COURT FILE NO.: CV-20-00000957-0000 (OSHAWA)

DATE: 20210813

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1854329 ONTARIO INC., BERNARD BOUTET, JEAN BOUTET, JOHN SHOBRIDGE and LYNNE SHOBRIDGE, Plaintiffs/Moving Parties

AND:

ANGELO CAIRO, STOUFFVILLE GLASS MIRROR AND ALUMINUM 2012 INC., also known as STOUFFVILLE GLASS MIRRORS & ALUMINUM (2012) LTD. and YOUR COMMUNITY REALTY INC. operating as ROYAL LEPAGE YOUR COMMUNITY REALTY, BROKERAGE or as ROYAL LEPAGE YOUR COMMUNITY REALTY, Defendants/ Respondents

BEFORE: Dawe J.

COUNSEL: N. Cameron Murkar, Counsel, for the Plaintiffs/Moving Parties

Barry Greenberg, Counsel, for the Defendants/Respondents Angelo Cairo and Stouffville Glass Mirror & Aluminium 2012 Inc. a.k.a. Stouffville Glass Mirror & Aluminium (2012) Ltd.

No one appearing for the Defendants/Respondents Your Community Realty Inc. operating as Royal LePage Your Community Realty, Brokerage or as Royal LePage Your Community Realty

HEARD: June 24, 2021

ENDORSEMENT

I. Overview

[1] The plaintiffs bring a motion for partial summary judgment in an action arising out of a failed $7.25 million commercial real estate transaction. Specifically, they seek partial summary judgment in their favour against the defendants Angelo Cairo and Stouffville Glass Mirror & Aluminium 2012 Inc. a.k.a. Stouffville Glass Mirror & Aluminium (2012) Ltd. (“Stouffville Glass”) for an amount equalling the $400,000 in deposit funds that are currently being held in trust by the defendant realtor,[^1] while reserving the right to seek additional damages later.

[2] Mr. Cairo, who had agreed to purchase the property at issue from the corporate plaintiff 1854329 Ontario Ltd., in trust for corporate defendant Stouffville Glass, acknowledges that he was unable to close the transaction as scheduled because he could not obtain adequate financing. However, he and Stouffville Glass now contend that the agreement of purchase and sale was invalid, and argue further that they should not be held liable for failing to close the sale because the seller’s own closing documents were inadequate. The defendants also argue that these issues are ones that require a trial.

[3] In the alternative, the defendants argue that if they are found liable for breach of contract, I should exercise my equitable discretion to grant them relief from forfeiture of the full amount of the $400,000 deposit.

[4] I will discuss the question of whether this is an appropriate case for granting summary judgment below. However, as I told counsel when this motion was heard by Zoom videoconference, I am satisfied that this is not an appropriate case for granting partial summary judgment that would leave the issue of damages to be determined in later proceedings, possibly before a different judge. As I will explain, I do not think the defendants’ argument that they should be relieved from forfeiture of the full amount of the deposit can be disentangled from the question of how much the plaintiffs actually sustained in damages. Accordingly, having these two issues considered at different times by different judges would waste scarce judicial resources and present a risk of inconsistent verdicts.

[5] For this reason, I advised counsel at the hearing that I would make a preliminary ruling on two issues: (i) whether the action as a whole appears amenable to summary disposition without a trial; and (ii) if so, whether some or all of the plaintiffs are entitled to summary judgment in their favour on the issue of liability for breach of contract.

[6] If I answer both of these questions in the affirmative, the issue of damages, including the defendants’ argument that they should be relieved from forfeiture of the full amount of the $400,000 deposit, will be argued before me at a future date, which has now been provisionally set for September 24, 2021.

[7] For reasons I will now explain, I am satisfied that the breach of contract claim in this action can properly be decided on a summary basis without the need for a trial. I am also satisfied that the corporate plaintiff 1854329 Ontario Ltd. is entitled to judgment in its favour on the issue of liability as against Mr. Cairo and Stouffville Glass.

[8] However, I find that the individual plaintiffs, Bernard and Jean Boutet and John and Lynne Shobridge, have no standing to sue on the contract, since even though they were co-owners of the property that was to be sold to the defendants, they were not made parties to the contract itself. That said, I do not agree with the defendants’ further submission that this limits the damages that the corporate plaintiff 1854329 Ontario Ltd., who was the only party named as a seller in the contract, can properly claim.

II. Factual background

[9] The corporate plaintiff 1854329 Ontario Ltd. is a closely held corporation jointly owned by Bill McKay and his wife. Mr. McKay is also the corporation’s president.

[10] In 2019 the corporation owned a 1/3 share of a commercial building in Pickering, located at 875 Dillingham Road South. The remaining 2/3 interest in the property was owned by two other married couples, Bernard and Jean Boutet and John and Lynne Shobridge. Each couple co-owned a 1/3 share of the property as joint tenants.

[11] In 2019 the McKays, Boutets and Shobridges agreed that they would sell the Dillingham Road South property. To facilitate this planned sale, the Boutets and the Shobridges executed powers of attorney that authorized Mr. McKay to sell their ownership interests in the property for them.

[12] On November 15, 2019 Mr. Cairo, acting in trust for the corporate defendant Stouffville Glass, made an offer to purchase the Dillingham Road South property from 1854329 Ontario Ltd. for $7 million. Mr. Cairo’s uncontroverted evidence is that he believed at the time that 1854329 Ontario Ltd. was the sole owner of the property and was unaware that the Boutets and the Shobridges were also part-owners.

[13] After further negotiation the purchase price was increased to $7.25 million, and on November 21, 2019 Mr. McKay accepted the revised offer on behalf of 1854329 Ontario Ltd. The Boutets and the Shobridges were not named as parties to the agreement of purchase and sale (“the APS”), nor does the contract indicate anywhere that Mr. McKay was signing it as their attorney.

[14] Mr. Cairo provided an initial $200,000 deposit. The agreement of purchase and sale contained the following condition:

This offer is conditional for THIRTY (30) business days from the date of acceptance upon financing and due diligence and the Buyer being satisfied in its sole and absolute discretion with all investigations relating to the real property, that it deems necessary, at the Buyer’s own expense. Unless the Buyer gives notice in writing delivered to the Seller not later than the last day of the conditional period that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to this Seller within the time period stated herein.

“Business days” was defined to exclude weekends and statutory holidays. The APS also provided that if Mr. Cairo waived the condition or gave notice that it had been fulfilled, he would then have to provide an additional $200,000 deposit, increasing the total deposit to $400,000.

[15] In January 2020 the parties agreed to amend the APS by adding the following additional term:

Buyer and Seller agree that the offer is conditional for a further period of 13 business days following receipt of a satisfactory Phase II Environmental Report upon financing and due diligence and the Buyer being satisfied in its sole and absolute discretion with all investigations relating to the real property that it deems necessary, at the Buyer’s own expense. Unless the Buyer gives notice in writing delivered to the Seller not later than the last day of the conditional period that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to this Seller within the time period stated herein.

Although this amendment is undated, Mr. Cairo states in his affidavit that it was agreed to on or about January 6, 2020. Mr. McKay agrees, stating in his own affidavit that it was executed on January 6, 2020.

[16] As I will discuss further below, the copy of the amendment document that has been included in the plaintiffs’ motion record contains a handwritten note stating: “Deal extended for an additional 13 business days from January 6, 2020”. However, this note does not appear on the executed copy of the document that has been included in the defendants’ responding motion record.

[17] On January 24, 2020 Mr. Cairo received a term sheet from the Business Development Bank of Canada (“BDC”) setting out the terms on which BDC was prepared to loan Mr. Cairo $6.65 million to fund his purchase of the Dillingham Road South property. The term sheet specified that it was “not a loan offer”. However, after Mr. Cairo received it, he proceeded to waive both the original finance condition and the January 6, 2020 amendment by signing a written waiver, dated January 24, 2020. He also provided the additional $200,000 deposit as required by the APS.

[18] The sale of the Dillingham Road South property was scheduled to close on April 7, 2020. However, on April 2, 2020 Mr. Cairo received an Offer of Financing from BDC in which the lender now advised that it would only advance Mr. Cairo $5.4 million of the $6.65 million loan on the closing date, and would only provide the balance of the loan funds after certain conditions had been met. In his affidavit, Mr. Cairo states that a BDC representative told him that this was because the lender was concerned that the onset of the COVID-19 pandemic would cause a downturn in Stouffville Glass’s business.

[19] On April 6, 2020, the day before the scheduled closing, Mr. Cairo’s lawyer sent an email to counsel for 1854329 Ontario Ltd. advising that Mr. Cairo would be unable to close as scheduled the next day, and requesting a six-month extension of the closing date. She explained:

Unfortunately, my client is unable to close on April 7. Due to the impact of Covid-19 on my client’s business and the resultant issues with financing, my client is seeking a six month extension to the closing date. The financing has taken an extraordinary amount of time and on Friday BDC revised its offer again to include various conditions and material adverse change representations that my client simply can't make. With construction sites closing and being removed as an essential service, it is very unlikely that my client can meet the ratios and other onerous requirements of this bank leading to certain default. My client is continuing to negotiate with BDC and is prepared to pursue other financial institutions during this period of extension if required.

[20] 1854329 Ontario Ltd.’s counsel responded on April 7, taking the position that the seller was ready, able and willing to close as scheduled and would treat Mr. Cairo’s counsel’s email as an anticipatory breach of contract. He provided a “closing package” of documents.

[21] The transaction did not close on April 7, 2020, and 1854329 Ontario Ltd. eventually sold the Dillingham Road South property to a different purchaser for $75,000 less than the price the defendants had agreed to pay. This sale was completed on October 7, 2020, six months after the sale to the defendants was supposed to have closed.

[22] 1854329 Ontario Ltd. asserts that in addition to its lost profits resulting from the eventual lower sale price, it has sustained a further $65,342.20 in damages attributable to additional realtor and legal fees, as well as $293,738.24 in carrying costs and “lost rent”. It has not yet provided evidence substantiating any of these latter damages claims.

[23] Based on these calculations, the plaintiffs are claiming a total of $434,080.44 in damages, which is $34,080.44 more than the $400,000 deposit that the defendant realtor is holding in trust. However, the plaintiffs’ current motion for partial summary judgment only seeks to have the deposit funds released to them.

III. Analysis

A. Is this an appropriate case for summary judgment?

[24] Rule 20.04(1) of the Rules of Civil Procedure directs courts to grant summary judgment “if satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence”.

[25] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, the Supreme Court of Canada called for a “shift in culture” that recognizes that the summary judgment process sometimes offers a better way of doing justice than a full-blown trial. As Karakatsanis J. explained (at paras. 28-29):

The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible — proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure.

There is, of course, always some tension between accessibility and the truth-seeking function but, much as one would not expect a jury trial over a contested parking ticket, the procedures used to adjudicate civil disputes must fit the nature of the claim. If the process is disproportionate to the nature of the dispute and the interests involved, then it will not achieve a fair and just result.

[26] For the plaintiffs, Mr. Murkar argues that breach of contract actions arising out of failed real estate deals will often be amenable to summary disposition, and that this case is no exception.

[27] On behalf of the defendants Mr. Cairo and Stouffville Glass, Mr. Greenberg disagrees, arguing that the issues his clients raise when disputing their liability for breach of contract are ones that require a trial. When pressed, however, he was unable to provide any concrete reasons why these particular issues cannot be fairly decided summarily on the existing evidential record, such that a trial is necessary.

[28] As I will discuss further below, Mr. Cairo and Stouffville Glass do not dispute that they failed to close the transaction on April 7, 2020 because their financing arrangements fell through. They make three main arguments in support of their contention that they should nevertheless not be held liable for breach of contract.

[29] First, they argue that the APS was invalid from the outset because the Boutets and the Shobridges, who between them owned 2/3 of the property being sold, were not made parties to the contract. In my view, this argument raises a question of contract law that does not depend to any great extent on the particular facts of this case, which in any event do not appear to be disputed. It strikes me as precisely the sort of issue that can be fully litigated and fairly decided without a trial.

[30] The defendants’ second argument is that the APS became null and void in January 2020 because Mr. Cairo’s purported waiver of the financing condition was made too late, after the condition had already expired. As I will discuss below, they advance two alternative variations of this argument, both of which hinge on how the January 6, 2020 amendment to the APS should be interpreted. While this question of contractual interpretation does depend to some extent on the particular facts of this case, the material facts seem to be essentially undisputed and are based primarily on a documentary record. I am satisfied that I would not be in a significantly better position to consider and decide this issue if I heard viva voce evidence at a trial.

[31] The defendants’ third argument is that even though they could not complete the purchase on the scheduled closing date because their financing had fallen through, they should be relieved from liability for breach of contract because the plaintiffs’ own tender of closing documents was incomplete. In my view, the adequacy of the tendered closing documents and the legal consequences of any deficiencies in them are both matters I can fairly assess without hearing trial evidence.

[32] I am accordingly satisfied that this is a proper case for summary determination under Rule 20.

[33] However, as I have already mentioned, I do not think this is an appropriate case for granting partial summary judgment, as the plaintiffs seek.

[34] Rule 20 permits summary judgment to be granted “on all or part” of a claim. However, writing for the Ontario Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783, Pepall J.A. cautioned (at para. 34):

A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.

Courts are required to consider whether there is a “risk of duplicative or inconsistent findings at trial” and whether granting summary judgment is “advisable in the context of the litigation as a whole”. Butera, supra at para. 28; see also Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 at para. 34-35; Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922 at para. 4.

[35] In this case, as noted above, the plaintiffs assert that they have sustained a total of $434,080.44 in damages as a result of the failed April 7, 2020 sale, but they have not yet adduced evidence to substantiate most of these claimed damages. However, they contend that they are entitled to receive the full amount of the $400,000 deposit regardless of what their actual damages turn out to have been. They accordingly seek partial summary judgment for this amount, while reserving the right to seek additional damages later.

[36] I should note that I am somewhat doubtful that the plaintiffs will be able to substantiate their assertion that they have suffered actual damages in excess of the $400,000 deposit funds. Their $434,080.44 damages calculation includes an unspecified amount for “lost rent”, based on their having “prematurely terminated their tenancy agreement with the tenant that was occupying the premises” so as to give the defendants vacant possession of the property on closing. Since the plaintiffs would not have collected any rent after April 7 if the sale to the defendants had closed as scheduled, it is not apparent to me that they are entitled to claim any damages for lost rent as part of their breach of contract claim.

[37] However, the defendants argue that if I find them liable for breach of contract, I should exercise my equitable discretion to relieve them from forfeiture of the full amount of the $400,000 deposit. One factor I will have to take into account when considering this argument is “the disparity between the value of the property forfeited and the damage caused by the breach”: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 SCR 490 at p. 504.

[38] In my view, the defendants’ request for relief from forfeiture cannot be “readily bifurcated” from the plaintiffs’ overall damages claim. Without knowing how much the plaintiffs lost as a result of the sale of the property to the defendants falling through, I cannot fairly determine whether it would be inequitable to award them the full amount of the $400,000 deposit. Moreover, any conclusions I reach about the plaintiffs’ actual damages based on the incomplete evidential record that is now before me may be inconsistent with the findings another judge might reach in the future if the plaintiffs did pursue their claim for additional damages and provided further evidence supporting these claims. It will also be inefficient for two different judges to spend time reviewing the evidence in this case.

[39] A final consideration is that it seems likely to me that the question of the plaintiffs’ overall damages will also turn out to be amenable to summary disposition, and will not require a full trial.

[40] For all of these reasons, I advised the parties that I would at this stage only decide the threshold questions of (i) whether the issue of the defendants’ liability for breach of contract can be fairly determined summarily; and (ii) if so, whether summary judgment on this issue should be granted to at least some of the plaintiffs.

[41] I told counsel that if I answered both of these questions in the affirmative, the remaining issues – namely, whether the issue of the plaintiffs’ damages and the defendants’ request for relief from forfeiture can appropriately be decided on a summary basis and, if so, how much should be awarded to the plaintiffs – should be scheduled to be argued before me at a later date. I understand that counsel have now agreed on a tentative hearing date of September 24, 2021.

B. Liability issues

[42] Mr. Cairo and Stouffville Glass do not dispute that the transaction fell through because they were unable to obtain financing, and for this reason could not close as scheduled on April 7, 2020. However, they make three main arguments as to why they should nevertheless not be held liable for breaching the contract. Their first two arguments challenge the validity of the APS as of the closing date, while their third argument is based on the contention that they should not be held responsible for the transaction not closing because 1854329 Ontario Ltd.’s own tender of closing documents was incomplete.

1. Was the APS invalid because the Boutets and the Shobridges were not named as co-sellers?

[43] The defendants’ first argument is that the APS was invalid from the outset because the Boutets and Shobridges, who between them owned two-thirds of the Dillingham Road South property, were not made parties to the contract to sell the property to the defendants. The defendants contend that this made the contract invalid because it was not “binding on all owners of the Property”.

[44] I agree with the defendants that the Boutets and Shobridges were not parties to the APS. Mr. McKay, who signed the APS in his capacity as president of 1854329 Ontario Ltd., held powers of attorney over property from both couples that would have allowed him to sign the APS on their behalf, if the contract had been drafted to name them as co-sellers. However, the APS was not drafted that way, and Mr. McKay did not purport to sign it on behalf of the Boutets and Shobridges. Instead, the APS named 1854329 Ontario Ltd. as the only party selling the property, and Mr. McKay signed the document solely in his capacity as the signing officer for this corporation.

[45] It seems likely that the APS was drafted in this way because Mr. Cairo mistakenly believed at the time that the property was wholly owned by 1854329 Ontario Ltd. This is his evidence in his affidavit, on which the plaintiffs chose not to cross-examine him. For his part, Bill McKay acknowledged in cross-examination that he cannot remember whether he ever told Mr. Cairo that the Boutets and Shobridges were co-owners of the property, or that he was acting as their agent as well as on behalf of 1854329 Ontario Ltd. Although Mr. McKay testified that “in [his] mind” he thought he was signing the APS on behalf of the Boutets and Shobridges as well as for the corporation, he acknowledged that he is not a lawyer and does not “do legal papers”. In my view, whatever Mr. McKay might have thought, it is clear from the face of the APS that the Boutets and the Shobridges were not made parties to the contract.

[46] However, I disagree with the defendants that this made the APS invalid. People can enter into valid contracts to sell goods or property that they do not yet own themselves. From the buyer’s perspective, all that matters is that the seller be able to transfer good title to the buyer on the closing date. How the seller accomplishes this is not the buyer’s concern.

[47] In this case, I am satisfied that there was a valid contract between 1854329 Ontario Ltd. and the defendants for the sale of the Dillingham Road South property. By agreeing to sell property that it did not wholly own, 1854329 Ontario Ltd. was assuming the risk that it might not be able to deliver on its end of the bargain. The corporation could have guarded against this risk by making the contract conditional on it obtaining the agreement of the Boutets and Shobridges to transfer their title to the defendants, but it did not take this precaution. However, in the circumstances here the risk 1854329 Ontario Ltd. was assuming was minimal, since both couples had already authorized Mr. McKay to sell their interest in the property for them and had appointed him as their attorney for this purpose.

[48] Whether or not the Boutets and Shobridges were legally obliged by the contract to transfer their interest in the property to the defendants on closing made no difference to the defendants, as long as full title to the property was ultimately transferred to them. As it turned out, the theoretical danger that the Boutets and Shobridges might renege on their agreement with Mr. McKay and refuse to transfer their ownership interests on the closing date never materialized. A few days before the scheduled closing date, before the defendants advised that they would be unable to close due to lack of funds, 1854329 Ontario Ltd.’s lawyer delivered documents that had been signed by the Boutets and the Shobridges that would have allowed full title over the property to be transferred to the defendants on closing. The sale only fell through because of the buyers’ lack of funds, and not because the seller found itself unable to provide good title.

[49] The situation might be different if there was evidence that the Boutets and Shobridges were refusing to transfer their title over the property to the defendants, thereby preventing 1854329 Ontario Ltd. from fulfilling its own part of the bargain. However, I agree with the plaintiffs that the defendants cannot rely on this hypothetical possibility without having given 1854329 Ontario Ltd. “opportunity to prove that it could deliver good title to the purchaser”: Towne Meadow Development Corp. v. Chong, 1993 CarswellOnt 584 at para. 8 (Gen. Div.). In any event, the evidence that has been put forward shows that if the defendants had been able to close as scheduled, 1854329 Ontario Ltd. would have had no difficulty transferring good title over the property to them.

[50] It follows that I do not agree that the omission of the Boutets and Shobridges from the APS has any bearing on its validity as a contract binding the parties named in it, that is, 1854329 Ontario Ltd. and the defendants.

[51] That said, I do agree that as non-parties to the contract, the Boutets and Shobridges have no standing to sue the defendants for breaching the APS: see, e.g., Greenwood Shopping Plaza Ltd. v. Beattie et al., 1980 CanLII 202 (SCC), [1980] 2 SCR 228. It follows that the individual plaintiffs’ motion for summary judgment in their favour against the defendants must fail.

[52] However, the defendants go further and argue that since 1854329 Ontario Ltd. only owned a 1/3 share of the Dillingham Road South property, it can only claim 1/3 of any damages flowing from their breach of the APS. I disagree. If the defendants did breach their contract with 1854329 Ontario Ltd., I think that the corporation can properly claim all of the damages that it can show flowed from this breach. The corporation may very well have some contractual arrangements of its own with the Boutets and Shobridges that will require it to pass on to them some portion of any damages it collects from the defendants. However, that is not the defendants’ concern.

2. Was the APS rendered null and void by Mr. Cairo’s delay in waiving the financing condition?

[53] The defendants’ second argument is that Mr. Cairo did not waive the financing condition in writing within the time period that was required by the APS, with the result that the APS had already become null and void by the time he purported to grant this waiver on January 24, 2020. As I will discuss, they make two somewhat different arguments in support of this position.

[54] By way of background, as I have already set out above, the original APS included a financing condition that required Mr. Cairo to give notice in writing that the condition had been fulfilled or waived within “30 business days from the date of acceptance”, failing which the APS would become “null and void”.

[55] 1854329 Ontario Ltd. had accepted the defendants’ offer to purchase the Dillingham Road South property on November 21, 2019, and since “business days” were defined in the APS to exclude weekends and statutory holidays, after taking the Christmas and New Year’s holidays into account this 30-day deadline was set to expire at the end of the day on January 7, 2020.

[56] On January 6, 2020 the parties executed an amendment that made the contract conditional “for a further period of 13 business days” to allow, among other things, receipt of a satisfactory Phase II environmental report and for Mr. Cairo to satisfy himself that he would be able to obtain financing.

[57] On January 24, 2020 Mr. Cairo signed a document in which he purported to waive both the original condition and the January 6, 2020 amendment. He also provided a further $200,000 deposit, as the APS required him to do once he waived the financing condition.

[58] As I understand it, the defendants are making two alternative arguments in support of their claim that Mr. Cairo’s January 24, 2020 waiver of the finance condition was inoperative because by that date the condition had already expired.

[59] First, they contend that because the January 6 amendment did not expressly delete the original financing condition, the 30-day waiver deadline that was established by the original condition remained in effect and expired at the end of the day on January 7, 2020.

[60] Second, and in the alternative, they argue that even if the January 6 amendment is interpreted as extending the original deadline by a further 13 business days, this extension should be understood as running from January 6, when the amendment was executed, rather than from January 7, when the 30 business day deadline in the original condition was set to expire. On this interpretation, the extension only remained effective until the end of the day on January 23, making Mr. Cairo’s purported waiver of the financing conditions the next day, on January 24, one day too late.

[61] I should note that Mr. Cairo does not dispute that after January 24, 2020 he still treated the APS as valid and binding on both him and the seller, and that he does not suggest that the supposed triggering of the condition that rendered the APS null and void had anything to do with the defendants’ failure to complete the transaction on April 7, 2020.

[62] The defendants’ two alternative arguments both hinge on how the January 6, 2020 amendment to the APS should be properly interpreted. As the Supreme Court of Canada noted in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633 at para. 55, “the goal of contractual interpretation [is] to ascertain the objective intentions of the parties”. A court must “read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 SCR 23, at para 27; Sattva Capital Corp., supra at paras. 47 and 49. Moreover, “[i]t is also well settled that courts should avoid commercially absurd interpretations of contracts”: Harvey Kalles Realty Inc. v. BSAR (Eglinton) LP, 2021 ONCA 426 at para 6.

[63] Dealing first with the argument that the January 6 amendment did not actually extend the original January 7 deadline, I am satisfied that this interpretation can be rejected as manifestly at odds with the parties’ objective intentions. The amendment expressly stated that Mr. Cairo was being given “a further period of 13 business days” to satisfy himself, among other things, that he could obtain financing. In my view, the only sensible interpretation of this language is that the parties meant to extend the deadline that was about to expire the following day for 13 additional business days, and that this new deadline would replace the January 7 deadline that was about to expire. It would make no sense for the parties to have meant to create a new deadline while still leaving the old January 7 deadline in place, since if the APS became null and void after January 7 the amendment and the new deadline would both be rendered completely pointless.

[64] For what it is worth, Mr. McKay testified in cross-examination that he understood when he initialled the amendment that he was granting “a 13-day extension” to Mr. Cairo, and it is equally clear from Mr. Cairo’s own subsequent actions that he also understood that the original deadline had been extended. However, even without this evidence of the parties’ subjective understandings, I think their objective intentions in executing the amendment are self-evident.

[65] The defendants’ alternative argument is that even if the January 6, 2020 amendment is understood as extending the original January 7 deadline, it should be interpreted as only extending it for 13 business days from the date of the amendment on January 6 – that is, until the end of the day on January 23 – rather than for 13 business days from the original January 7 deadline, or to the end of the day on January 24.

[66] In support of this interpretation, the defendants rely on the handwritten note that appears on the copy of the January 6 amendment that is included in the plaintiffs’ motion record, which states: “Deal extended for an additional 13 business days from January 6, 2020” (underlining added).

[67] In my view, there are several problems with treating this handwritten note either as part of the amendment itself, or as an accurate reflection of the parties’ intentions when they agreed to the amendment. First, there is no evidence about who wrote this note, or when it was made. Second, and I think even more significantly, the copy of the amendment document that the defendants have put in their own responding motion record – which, like the copy in the plaintiffs’ record, has been initialled by both parties – does not include this handwritten note. The clear implication is that it was only added to one of the copies of the document some time after it was executed. The note accordingly cannot be understood as forming part of the agreement between the parties. Moreover, in the absence of any evidence about who wrote the note or when it was written, I do not think it sheds any light on either party’s subjective intentions at the time the agreement to amend the APS was reached.

[68] In my view, the objective purpose and meaning of the amendment must be determined based solely on what it actually says. The amendment states only that “the offer is conditional for a further period of 13 business days”. It does not say when this “further period” begins. Indeed, although it is undisputed that the amendment was agreed to between the parties on January 6, the document itself is undated and makes no mention of January 6 as being a date of any significance

[69] The Oxford Dictionary defines “further” to mean “additional to what already exists or has already taken place, been done or been accounted for”. In my view, since the amendment does not expressly state when the 13 business day extension was meant to start, the only sensible interpretation is that the parties must have intended for it to begin on the date that the original condition would have expired – that is, on January 7, 2020 – and that their purpose was to give Mr. Cairo 13 additional business days to decide whether he would waive the financing condition, over and above the time he had been granted by the original APS.

[70] On this interpretation, the APS remained valid until the end of the day on January 24, 2020, and Mr. Cairo’s waiver of the condition on that same day was made before this deadline expired. For what it is worth, there is no real doubt this was Mr. Cairo’s own understanding at the time.

[71] In summary, I am satisfied that on a proper interpretation of the APS, as it was amended on January 6, 2020, Mr. Cairo had until the end of the day on January 24, 2020 to choose whether to waive the financing condition and proceed with the transaction, or to walk away from the deal and get his deposit back. He plainly chose the first option, and I am satisfied that he did so in time to prevent the APS from being rendered null and void.

[72] This makes it unnecessary for me to consider whether Mr. Cairo, having chosen to treat the APS as valid on and after January 24, 2020, should now be estopped from claiming that the contract actually became null and void at some earlier date: see, e.g., Re Tudale Explorations Ltd. and Bruce et al., 1978 CanLII 1471 (Ont. Div. Ct.).

3. The alleged deficiencies in 1854329 Ontario Ltd.’s closing documents

[73] Mr. Cairo and Stouffville Glass’s final line of defence on the issue of their liability for breach of contract is to argue that the closing documents that 1854329 Ontario Ltd. delivered on April 7, 2020 were deficient because they did not include a corporate resolution from 1854329 Ontario Ltd. approving the sale of the property, or a certificate of incumbency listing the corporation’s officers and directors.

[74] The defendants’ lawyers had requested these documents several weeks earlier, on March 20, 2020, and 1854329 Ontario Ltd.’s lawyer had responded that they “would follow”. Neither document had been provided to the defendants by the April 7, 2020 closing date.

[75] The defendants now argue that without these documents 1854329 Ontario Ltd. was not itself in a position to close the deal on April 7, 2020, and that this relieves the defendants from being held liable for breaching the contract after their lack of funds made it impossible for them to carry out their end of the bargain.

[76] I would adopt the following comments of Rosenberg J. in Victorian Homes (Ont.) Inc. v. DeFreitas, 1991 CarswellOnt 414 at paras. 13-14 (Gen. Div.):

The tender, even if it was deficient, was deficient in a minor way that could easily be corrected had the purchaser acted in good faith and disclosed the reason for alleging that the tender was deficient.

The purchaser having made it clear that they were not in a position to close had no right to take the position that the tender was deficient, but had they, it could easily have been corrected if the alleged problem to the purchaser had been explained.

[77] In this case, Mr. McKay’s uncontroverted evidence is that he and his wife were the sole shareholders and officers of 1854329 Ontario Ltd. If the defendants had given them fair notice that they for some reason considered these corporate documents to be essential for the closing to proceed, I think it is very likely that Mr. McKay would have been able to provide them without much difficulty.

[78] As Greer J. noted in Towne Meadows, supra at para. 14, “[i]t is clear from Victorian Homes that the Court takes a hard look at the underlying reasons why real property sales do not close”. In this case, there is no real question that the reason the sale of the Dillingham Road South property failed was because the defendants’ financing arrangements fell through, leaving them short of funds. Any deficiencies in the seller’s closing documents were minor and easily correctable, and in my view played no causal role in the sale not closing as scheduled.

IV. Disposition

[79] In the result, the motion for summary judgment is granted in part. The plaintiff 1854329 Ontario Ltd. is entitled to summary judgment in its favour on the issue of Mr. Cairo and Stouffville Glass’s liability for breach of contract. However, none of the individual plaintiffs were parties to the APS, and they have no standing to sue for breach of contract. Their claims against the defendants are accordingly dismissed.

[80] The issue of damages, including the defendants’ request that I exercise my equitable discretion to relieve them forfeiture of the full amount of the $400,000 deposit, will be argued before me on a date to be arranged with the trial coordinator, which has been tentatively set for September 24, 2021.

Dawe J.

Date: August 13, 2021

[^1]: The realtor Your Community Realty Inc. operating as Royal LePage Your Community Realty, Brokerage or as Royal LePage Your Community Realty has been named as a defendant solely on the basis that it is currently holding the deposit funds that were provided by the other defendants. The plaintiffs are not alleging that the realtor is personally liable, and it takes no position on this motion.