Court File and Parties

COURT FILE NO.: CV-17-430-00 DATE: 20190722 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: TASHFEEN MALIK, Plaintiff AND: AMAL ATTIA, MOHAMED AMR ABDELRAOUF, RE/MAX PERFORMANCE REALTY INC. and JOHN DOE CORPORATION, Defendants

BEFORE: Justice Irving André

COUNSEL: H. Dhaliwal, for the Plaintiff S. Rosen, for the Defendants

HEARD: April 10, 2019, at Brampton

Endorsement

[1] The plaintiff brings a motion for a partial summary judgment against the defendants on the ground that they breached two Agreements of Purchase and Sale for two properties. Alternatively, the plaintiff seeks an adjournment of its motion and the setting of a date for a summary trial. The defendants oppose the plaintiff’s motion and submit that the court should make an initial finding, before setting a trial date in this matter, that the plaintiff repudiated the Agreements and thereby breached their contract.

Background Facts

[2] The transaction involved the sale of two adjacent properties in Mississauga, at 4240 Cawthra Road and 4246 Cawthra Road, by the plaintiff who had purchased both properties in a single transaction in 2013.

[3] On August 19, 2016, the plaintiff listed both properties for sale. In September 2016, the defendant Attia contacted the plaintiff about the properties.

[4] The defendant Attia then made two offers to purchase the properties on October 6, 2016.

[5] On October 7, 2016, the defendant Attia, acting in trust for a company to be incorporated, entered into two Agreements of Purchase and Sale with identical terms. The Agreements provided for:

(a) a purchase price of $725,000 for each property; (b) a $50,000 deposit; (c) a closing date of December 6, 2016; and (d) no mortgage financing.

[6] Mr. Attia’s $100,000 deposit is being held in trust by the defendant brokerage.

[7] On or about December 7, 2016, counsel for the plaintiff sent the closing documents for both properties to Mr. Attia’s counsel. On December 8, 2016, the parties agreed to extend the closing date to December 9, 2016.

[8] On December 9, 2016, the defendant Attia failed to close the transaction because he had not received the financing he had applied for.

[9] On December 20, 2016, the parties executed two mirroring amendments to the two Agreements of Purchase and Sale respecting the two properties. The amendments changed the closing date to January 10, 2017, and added the name “Amr Abdelraouf” as a buyer.

[10] On January 6, 2017, counsel for the defendants requested a further extension of the closing date to January 26, 2017. The plaintiff refused the request.

[11] On January 10, 2017, the plaintiff appeared ready, willing and able to close the transactions. The defendants did not pay the full amount owing under the Agreements. On January 11, 2017, counsel for the plaintiff formally advised his counterpart of the breach of the agreements. The plaintiff subsequently relisted the properties for sale at reduced prices.

Position of the Plaintiff

[12] The plaintiff submits that the defendants breached the Agreements of Purchase and Sale when they failed to pay for the properties on January 10, 2017. As a result of this failure, the plaintiff has no legal obligation to return the deposits paid to her by the defendants.

Defendants’ Position

[13] The plaintiff invalidated the contract through her response to the requisition letters sent to her counsel for each property.

[14] Paragraph 15 of the Agreements of Purchase and Sale signed by the plaintiff and the defendant Attia provide that:

This Agreement shall be effective to create an interest in the property only if Seller complies with the subdivision control provisions of the Planning Act by completion and Seller covenants to proceed diligently at Seller’s expense to obtain necessary consent by completion.

[15] Paragraph 5 of the Statutory Declaration signed by the plaintiff in response to the requisition letters sent by the defendants indicates that:

I do retain the fee or the equity of redemption in, or a power or right to grant, assign or exercise a power of appointment with respect to any land abutting the lands being conveyed in the subject transaction.

[16] The defendants submit that paragraph 5 is fatal to the Agreements of Purchase and Sale for the following reason: It did not comply with the relevant provisions of the Planning Act, R.S.O. 1990, c. P. 13, because the Act clearly stipulates that if the seller owns two parcels of land which are being sold together, then the seller is not subdividing the land with municipal approval. The plaintiff did not comply with the Planning Act because she declared in her Statutory Declaration that she retained the fee in the abutting land.

[17] The defendants submit that by retaining the fee in the abutting land, the plaintiff’s tender was defective and the Agreements of Purchase and Sale were invalid. They contend that they could not have taken title to the two subject properties where the seller had sworn under oath that they retained the fee in the abutting land. By doing so, the plaintiff effectively repudiated the Agreement of Purchase and Sale.

Governing Principles

[18] Section 50(3) of the Planning Act provides that:

No person shall convey land by way of a deed or transfer, or grant, assign or exercise a power of appointment with respect to land, or mortgage or charge land, or enter into an agreement of sale and purchase of land or enter into any agreement that has the effect of granting the use of or right in land directly or by entitlement to renewal for a period of twenty-one years or more unless,

(b) the grantor by deed or transfer, the person granting, assigning or exercising a power of appointment, the mortgagor or chargor, the vendor under an agreement of purchase and sale or the grantor of a use of or right in land, as the case may be, does not retain the fee or the equity of redemption in, or a power or right to grant, assign or exercise a power of appointment in respect of, any land abutting the land that is being conveyed or otherwise dealt with other than land that is the whole of one or more lots or blocks within one or more registered plans of subdivision.

[19] In Pierotti v. Lansink (1978), 25 O.R. (2d) 656 (County Ct.), at p. 658, aff’d (1979), 25 O.R. (2d) 656 at 600 (C.A.), the court noted that:

The overriding purpose of subdivision control is to curb the indiscriminate carving up of land into subdivisions to ensure orderly development and to enable the municipalities to safeguard themselves against the high cost of providing municipal services. In short, the legislation was and is intended to enable the municipalities of Ontario to control and regulate the division of land into individual building lots.

[20] Section 50(21) of the Planning Act states that:

An agreement, conveyance, mortgage or charge made, or a power of appointment granted, assigned or exercised in contravention of this section or a predecessor thereof does not create or convey any interest in land, but this section does not affect an agreement entered into subject to the express condition contained therein that such agreement is to be effective only if the provisions of this section are complied with.

[21] In Morgan Trust Co. of Canada v. Falloncrest Financial Corp., (2006) 218 O.A.C. 71 (C.A.), at para. 20, the court stated that s. 50(21) of the Planning Act will save a contravening agreement where the agreement entered into is subject to an express condition that provides that the agreement is to be effective only if the provisions of s. 50 are complied with.

Analysis

[22] This motion is, in many respects, a tale of the sale of two abutting pieces of land. It raises the following question:

Did paragraph 5 of the Statutory Declaration signed by the plaintiff invalidate the two Agreements of Purchase and Sale for contravening the Planning Act?

[23] In answering this question, recourse must be had to the undisputed facts in this matter. They are as follows:

(1) The two adjoining parcels of land were merged and owned by the plaintiff, who had purchased both of them from the owner in 2013. (2) The MLS listings for the subject properties indicated that “4240 and 4246 Cawthra Rd. Merged Together, Vendor Wants Both Lots to Be Sold together.” (3) The plaintiff did not own any other land where the two subject properties were located. (4) The defendant Attia prepared two identical offers in the form of two Agreements of Purchase and Sale for the two properties. (5) The Agreements provided for a closing date of December 8, 2016. (6) The original closing date was extended on consent to January 10, 2017. (7) The defendant never questioned the validity of the Statutory Declaration signed by the plaintiff on December 6, 2016.

[24] In my view, the clear intent of the parties was to treat the two parcels of land owned by the plaintiff as having been merged and capable of being sold simultaneously. The offers presented by the defendants indicate an intention by the defendants to purchase both properties together. It is clear that both parties regarded the sale and purchase of the properties as a single transaction.

[25] In the circumstances of this case, I adopt the following statement of Callaghan J. in Baker v. Nero (1979), 23 O.R. (2d) 646 (H.J.), concerning s. 29(5a) of the Planning Act, R.S.O. 1970, c. 349, the section which preceded s. 50(3) of the Act:

The Planning Act is deemed to be a remedial statute. It falls to be interpreted in the light of the so-called "golden rule" set forth in s. 10 of the Interpretation Act, R.S.O. 1970, c. 225. The construction to be placed on the words of s. 29(5a) is large and liberal and that which will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit: Reference re Certain Titles to Land in Ontario, [1973] 2 O.R. 613 at p. 624, 35 D.L.R. (3d) 10 at p. 21. The object of the Planning Act is the prevention of the unrestricted subdivision of land. In order to determine whether or not a transaction falls within the purview of the statute, consideration must be directed to the substance of the transaction rather than to its form. In the instant case it is clear that while two deeds were used to effect the conveyance, the transaction related to a single building for a single purchase price to a single purchaser. It represented the complete holding of the then vendor. On its face, s. 29(5a) would appear to prevent the completion of two transactions at the same time although it is not, in my view, within the mischief contemplated by the Act to prohibit a sale by two conveyances to the same person of a single residential building. While the conveyance of abutting land to various and diverse purchasers is within the purview of the s-s. (5a), the conveyance of a single building which occupies two lots by separate deeds consecutively registered to a single purchaser for a unit price is not within the scope of the legislation as it in fact constitutes in substance a single transaction effecting no severance of land.

[26] See also 1390957 Ontario Ltd. v. Acchione (2000), 51 O.R. (3d) 635 (S.C.), at para. 18, rev’d (2002), 57 O.R. (3d) 578 (C.A.).

[27] I also adopt the observation of Gray J. in Consortium Capital Projects Inc. v. Blind River Veneer Ltd. (1988), 63 O.R. (2d) 761 (H.J.), at p. 2, aff’d (1990), 72 O.R. (2d) 701 (C.A.), that “the provisions of the Planning Act were never intended to apply to an error or mistake made between the executing parties”. Gray J. also noted the following general principle set forth in Edmund Henry Turner Snell at al., Snell’s Principles of Equity, 28th ed. (London: Sweet & Maxwell,1982), at p. 610, with approval:

If by mistake a written instrument does not accord with the true agreement between the parties, equity has power to reform, or rectify, that instrument so as to make if accord with the true agreement. What is rectified is not a mistake in the transaction itself, but a mistake in the way in which that transaction has been expressed in writing. “Courts of Equity do not rectify contract; they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts.

[28] These comments, in my view, are apropos in this matter.

[29] For the above reasons, I find that the plaintiff did not breach the Agreements of Purchase and Sale on December 8, 2016, when she presented a statutory declaration to the defendants. The breach of the Agreements occurred on January 10, 2017, when the defendants failed to pay the full amount owing under the Agreements.

[30] I therefore conclude that in this case, there is no genuine issue regarding the breach of contract between the plaintiff and the defendants which require a trial. However, absent an agreement between the parties, a trial is required regarding a) the deposit paid by the defendants to the plaintiff (rule 20.04(4)) and b) damages pursuant to rule 20.04(3).

Disposition

[31] Counsel for the defendants submit that even if I rule in favour of the plaintiff, I should decline to make a decision to the effect that the defendants breached the contract on January 10, 2017, and I should simply set the matter down for trial. He relies on the case of Baywood Homes Partnership v. Haditagi, 2014 ONCA 450, 120 O.R. (3d) 438, for the proposition that partial summary judgment should rarely be granted.

[32] In Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6, at para. 9, Strathy C.J.O. noted the following:

In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, this court cautioned against partial summary judgment where it is possible that the trial judge “will develop a fuller appreciation of the relationships and the transactional context than the motions judge” which could risk “inconsistent findings and substantive injustice” para. 37; see also Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, and Mason v. Perras Mongenais, 2018 ONCA 978. The respondent did not argue that if we disagreed with how the motion judge dealt with the pleading point we should preserve specific other parts of her decision.

[33] In my view, the possibility of a trial judge developing a “fuller appreciation of the relationship and the transactional context than the motions judge” in this matter is either minimal or non-existent. The facts in this matter are not in dispute. The only issue is whether paragraph 5 of the plaintiff’s Statutory Declaration resulted in a breach of the Agreements of Purchase and Sale. In my view, it does not. To that extent, the plaintiff did not breach the agreements.

[34] This is one of the rare cases contemplated by Baywood Homes where, given my ruling in this motion, this matter will be set down for a trial dealing with the issue of damages and forfeiture of the deposit paid to the plaintiff by the defendants.

Costs

[35] There will be no award of costs.

André J. Date: July 22, 2019