COURT FILE NO.: CV-19-00457-00 DATE: 2021-10-22 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
384130 ONTARIO LIMITED Michael McCluskey, for 384130 Ontario Limited Applicant
- and -
520611 ONTARIO LIMITED David Thompson, for 520611 Ontario Limited Respondent
HEARD: September 27, 2021, By video-conference at Guelph, Ontario Price J.
Reasons For Judgment
NATURE OF PROCEEDING
[1] Richard Carrer is the principal of 520611 Ontario Limited, which owns a property at 79 Waterloo Avenue in Guelph, Ontario (“the property”). Mr. Carrer operated a service station on the property until 2003, when he entered into an agreement to sell the property to 384130 Ontario Limited (“the agreement”).
[2] David White is the principal of 384130 Ontario Limited. Since 2003, when he entered into the agreement with Mr. Carrer, Mr. White has operated an auto repair business on the property.
[3] Mr. Carrer and Mr. White acted throughout as agents of their respective companies. For simplicity, I will refer to them and their companies as Mr. Carrer and Mr. White, respectively.
[4] Mr. White applies to the Court for a declaration that the agreement the parties entered into 18 years ago is still valid and enforceable, and that Mr. Carrer may not sell the property to anyone else without his consent. Additionally, he applies for an Order for specific performance of the agreement or, in the alternative, damages.
[5] The agreement contains no expiry date. Since signing it in 2003, Mr. White has paid monthly rent to Mr. Carrer, as provided for in the agreement, pending the completion of an environmental remediation which the agreement requires Mr. Carrer to perform.
[6] Mr. Carrer says that when the parties entered into the agreement, they believed that the remediation would cost approximately $40,000.00 and that, in fact, the remediation has already cost him more than three times that amount. He submits that his performance of the agreement should be considered to have been frustrated and the agreement thereby rendered invalid and unenforceable. He says that he told Mr. White several times that he could not afford to continue paying for the remediation and that “the deal was dead”. However, he never gave Mr. White written notice that the agreement was terminated, and did not refund $15,000.00 that Mr. White paid him to conduct the remediation, and which the agreement required him to refund if either party terminated the agreement.
BACKGROUND FACTS
Background of the agreement
[7] Mr. Carrer has owned the property since 1985. In 1999, there was a fire at the property, which resulted in a Phase 1 and 2 environmental assessment being completed by AMEC Earth and Environmental Limited (“AMEC”).
[8] On August 30, 2002, AMEC completed a supplementary Phase 2 Audit report. By that time, Mr. Carrer’s business was struggling, and had accrued significant tax arrears. As a result, Mr. Carrer decided to sell the property to Mr. White.
The Agreement
[9] In January 2003, Mr. Carrer signed an agreement to sell the property to Mr. White for $415,000.00. Pursuant to the agreement, Mr. White paid Mr. Carrer a $1,000.00 deposit and an additional $30,000.00 to enable Mr. Carrer to carry out the environmental Phase 2 Audit and remediate the environmental contamination, as the agreement required.
[10] The agreement provided that if the Phase 2 Audit disclosed that the cost of the remediation would exceed $40,000.00, Mr. White could terminate the agreement. In that event, Mr. Carrer would be required to refund half of the $30,000.00 that Mr. White had paid to him.
[11] The agreement further provided that, pending completion of the environmental remediation, Mr. White would occupy the property as a tenant, pay rent of $3,500.00 per month to Mr. Carrer, and pay the utilities. It is not disputed that Mr. White has made all the monthly payments required by the agreement.
[12] Upon signing the agreement, Mr. Carrer hired an environmental company, Bioforj Ontario Ltd. (“Bioforj”), to remediate the environmental contamination of the Property. Instead of instructing Bioforj to conduct a Phase 2 Audit, as the agreement required, Mr. Carrer allowed Bioforj to use AMEC’s supplementary Phase 2 Audit report, completed five weeks before the parties signed the agreement. Based on the AMEC report, Bioforj estimated that the remediation would cost $30,000.00.
The amendment of the Agreement
[13] On February 10, 2003, the parties signed an amendment of the agreement, deleting the term allowing Mr. White to terminate the agreement if the Phase 2 Audit disclosed that the cost of the remediation would exceed $40,000.00, and adding a term requiring Mr. Carrer, immediately upon final acceptance of the agreement, and before closing, to take all such remedial actions as the Phase 2 Audit recommended, at his own expense, to the satisfaction of the Ministry of the Environment (“the Ministry”).
Mr. White’s third-party peer review of the remediation
[14] After the parties signed the amended agreement, Mr. White learned that the contamination was more widespread than the parties had originally believed. The bank that gave Mr. White the financing he needed to buy the property required a peer review by a third party of the remediation, in conjunction with the “sign-off” by the Ministry. For this purpose, Mr. White hired a company, “Frontline”, as the peer review contractor.
[15] When Frontline reviewed Bioforj’s remediation work, it learned that a new Phase 2 Audit had not been conducted, as the agreement required, and that Bioforj had instead relied on the supplementary Phase 2 Audit that AMEC had done five weeks before the agreement was signed. The Frontline report dated March 24, 2003, noted that the contamination was more extensive than AMEC had suggested. Frontline’s report stated:
We anticipated that further drilling and testing would have been completed before remediation, including the off-site municipal boulevard along Waterloo Street. This work would better define the extent of soil and ground water contamination as well as the ground water flow direction. This has not been done. The contractor has already acknowledged that soil contamination is broader than what was originally thought.
[Emphasis added]
The parties’ conduct as the cost of remediation escalated
[16] Neither Bioforj nor Mr. Carrer gave Mr. White the reports that Bioforj was sending to Mr. Carrer concerning its remediation of the contamination, although Mr. White had requested the reports.
[17] For 18 years, Mr. White has operated an auto repair business, known as College Auto Tech, on the property, and paid the monthly rent to Mr. Carrer that is required by the agreement. According to the agreement, Mr. White’s tenancy can only be terminated “on the earlier of the closing or termination of [the agreement]”.
[18] On March 4, 2004, Mr. Carrer sent an email to Mr. White informing him that the cost of the environmental remediation had exceeded the $40,000.00 contemplated in the original agreement. On March 4 and 11, 2004, he told Mr. White that he was concerned the agreement might expire.
[19] Mr. White gave no indication to Mr. Carrer that he was terminating the agreement. Although the agreement entitled him to terminate the agreement if the Phase 2 Audit indicated that the cost of remediation would exceed $40,000.00, Mr. White continued making his monthly rent payments to Mr. Carrer. The payments eventually amounted, cumulatively, to over $757,000.00.
[20] The agreement provided that if either party terminated the agreement, Mr. Carrer would repay to Mr. White half of the $30,000.00 that Mr. White had paid to him for the remediation of the property. It further provided that if the agreement was terminated, the utilities, which had been in Mr. White’s name since the agreement was signed, would be transferred back into the name of Mr. Carrer. Mr. Carrer never refunded the $15,000.00 to Mr. White and the utilities remained in Mr. White’s name.
[21] In the 18 years since the parties signed the amended agreement, Mr. Carrer has not obtained a Phase 2 Environmental Audit or completed the remediation of the contamination, although he says he has spent roughly $126,325.00 to that end.
[22] Bioforj sent Mr. Carrer 12 reports regarding the remediation from December 12, 2003, to September 16, 2019, but neither Bioforj nor Mr. Carrer sent any of the reports to Mr. White. They also did not send the reports to the Ministry, nor seek the Ministry’s approval of the remediation, as the agreement required. Mr. Carrer confirmed, at questions 303 to 306 of his cross-examination, that the Ministry was not responsible for the delay in the remediation.
[23] When the parties entered into the agreement, Mr. Carrer owed municipal property tax arrears of approximately $41,349.62. Those arrears climbed to $197,843.82 by November 2011. Mr. Carrer states that since January 2003, he has paid $454,848.06 in an effort to bring the taxes into good standing.
[24] Mr. Carrer asserts that in July 2016, he approached Mr. White, and told him that he could not afford to continue advancing funds toward the remediation and that the “deal was dead.” He relies on this conversation in support of his argument that the agreement is no longer valid or enforceable. Mr. White disputes that the conversation ever occurred.
[25] On August 18, 2017, Mr. White sent an email to Mr. Carrer. He stated:
I spoke with Bioforj/Bob when he dropped by several months ago and he doesn’t seem to be doing anything to finish your project. He seemed to think it was close to completion, but would not share any information with me. I would not pave over the area of contamination until the clean up is finished.
Mr. Carrer’s attempt to sell the property to another party
[26] Mr. Carrer hired a lawyer, Zijiad Saskin, to ensure that the agreement was null and void so that he could enter an agreement to sell the property to a new buyer for almost twice the amount, namely, $800,000.00. Mr. Saskin gave Mr. Carrer what appeared to be a Court Order dated July 25, 2019, voiding the agreement.
[27] In August 2019, Mr. White learned from a lawyer for Rykur Holdings Inc. (“Rykur”) that Mr. Carrer had signed an agreement to sell the property to Rykur. On September 17, 2019, Mr. Carrer advised Mr. White that their agreement was “null and void and unenforceable,” and relied on the “Order” that Mr. Saskin had given him to support his position.
[28] Mr. White has proven, and it is now not disputed, that the Order that Mr. Saskin gave to Mr. Carrer was fabricated. As a result of his misconduct, Mr. Saskin’s license to practice law has since been revoked.
[29] On September 23, 2019, Mr. Carrer advised Mr. White that the closing of his sale to Rykur would be delayed pending the outcome of Mr. White’s application to this Court for directions. On November 22, 2019, Mr. Carrer’s lawyer advised Mr. White’s lawyer that Mr. Carrer was impatient to have the matter resolved and asked Mr. White to begin his application. In December 2019, Mr. Carrer stopped cashing Mr. White’s monthly rent cheques.
Mr. White’s Application
[30] On March 5, 2020, Mr. White caused an Application to be issued and served on Mr. Carrer. The Application seeks:
a. a declaration that the agreement, as amended, is valid and enforceable, and that Mr. Carrer must comply with its terms; b. a declaration that Mr. White is entitled to buy the property for the stated purchase price of $415,000, less the deposit he has paid, and that Mr. Carrer is not entitled to sell the property to anyone else without Mr. White’s consent; c. an order for specific performance requiring Mr. Carrer to provide the remediation documentation and to complete the sale of the property to him in accordance with the agreement; d. an injunction preventing Mr. Carrer from selling, transferring, or encumbering the property to anyone else; or e. In the alternative, damages of an unspecified amount.
ISSUES
[31] The issues raised by the Application are:
a. Is the Agreement, as amended, valid and enforceable? b. Is Mr. White entitled to specific performance of the agreement, or are damages an adequate remedy? c. If damages are appropriate, has Mr. White mitigated his damages?
[32] I will address each of these issues in turn.
a. Is the agreement, as amended, valid and enforceable?
[33] For the reasons that follow, I find that the agreement, as amended, is valid and enforceable.
i. There is no true condition precedent that prevents the rights and obligations in the agreement from arising
[34] Mr. Carrer submits that the agreement contains no closing date, and argues that because his obligation to close the transaction does not arise until the Ministry approves the remediation of the property, and Ministry approval is uncertain and depends on the will of a third party over whom he has no control, it is a true condition precedent which, in law, renders the agreement unenforceable.
[35] Mr. White submits that a closing date is not an essential term of an Agreement of Purchase and Sale, provided the agreement contains a mechanism for closing. He argues that the agreement contains a mechanism for closing, and that that Ministry approval is not uncertain or beyond Mr. Carrer’s control but, rather, depends on Mr. Carrer obtaining a Phase 2 Environmental Audit, and submitting the Audit report to the Ministry for approval, which the agreement requires him to do. Mr. White submits that Mr. Carrer cannot rely on his failure to comply with his own obligations to argue that the agreement is unenforceable.
[36] If a true condition precedent is not satisfied by the completion date of a contract, rights of the party that depend on satisfying the condition do not arise. In that event, the contract is void. See Turney v. Zhilka, [1959] S.C.R. 578.
[37] In the present case, Ministry approval was not a true condition precedent. A true condition precedent occurs where a) the rights and obligations of the contracting parties under the contract depend b) on a future uncertain event, c) the happening of which is beyond the control of the parties and depends entirely on the will of a third party. Until the event occurs, there is no right to performance on either side. See: Coghlan v. Unique Real Estate Holdings Inc, 2016 ONSC 6420, 128 O.A.C. 373, at para. 19.
[38] Ministry approval in the present case does not depend entirely on the will of a third party. It depends on Mr. Carrer removing the contaminants from the property, obtaining a Phase 2 Environmental Audit confirming that the contaminants have been removed, and submitting the Audit report to the Ministry for a Certificate of Compliance or, under the current legislation, an “Environmental Approval.” Mr. Carrer may not default on his obligations under the agreement and then argue that the issuance of the certificate is beyond his control.
[39] In Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072, at p. 1083 to 1084, the Supreme Court stated that, “in appropriate circumstances, the courts will find an implied promise by one party to take steps to bring about the event constituting the condition precedent” and, in these circumstances, “the vendor is under a duty to act in good faith and to take all reasonable steps to complete the sale”. In the present case, Mr. Carrer’s promise to take the steps necessary to obtain Ministry approval was expressed in the agreement, and Mr. Carrer is required to take those steps in order to complete the sale.
[40] The Environmental Protection Act, R.S.O. 1990, c. E.19 makes it clear that Ministry certification will follow from the filing of a Phase 2 environmental assessment by a qualified person certifying that the applicable standards have been met. It provides:
168.4 (1) An owner of a property may submit for filing in the Registry a record of site condition in respect of the property if all of the following criteria are satisfied : …….
- If a phase two environmental site assessment was conducted for all or part of the property, a qualified person has certified in the record of site condition that ,
i. as of the certification date, the property for which the phase two environmental site assessment was conducted meets,
(a) the applicable full depth background site condition standards prescribed by the regulations for all contaminants prescribed by the regulations ,… except for those contaminants specified by the qualified person,….
and
ii. for each contaminant excepted by the qualified person from the certification under subparagraph i,
(a) a risk assessment was prepared for the contaminant with respect to the property for which the phase two environmental site assessment was conducted,
(b) the Director has accepted the risk assessment under clause 168.5 (1) (a), and
(c) as of the certification date, the property for which the phase two environmental site assessment was conducted meets the standards specified in the risk assessment for the contaminant
Submitting a record of site condition
(3) If a record of site condition is submitted for filing under this section in respect of a property, the Director shall ,
(a) give a notice of receipt to the owner who submitted the record of site condition, once the Director is satisfied that everything required by subsection (2) has been submitted for filing ; ….
[41] In Gulston v. Aldred, 2011 BCCA 147, a case involving a real estate transaction with a condition requiring completion of soil remediation, the British Columbia Court of Appeal determined that the trial judge did not err in finding that the remediation clause was not a condition precedent, because soil remediation did not depend on the unknown will of a third party. Rather, once legislative standards were met, a municipal certificate would be issued. The Court stated, at paragraph 42:
By this, the trial judge notes that the remediation clause was almost entirely dependent on the actions of Ms. Aldred, not the third party . If Ms. Aldred returned the soil to a condition "in compliance with current environmental standards as overseen by the municipal authorities" (see para. [16] above), standards which would have been objectively verifiable, the issuance of the certificate would certainly follow . Having analyzed the substance of the remediation clause in this way, the trial judge went on to conclude that, by this clause, the parties did not intend to create a condition which suspended the performance of the contract until it was fulfilled . Instead it created a warranty .
[42] In the present case, the terms of the agreement set out a mechanism for closing. They require Mr. Carrer to complete a Phase 2 Audit and take the steps the Audit recommends to remediate the contamination of the property. Upon completion of the remediation, Mr. Carrer would be entitled to a certificate of compliance or “environmental approval” from the Ministry. Upon receipt of the approval, Mr. White would notify Mr. Carrer that the transaction would close within 30 days.
[43] In his email dated August 18, 2017, Mr. White informed Mr. Carrer that Bioforj’s representative had told him that the remediation was close to complete. Mr. Carrer confirmed during cross-examination that he did not send any of the Biorforj reports to the Ministry to seek its approval of the remediation, as the agreement required.
[44] Based on this evidence, I find that that Mr. Carrer substantially completed the remediation but failed to submit the Bioforj reports to the Ministry for its approval. If Mr. Carrer had submitted the reports, he could reasonably expect that the Ministry would certify that the remediation met the objective standards set out in the Act. The Ministry’s approval was therefore not a condition precedent that was beyond Mr. Carrer’s control. Mr. Carrer may not default in his obligation to submit the Audit report to the Ministry and then argue that Ministry approval was beyond his control.
[45] Mr. Carrer argues that Mr. White could have waived the requirement for Ministry approval, did not do so, and was therefore partially responsible for the transaction not closing. If neither party does what is necessary to close a transaction, this does not give either one the right to terminate the agreement unilaterally. In 1672370 Ontario Limited v. D. Narducci Holdings Inc., 2010 ONCA 264, the Court of Appeal stated:
[2] As neither party could close, the appellant could not unilaterally terminate as the agreement purported to do in September 2008. The respondent was entitled to fix a new closing date and he did so – October 31, 2008: King v. Urban & Country Transport Ltd. (1973), 1 O.R. (3d) 449 (C.A.).
[46] Given that the environmental approval was not a condition precedent, and that the term of the agreement requiring it was inserted for Mr. White’s benefit, Mr. White is entitled to waive compliance and may seek specific performance of the sale of the property “as is”.
ii. Performance of the agreement was not frustrated by circumstances that render it unenforceable
[47] Mr. Carrer submits that the fact that the $126,000 cost that he has incurred to remediate the property exceeded by more than three times the $40,000.00 the parties had anticipated, frustrated his performance of the agreement and rendered the agreement unenforceable. He relies on the fact that the agreement, as originally drafted, allowed Mr. White to terminate the agreement if the Phase 2 Audit disclosed that the cost to remediate would exceed $40,000.00, and argues that the $40,000.00 cost of remediation was a “cap” that Mr. Carrer was not required to exceed.
[48] Mr. Carrer states at paragraph 13 of his responding affidavit, “Despite Mr. Carrer paying well over $100,000.00 to Bioforj, which greatly exceeded its obligation under [the Agreement] , the Environmental Condition remains unsatisfied as [the Ministry] has not yet approved the remediation work completed on the Property.”
[49] Mr. White disputes that Mr. Carrer’s obligation to remediate was “capped” at $40,000.00 under the agreement, as amended. He submits that a repudiation of a contract on any ground, including frustration, must be communicated unequivocally, which Mr. Carrer did not do. He further submits that Mr. Carrer failed to take the necessary steps to terminate the agreement, as he did not refund the $15,000.00 to Mr. White as the agreement required in the even the agreement was terminated.
[50] I find that the $40,000.00 cost of remediation was not a “cap” that entitled Mr. Carrer to terminate that agreement if that cost was exceeded. I further find that performance of the agreement was not frustrated by the fact that the cost of remediation exceeded that amount.
[51] The test for frustration is whether the circumstances in which the contract was negotiated have changed to such an extent as to render the contract radically different from the one the parties signed: Davis Contractors Ltd. v. Fareham Urban Dist. Council, [1956] A.C. 696 at p. 728-29, [1956] 2 All E.R. 145 (H.L.).
[52] The fact that the obligation has become more expensive to carry out than the parties expected does not render an agreement “radically different” from the one the parties signed. In McDermid v. Food-Vale Stores (1972) Ltd., 1980 ABKB 1076, 25 A.R. 301, Egbert J., of the Alberta Court of Queen’s Bench, reviewed the jurisprudence and concluded:
- Therefore the implied condition theory is no longer applicable but one must examine the contract as a whole and the relevant surrounding circumstances and determine whether the root of the contract has been so radically changed by the intervening event that it would be unjust and unfair to compel the party upon whom the obligation rests to perform that obligation. It matters not that the obligation has become more onerous or expensive to carry out.
[Emphasis added]
[53] The agreement originally contained a term providing that if the Phase 2 Audit that Mr. Carrer was to obtain disclosed that the remediation would cost more than $40,000.00, Mr. White could terminate the Agreement. The agreement did not contain a term permitting Mr. Carrer to terminate the Agreement in those circumstances. Mr. Carrer nevertheless argues that if the cost of remediation exceeded $40,000.00, even by $1.00, the Court should treat the Agreement as no longer valid. I disagree.
[54] The environmental contamination that Bioforj encountered when it undertook its remediation of the property was the same contamination that existed when AMEC issued its supplementary Phase 2 Audit report five weeks before the agreement was signed. Mr. Carrer did not obtain a new Phase 2 Audit as the agreement required. Instead, he relied on the AMEC supplementary audit report which, as the Frontline audit later disclosed, understated the extent of the contamination. The fact that Mr. Carrer elected not to obtain a new audit, as called for in the agreement, and did not discover the extent of the contamination before agreeing to remediate it, does not relieve him of the obligation he assumed to perform the remediation, notwithstanding that performance entailed a greater expense than either party had anticipated.
[55] In Delta Food Processors Ltd v. East Pacific Enterprises Ltd (1979), 1979 BCSC 668, 16 B.C.L.R. 13, at paras. 15, 18-19, the defendant agreed to supply 1200 tons of herring to the plaintiff for processing but supplied only 892 tons, and the plaintiff brought an action for its lost profits on the remainder of the shipment. The defendant asserted that the contract was frustrated by a poor fishing season and the necessity of diverting one vessel’s catch to another processor when that vessel nearly foundered. Ruttan J., of the British Columbia Supreme Court held that the defendant could not avoid liability based on the doctrine of frustration because, while the circumstances had made performance more onerous and expensive, they had not radically altered the nature of the obligation. In so concluding, Ruttan J., at para. 20 of his reasons, cited Lord Radcliffe in Davis Contractors Ltd. v. Fareham Urban Dist. Council, [1956] A.C. 696 at 728-29, [1956] 2 All E.R. 145 (H.L.):
So perhaps it would be simpler to say at the outset that frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract . Non haec in foedera veni . It was not this that I promised to do.
[Emphasis added]
[56] Ruttan J. also relied on the Court of Appeal of England’s decision in Ocean Tramp Tankers Corpn. v. V/O Sovfracht (The Eugenia), [1964] 2 Q.B. 226, [1964] 1 All E.R. 161 (C.A.), in which Lord Denning M.R. followed with approval Lord Radcliffe’s judgment in Davis Contractors Ltd., and continued [p. 239]:
To see if the doctrine applies, you have first to construe the contract and see whether parties have themselves provided for the situation that has arisen. If they have provided for it, the contract must govern. There is no frustration. If they have not provided for it, then you have to compare the new situation with the situation for which they did provide. Then you must see how different it is. The fact that it has become more onerous or more expensive for one party than he thought is not sufficient to bring about a frustration. It must be more than merely more onerous or more expensive. It must be positively unjust to hold the parties bound.
[Emphasis added]
[57] Ruttan J. granted judgment in the amount claimed by the plaintiff, noting that the fish that the defendant had offloaded at the other plant could have been sent to the plaintiff’s plant, although at greater trouble and expense. Ruttan J. noted, at para. 19, “The costs, while greater, were not stated to have been prohibitive.”
[58] In the present case, there was no evidence that the cost to Mr. Carrer of remediating the contamination of the property was prohibitive. Having regard to the purchase price of the property, and the amount of rent that Mr. White paid over the years, it is not commercially unreasonable to require Mr. Carrer to complete the remediation that he undertook to perform.
[59] In First Real Properties Limited v. Biogen Idec Canada Inc, 2013 ONSC 6281, at para. 40, this Court relied on Professor Swan’s Canadian Contract Law, (Toronto: Lexis Nexis, 2006) at 600-601, concluding:
…it is not hardship or inconvenience or material loss itself which calls the principle of frustration into play. There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a different thing from that contracted for.
[Emphasis added]
[60] In the present case, the agreement provides that if the agreement is terminated, Mr. White’s tenancy would come to an end. The tenancy never did come to an end. Mr. Carrer continued to collect Mr. White’s monthly cheques until December 2019, when he entered into the agreement to sell the property to Rudyk for almost twice the amount for which he had agreed to sell it to Mr. White.
[61] Mr. Carrer is an experienced businessman. When he entered into the agreement, he owned 11 commercial buildings in downtown Guelph as well as an apartment building. I infer from these facts that he understands the significance of written contracts and knows that when he terminates such a contract, he must confirm the termination in writing.
[62] If Mr. Carrer had terminated the agreement in 2016, when he claims to have told Mr. White that “the deal is dead”, he should have confirmed the termination in writing, stopped cashing Mr. White’s cheques, and refunded $15,000.00 of the $30,000.00 that Mr. White paid to Mr. Carrer to enable him to conduct the remediation, as the agreement required. He did not do so. Instead, he treated the agreement as continuing, cashing Mr. White’s cheques for another three years, until December 2019. He is estopped, at this point, from claiming that the agreement came to an end earlier because the $40,000.00 cost of remediation that the parties had anticipated had been exceeded.
[63] Mr. Carrer stopped cashing Mr. White’s monthly rent cheques four months after entering into the agreement to sell the property to Ruykur. I find that he stopped cashing the cheques at that time because he realized that continuing to cash Mr. White’s cheques would preclude him from successfully arguing that he had repudiated his agreement with Mr. White.
[64] The intention to repudiate a contract, whether by reason of frustration or otherwise, must be unequivocal. In Wilson v. Graydon Hall Pizza & Catering Ltd. (1994), 1994 ONSC 7535, 11 B.L.R. (2d) 266 (Ont. Gen. Div.), aff’d, [1996] O.J. No. 1661 (Ont. C.A.), the party purchasing a business explained to the party selling that “he could not handle the business and didn’t want any more of it.” The purchasing party, who had taken over the day to day operations of the business pending the closing of the agreement, also stopped paying for various shipments. In that case, the Court held that the notice did not constitute an unequivocal repudiation or demonstrate a clear desire to no longer be bound by the terms of the agreement. Kane J. stated at para. 50:
To constitute repudiation of a contract the conduct of the promisor must show an intention to altogether refuse the performance of the contract and to no longer bound by it. The intimation must be unequivocal …
[emphasis added]
[65] In the present case, Mr. Carrer did not unequivocally repudiate the agreement. On the contrary, he continued to treat the agreement as valid and in force.
iii. Mr. White’s claims are not statutorily barred by the two-year limitation period contained in the Limitations Act, 2000, S.O. 2002, c. 24, Sched. B
[66] Mr. Carrer relies on s. 4 of the Limitations Act, 2000, which provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. Pursuant to s. 5(2) of the Limitations Act, 2000, Mr. White is presumed to have known of the breach on the day the omission on which its claim is based took place, unless the contrary is proved.
[67] Mr. Carrer submits that if, as Mr. White states, Mr. Carrer defaulted on a “promissory condition” in 2017, which he denies, Mr. White was out of time to make such a claim on August 6, 2020, when he commenced his Application. Mr. Carrer submits that the alleged breach was discoverable by Mr. White more than two years before he commenced the Application. He argues that this is evidenced by Mr. White’s email to him dated August 18, 2017, attached as exhibit P to Mr. Carrer’s affidavit sworn April 23, 2021, in which Mr. White stated: “ I spoke with Bioforj/Bob when he dropped by several months ago and he doesn’t seem to be doing anything to finish your project…”
[68] The interpretation Mr. Carrer seeks to give to Mr. White’s e-mail, as reflecting a belief that Mr. Carrer had abandoned his commitment to remediate, is belied by the remainder of the e-mail, in which Mr. White continues, “He seemed to think it was close to completion, but would not share any information with me. I would not pave over the area of contamination until the clean up is finished.”
[69] I find that Mr. White’s statement was simply a complaint concerning delay, and concerning Bioforj’s failure to share reports of its progress with Mr. White, and an encouragement to Mr. Carrer to get Bioforj to complete its work and to send him its reports. The e-mail did not evince a belief by Mr. White that Mr. Carrer had permanently abandoned the remediation or that he intended not to be bound by the agreement. On the contrary, it demonstrates Mr. White’s belief that the project was near completion.
iv. Mr. White’s failure for 18 years to object to the fact that the agreement had not closed does not give rise to the equitable doctrine of laches or prevent him from requiring Mr. Carrer to comply with the agreement
[70] Mr. Carrer relies on the equitable doctrine of laches. He argues that the two decisions Mr. White relies on, in which agreements were enforced that did not contain closing dates, are distinguishable on the ground that in each of those cases, the applicant sought relief within a reasonable period of time after the agreement was signed.
[71] Mr. Carrer notes that in Roppo v. Avvro Developments Inc, 2006 ONSC 6586, 16 B.L.R. (4th) 321, the application was commenced in 2006, three years after February 27, 2003, when the Agreement of Purchase and Sale was signed. In Rolling Meadows v. 2560262 Ontario Inc., 2018 ONSC 5063, the application was commenced in 2018, a year after February 7, 2017, when the Agreement of Purchase and Sale was signed. Mr. Carrer argues that Mr. White’s failure to apply within two years after becoming aware that the remediation was not being performed gives rise to the equitable doctrine of laches.
[72] Mr. White admitted on cross-examination that apart from a single meeting in 2016, he never approached Mr. Carrer expressing a desire to close the Agreement. He stated, “Yeah. I don’t see how it’s my concern of what happens in clean up. My agreement says when it’s clean, I can finally stop paying rent and I can give him his money and get on with it.”
[73] In Manitoba Métis Federation Inc. v. Canada (Attorney General), [2013] 1 S.C.R. 623 (S.C.C.), at paras. 145-46, the Supreme Court summarized the doctrine of laches as follows:
The equitable doctrine of laches requires a claimant in equity to prosecute his claim without undue delay. It does not fix a specific limit, but considers the circumstances of each case. In determining whether there has been delay amounting to laches, the main considerations are (1) acquiescence on the claimant’s part; and (2) any change of position that has occurred on the defendant’s part that arose from reasonable reliance on the claimant’s acceptance of the status quo.
[74] Given that Mr. Carrer acknowledges that he never gave Mr. White Bioforj’s reports, which Mr. White had requested, he cannot now reasonably assert that Mr. White acquiesced in an abandonment of the remediation by Mr. Carrer. Mr. Carrer never unequivocally refused to continue remediating the contamination or notify Mr. White that he repudiated the agreement until after he entered into an agreement to sell the property to Ruyker. I therefore find that Mr. White did not acquiesce in such a refusal or repudiation.
b. Is Mr. White entitled to specific performance?
[75] Mr. Carrer submits that Mr. White has failed to prove that the property was unique and that damages would not be an adequate remedy. He argues that Mr. White has not proved that another property would not be an adequate substitute for the one Mr. Carrer agreed to sell.
[76] Mr. White argues that the features of the property, which render it ideal for operating an auto repair business, and the fact that he has operated such a business on the property for 18 years make it unique.
[77] The onus is on Mr. White to satisfy the test for specific performance. In Semelhago v. Paramadevan, [1996] 2 S.C.R. 415, Sopinka J. states, at para. 22, that this requires the plaintiff to demonstrate that the land is unique in the sense that its substitute would not be readily available and that monetary damages would not be an adequate remedy.
[78] This Court in Smith v. Vankoughnet and Rasmussen, 2017 ONSC 4293, at paras. 49-53, re-stated the principals applicable to a claim for specific performance:
To determine whether or not damages are an adequate remedy, the court will have to assess if the property in question is “unique”.
Once again, the court in Erie Sand stated that “Land is unique if there is no readily available substitute property.”
[79] In applying this test, the Court must consider three factors, namely:
a. The nature of the property; b. The inadequacy of damages; and c. The behaviour of the parties.
See: Lucas et al v. 1858793 Ontario Inc, 2020 ONSC 964 at para. 57; appeal dismissed, Lucas v. 1858793 Ontario Inc (Howard Park), 2021 ONCA 52.
[80] Mr. White has produced evidence of the unique features of the property that make it ideally suited for operating an auto repair business. The survey and photographs disclose features, such as a double corner-lot, with double access and parking area that Mr. White could not readily duplicate elsewhere. More importantly, I infer from the fact that Mr. White has operated an auto repair business on the property for the past 18 years that he has developed goodwill toward the business associated with its location.
[81] it would be impossible for the economic loss that Mr. White would sustain by relocating his business. In particular, the Court would be unable to quantify the goodwill that Mr. White has acquired and that he would lose, to a significant extent, by re-locating.
[82] Mr. Carrer submits that by claiming damages as an alternative remedy, Mr. White implies that damages would be sufficient, and that the Court should conclude from this that specific performance is not available as an appropriate remedy. I disagree. Mr. White’s claim for damages as an alternative remedy does not prevent it from seeking specific performance in the first instance.
[83] The Court cannot award damages in this Application pursuant to Rule 14.05(3). Rule 14.05(3) is designed to address disputes where the material facts are not in dispute. In the present case, the material facts, especially as to the extent of contamination and the cost of remediation, are in dispute, and damages are therefore not available. See: TMJ Hygiene Service Corporation v Aces Capital Inc, 2018 ONSC 1572 at para 32, Citing: Huynh v. Lau, 2011 ONSC 3417 at paragraphs 19 to 20; Hefford v Charpentier, 2009 ONSCDC 21761, 249 OAC 93 (Div Crt) at paragraphs 24 to 27; Dovale v Metropolitan Toronto Housing Authority, 2001 ONSC 28024, 53 O.R. (3d) 181 (Ont SCJ) at paragraph 12.
[84] Mr. White has not claimed an abatement from the purchase price for Mr. Carrer’s failure to complete the remediation, and has not claimed damages other than as an alternative to its claim for specific performance. Mr. White’s Notice of Application seeks, “[i]n the alternative to the above claims, an order for damages against the Respondent for failing to complete the Agreement of Purchase and Sale with the Applicant.” Mr. White’s e-mail of August 18, 2017, is evidence of his belief that the remediation was near completion. Mr. White states, at paragraph 47 of his Supplementary Factum, “ The Applicant remains ready, willing and able to complete the transaction and purchase the Property as is. ”
[85] Mr. White has built his reputation on his operation of an auto repair business on the property for the past 18 years. He has paid approximately $800,000.00 in rental payments to that end, in the belief that he had a valid agreement to buy the property. It would be grossly unfair to permit Mr. Carrer, after receiving rent from Mr. White for 18 years, to deprive Mr. White of the increase that has accrued in the value of the property during that time, to renege on his obligation to complete the transaction, and to sell the property to another buyer for twice the price at which he had agreed to sell it to Mr. White.
c. Did Mr. White fail to mitigate his damages?
[86] Mr. White claims damages in an unspecified amount as an alternative to specific performance. Mr. Carrer submits that Mr. White has failed to mitigate his damages. Mr. White did not press his claim for damages, and Mr. Carrer has not offered support for his assertion that Mr. White failed to mitigate his damages, nor suggest how Mr. White could have done so. In any event, I have found that damages are not available and would be inadequate in the circumstances.
CONCLUSION AND ORDER
[87] For the foregoing reasons:
This Court declares and adjudges that: a. The Agreement of Purchase and Sale dated January 21, 2003 and amended February 10, 2003 is valid and enforceable; b. 384130 Ontario Limited may purchase the property for the purchase price of $415,000, less deposits paid, pursuant to the agreement.
This Court orders and adjudges that: a. 520611 Ontario Limited shall complete the sale of the property to 384130 Ontario Limited, in accordance with a Notice which 384130 Ontario Limited shall forthwith serve on 520611 Ontario Limited. The term of the agreement requiring 520611 Ontario Limited to obtain approval of its remediation from the Ministry of the Environment is dispensed with, for the purposes of the agreement. This shall not relieve either party of their obligations to comply with their statutory duties; b. 520611 Ontario Limited is enjoined from entering into any subsequent Agreement of Purchase and Sale of the Property without the consent of 384130 Ontario Limited; c. 520611 Ontario Limited is enjoined from selling, transferring or encumbering the property to anyone other than 384130 Ontario Limited; d. 520611 Ontario Limited shall forthwith provide 384130 Ontario Limited with a copy of all relevant documentation in respect of the property and the agreement;
If the parties are unable to agree on costs, they shall, by November 12, 2021, submit their written argument, not to exceed 4 pages, and a Costs Outline.
Price J.
Released: October 22, 2021
COURT FILE NO.: CV-19-00457-00 DATE: 2021-10-22 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: 384130 ONTARIO LIMITED Applicant
- and – 520611 ONTARIO LIMITED Respondent REASONS FOR JUDGMENT Price J.
Released: October 22, 2021