Court File and Parties

COURT FILE NO.: CV-18-0132 DATE: 2019/03/12

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

KEVIN WILLIAM CARR and JACQUELINE ANN CARR Plaintiffs

Counsel: Thomas Davis, for the Plaintiffs

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LIONEL RIVET Defendant

Counsel: Self-represented

AND B E T W E E N:

LIONEL RIVET Plaintiff by counterclaim

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KEVIN WILLAM CARR, JACQUELINE ANN CARR, BRIAN PURVIS GRAHAM, and 2306024 ONTARIO LTD. c.o.b. as ROYAL LEPAGE NORTH BAY REAL ESTATE SERVICES Defendants to the counterclaim

Counsel: Self-represented (for Lionel Rivet) Erin Hoops, for the Defendants Brian Purvis Graham and Royal Lepage North Bay Real Estate Services

HEARD: March 1, 2019

ellies j.

REASONS FOR DECISION

OVERVIEW

[1] The defendant moves under r. 42.02 of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194, for an order discharging a certificate of pending litigation (a “CPL”) registered against his property. The CPL was issued following a motion made without notice in an action the plaintiffs commenced as a result of a failed real estate transaction.

[2] For the following reasons, the motion to discharge the CPL is dismissed.

BACKGROUND

[3] The property in question is located on Talon Lake, about 40 kilometers east of the City of North Bay. According to the real estate listing, it consists of a two bedroom bungalow and a storage building located on the north side of Kaibusking Bay, a bay on the south end of Talon Lake. According to the statement of claim, the property was listed for sale in or around July 2017 for $289,900 [^1].

[4] In July 2018, the plaintiffs agreed to purchase the property for $284,000, subject to certain conditions. Those conditions were either fulfilled or waived by the plaintiffs in advance of the deadline set out in the Agreement of Purchase and Sale (the “APS”), being July 14, 2018. The closing date for the transaction was set for August 16, 2018. However, the defendant refused to sell the property in accordance with the APS.

[5] The plaintiffs commenced their action the day after the transaction was supposed to close. In the statement of claim, they seek specific performance of the APS and special damages of $100,000. In the alternative, they seek damages of $100,000. In addition, they request a CPL, pre-judgment interest and costs.

[6] The plaintiffs’ first motion for a CPL was rejected by the court because the ex parte motion materials failed to contain sufficient evidence that the property was so unique as to warrant an order of specific performance.

[7] The plaintiffs’ second request was successful and an order granting the CPL was made on October 31, 2018. The defendant brought this motion after he was served with the ex parte order.

ISSUES

[8] The defendant raises three issues:

(1) Did the plaintiffs fail to make full and fair disclosure in the motions they brought without notice to obtain the CPL? (2) Is the property sufficiently unique to support a claim for specific performance? (3) Should the CPL be discharged because the plaintiffs have claimed damages as an alternative to specific performance?

ANALYSIS

Issue 1: Did the plaintiffs fail to make full and fair disclosure?

[9] Rule 42.01(3) of the Rules of Civil Procedure provides that a motion for a CPL may be made without notice, as it was in this case. Rule 39.01(6) provides that a party moving without notice must make full and fair disclosure of material facts and that failure to do so is itself a sufficient reason for setting aside any order obtained on the motion.

[10] The defendant submits that the plaintiffs failed to make full and fair disclosure because they failed to advise the court of two facts: (1) that their claim was hotly contested, and (2) that the parties were actively trying to resolve the matter at the time the CPL was requested.

[11] I am unable to agree with this submission. In my view, neither fact was material.

[12] A material fact is one which may have affected whether the order issuing a CPL was granted or would make the decision to do so doubtful: Access Self Storage Inc. v. 1321645 Ontario Ltd., 2017 ONSC 6037 (Div. Ct.), at para. 19. The threshold for issuing a CPL on an ex parte motion is a low one. The parties seeking the order need only demonstrate that their claim to an interest in the land is plausible and that there is a serious issue to be tried: Interrent International Properties Inc. v. 1167750 Ontario Inc., 2013 ONSC 4746 (Master), at para. 15.

[13] Neither the fact that an action in which the plaintiffs claim an interest in land is being strenuously contested, nor the fact that the parties are trying to resolve the claim are ones that would ordinarily affect the issuance of a CPL. No inference concerning the plausibility of the plaintiffs’ claim can be drawn from either fact. Defendants are free to contest even the most meritorious claims and, unfortunately, often do. Likewise, defendants are at liberty to settle even the least meritorious claims, and often should.

[14] In addition to attacking what was not introduced into evidence by the plaintiffs, the defendant attacks what was. He takes issue with a statement contained in the unsworn affidavit of Stacy Williams, an employee of the law firm representing the plaintiffs. In her affidavit dated February 25, 2019 Ms. Williams states that the plaintiffs are concerned that Mr. Rivet might encumber or dispose of the property in a way that would frustrate an order for specific performance. As Mr. Rivet correctly submits, Ms. Williams does not refer to any evidence in support of the plaintiffs' alleged concerns.

[15] However, the basis for the plaintiffs’ concerns are obvious from the rest of the evidence. In an affidavit Mr. Rivet swore on January 16, 2019 he deposes that he was prepared to provide the plaintiffs’ counsel with a “comfort letter” in the following terms:

I, Lionel Rivet, hereby undertake not to transfer, mortgage or otherwise encumber title to the subject property pending the disposition of the within matter, save and except a second mortgage in the principal amount not to exceed $60,000. [Emphasis added]

[16] Mr. Rivet goes on to depose that the purpose of the second mortgage is to finance “basic activities” pending the receipt of his old age security in June 2019.

[17] In light of Mr. Rivet’s earlier affidavit evidence that he wanted to apply for a second mortgage, it is not surprising that Ms. Williams did not feel compelled to spell out the source of the plaintiffs' concerns. Those concerns could only have been heightened when, on February 22, 2019 Mr. Rivet wrote to plaintiffs' counsel via email to advise him that he was withdrawing the offer to provide a comfort letter.

[18] For these reasons, I am not persuaded that the plaintiffs have failed to make full and fair disclosure.

Issue 2: Is the property sufficiently unique to justify issuing a CPL?

[19] For a long time, the common law presumed that every piece of real property was unique and, therefore, that an order for specific performance was always available as a remedy in a failed real estate transaction. That presumption was effectively done away with by the Supreme Court of Canada in Semelhago v. Paramadevan, [1996] 2 S.C.R. 415. In Semelhago, Sopinka J. wrote for the majority (at paras. 20-22):

While at one time the common law regarded every piece of real estate to be unique, with the progress of modern real estate development this is no longer the case.

It cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases.

Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available.

[20] Nonetheless, specific performance is still available as a remedy in action regarding a failed real estate transaction. In order to obtain specific performance, the plaintiff must establish that the property in question has a quality which makes it particularly suitable for the purpose for which it was intended and that that quality cannot be readily duplicated elsewhere: John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 63 O.R. (3d) 304 (Ont. C.A.), at para. 39.

[21] In support of the plaintiffs’ second request for a CPL, Mr. Carr swore an affidavit in which he set out a number of reasons why he and his wife felt that the property was unique and why they wanted to buy it. These included:

(a) “easy vehicular access via a municipally maintained road”, as opposed to a private road they would have to pay to maintain; (b) a UV (ultraviolet) water purification system; (c) electrical service to the shed, which they hoped to turn into additional sleeping quarters; (d) the reputation of Talon Lake, including its reputation for having clean water; and (e) the nature of the waterfront on the property, including the fact that there were no weeds, reeds or other dense aquatic vegetation.

[22] In response, Mr. Rivet has sworn an affidavit in which he deposes that the plaintiffs “have been seriously mislead” about the factors listed above. He says that the last 1.5 km of the road to the property must be maintained by the property owner at substantial expense, that the water quality of Talon Lake is poor and suffers regularly from the presence of blue-green algae that cannot be neutralized by the UV filtration system, that the waterfront is filled with weeds, reeds and other dense aquatic vegetation, and that there is no electrical service to the shed.

[23] In my view, none of these things, alone or collectively, is sufficient to deprive the property of the type of uniqueness necessary to warrant an order for specific performance. My reasons are both general and specific.

[24] Generally, I agree with the statement made by the plaintiffs’ lawyer in one of the messages he wrote to Mr. Rivet which was introduced into evidence. Most waterfront properties are, by their nature, unique from one another. The exposure of every property is, to some extent at least, unique. So, too, is the waterfront, the lake bottom, the vegetation and the topography. Waterfront properties are not like the kind of cookie-cutter real estate development that Sopinka J. obviously had in mind when he wrote in Semelhago, at para. 20:

Residential, business and industrial properties are all mass produced much in the same way as other consumer products. If a deal falls through for one property, another is frequently, though not always, readily available.

[25] More specifically, I am persuaded that the property in question is unique to the plaintiffs, in particular. As Lax J. recognized at the trial level in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 56 O.R. (3d) 341, there is both a subjective and an objective aspect to uniqueness. She wrote (at paras. 59 - 60):

While it is difficult to be precise about this, it strikes me that normally, the subjective aspect will be less significant in commercial transactions and more significant in residential purchases, unless the motivation in the latter case is principally to earn profit. In terms of the subjective aspect, the court should examine this from the point of view of the plaintiff at the time of contracting. In some cases, there may be a single feature of the property that is significant, but where there are a number of factors, the property should be viewed as a whole. The court will determine objectively whether the plaintiff has demonstrated that the property has characteristics that make an award of damages inadequate for that particular plaintiff. Obviously, investment properties are candidates for damages and not specific performance.

It is important to keep in mind that uniqueness does not mean singularity. It means that the property has a quality (or qualities) that makes it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere. To put this another way, the plaintiff must show that the property has distinctive features that make an award of damages inadequate. The plaintiff need not show that the property is incomparable. [Citations omitted.]

[26] The plaintiffs live in London, Ontario. As Mr. Carr deposed, they wanted to buy the property to use as a family cottage. They have no intention of turning any profit from it. The property was attractive to them, in part, because it is relatively close to friends and family they have in the area. Regardless of the problems Mr. Rivet deposes are associated with the property, it is still located on Talon Lake, which the plaintiffs say is a smaller, calmer lake which is less intimidating and more manageable for them to venture out on. Mr. Carr deposes that the proximity of the property to neighbouring properties is “just right” for them, not too close and not too far. The building is on pillars, a fact which they value because it alleviates concerns about foundation and water problems. Finally, although not exhaustively, the property has the “look and feel” that they were searching for in a cottage.

[27] In my view, notwithstanding the problems with the property alleged by Mr. Rivet, it remains sufficiently unique to form the basis of a claim for specific performance, in the sense that it could not be readily duplicated elsewhere.

Issue 3: Should the CPL be discharged because the plaintiffs have claimed damages as an alternative to specific performance?

[28] Section 103(6)(a)(i) of the Courts of Justice Act provides that the court may make an order discharging a CPL where the party as whose instance it was issued claims a sum of money in place of or as an alternative to the interest in the land claimed.

[29] Mr. Rivet argues that the CPL in this case should be discharged because the plaintiffs have claimed damages as an alternative remedy in their statement of claim. However, s. 103 is permissive. It does not require that the CPL discharge were damages also claimed. As Craig J. wrote with respect to the predecessor to s. 103 in Holden Corp. v. Gingerfield Properties Ltd. et al (1987), 59 O.R. (2d) 304 (Ont. H.C.) (at p. 304):

In my view s. 116(6)(a)(i) of the Courts of Justice Act, 1984 should not be interpreted to mean that just because there is an alternative claim to damages the court should discharge the certificate routinely. It is usual that damages are claimed as an alternative to specific performance.

[30] In my opinion, given the uniqueness of the property to which I have referred, there is a risk that damages will not be an adequate remedy or will be difficult to calculate. The alternative claim for damages, therefore, should not be allowed to trump the plaintiffs' claim for specific performance at this stage, which claim may be impossible to maintain if the CPL is discharged.

CONCLUSION

[31] For the foregoing reasons, the motion to discharge the CPL is dismissed.

COSTS

[32] If the parties are unable to agree on costs, written submissions may be made, limited to five typewritten pages, excluding attachments, as follows:

(1) By the plaintiffs, within 20 days of the release of these reasons; and (2) By the defendant, within 10 days of the receipt of the plaintiffs' submissions.

[33] The defendants to the counterclaim, Brian Purvis Graham and 2306024 Ontario Ltd., took no position on the motion. In my view, therefore, they are neither entitled to receive nor exposed to paying costs.

Ellies J.

Released: March 12, 2019

[^1]: This may be a typographic error. The listing agreement states that it was listed beginning on July 5, 2018.