of the plaintiffs to properly disclose the agreement with Trillium entitles the defendants to rescind the APS. The plaintiffs had executed the agreement with Trillium in July 2007. They were aware of its significance to the use and enjoyment of their property. Their lack of disclosure amounts to deliberate misrepresentation which entitles the defendants to now rescind the APS. The defendants clearly were not receiving what they had bargained for in the APS.
[59] Based on all the evidence which I find credible and accept, as well as the reasonable inferences which the court may draw from that evidence, I conclude, therefore, there is no genuine issue requiring a trial.
Orders Made
[60] The following orders are made:
- Summary judgment is granted in favour of the defendants.
- The plaintiffs’ claims are dismissed.
- The Agreement of Purchase and Sale is terminated.
- The defendants’ deposit of $5,000.00 shall be returned with pre-judgment interest and post-judgment interest in accordance with the Courts of Justice Act.
Costs
[61] Unless otherwise agreed, costs submissions may be in writing, limited to two pages, plus a bill of costs. The defendants’ submissions are due September 4, 2018. The plaintiffs’ submissions are due September 18, 2018.
Maddalena J.
DATE: August 20, 2018
Footnotes
[1] License agreement is reproduced in Responding Motion Record, Tab 1B [2] All email references found in Defendants’ Motion Record, Tab 2G-V [3] Responding Motion Record, Tab 1A [4] Responding Motion Record, Tab 1B