Court File and Parties
COURT FILE NO.: CV-19-4058-00
DATE: 2022 09 12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Richard Massey, Applicant/Respondent by Cross-Motion
AND:
Frank Armstrong Massey, Respondent/Applicant by Cross-Application
BEFORE: André J.
COUNSEL: A. Jarvis, for the Applicant/Respondent by Cross-Motion
H. DeRusha, for the Respondent/Applicant by Cross-Application
HEARD: April 11, 2022
ENDORSEMENT
[1] The Applicant, Richard Massey, seeks an order listing the property municipally known as 435 Bristol Road West, dispensing with the signature of the Respondent, Frank Massey, and granting Richard Massey leave to issue a writ of possession of the Estate. The Respondent brings a cross-motion for an order that a September 13, 2021 agreement is binding on the Applicant and should be enforced.
BACKGROUND FACTS
[2] The parties are sons of Evelyn Massey, who died on December 9, 2018. Her husband died on October 27, 2016.
[3] Evelyn Massey appointed as her Estate Trustee her spouse or, alternatively, her sons: Richard and Frank Massey. Given that Evelyn’s husband had predeceased her, her sons became Estate Trustees for their mother.
[4] The parties are the sole beneficiaries of their mother’s estate with each receiving 50% of it.
[5] The primary asset of the estate is a residential dwelling municipally known as 435 Bristol Road West, Mississauga (“the Property”). The Respondent, Frank Massey, and his family reside in the Property and wishes to continue doing so.
[6] In May 2021, the parties agreed that Richard should sell his interest in the property to Frank. They agreed that Richard would receive 50% of the fair market value of the home or half of $1.4 million. The applicable documents were prepared to consummate the agreement which the parties signed on September 13, 2021.
[7] The parties required a court-issued Certificate of Administration for the property to be transferred to the Respondent.
[8] The Respondent’s counsel obtained a Certificate of Appointment in August 2021. The parties agreed to close the transaction on September 24, 2021. The transaction did not close on that date selected neither did it close on September 28, 2021, or on the next day. By then, Richard Massey, had decided to list the Property for sale, rather than sell his share to the Respondent. Both parties blamed each other for failing to close the transaction on September 24, 2021, although Frank Massey was advised by a financial institution on September 22, 2021 that he was approved for a loan in the amount of $779,000 which he would receive on September 24, 2021.
COURT ORDER
[9] On October 14, 2020, Trimble J. made the following orders:
The Property shall be sold, with the line of credit registered against title to the Property to be paid from the Applicant’s share of the net proceeds realized and the remaining net proceeds from the sale shall remain in the trust by the Estate’s choosing solicitor, pending further agreement or further order of the court;
The Property shall be forthwith listed for sale at a listing price not less than $1,000,000 and sold as soon as reasonably possible. The property shall be listed with Realtor Ameil Gith with a listing agreement being signed at a commission rate of not more than 4.0% plus HST. Jacquie Knowles, lawyer of the firm JMK Law, will be retained by the Estate to close the sale of the Property.
POSITION OF THE APPLICANT
[10] Mr. Richard Massey’s counsel submits the following:
a. Paragraphs 2 and 3 of Trimble J.’s endorsement should be enforced.
b. The Respondent was unable to close the May and September Agreements.
c. The Respondent is benefitting from the failure to comply with the agreements and has been living rent-free on the Property since December 2018.
d. Despite the agreement stating that the transaction “will close no later than September 24, 2021, his counsel’s email to counsel for the applicant on September 22, 2021 that he was “not quarrelling with the closing date” and a commitment from a financial institution to provide financing to the Respondent, the Respondent failed to close the transaction on September 24, 2021.
e. The Respondent acted in bad faith by failing to close the transaction on September 28, 2021 and should not benefit from doing so.
POSITION OF THE RESPONDENT
[11] Mr. DeRusha submits that:
a. His client did not fail to comply with Trimble J.’s order;
b. There was no condition in the parties’ September 2021 contract that time was of the essence and, therefore, the failure to close the agreement on September 24, 2021 should not have been fatal to the agreement;
c. The transaction did not close as agreed because the Applicant failed to instruct his counsel to do so;
d. The Respondent is not cynically benefitting from residing on the Property. While rental income from 2018 to 2019 was $15,600, he has maintained the Property since he commenced living there;
GOVERNING PRINCIPLES
[12] It is generally understood that when time is of the essence, the limits set must be strictly adhered to. It is an indication that the contract is to be one of the specific terms and granted certainty. See Deangelis v. Weldan Properties Inc.; and Weldan Properties Inc. v. Deangelis, 2017 ONSC 4155 at para. 39; 2260695 Ontario Ltd. v. Invecom Associates Limited, 2016 ONSC 3327 at para. 5; and 1376273 Ontario Inc. v. Knob Hill Farms Limited, 2003 CanLII 28382 (ON SC), 34 BLR (3d) 95 at para. 89.
[13] In Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 65, the Supreme Court of Canada noted that,
The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While “appropriate regard” for the other party’s interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith.
APPLICATION OF THE LAW TO THE FACTS
[14] This motion raises the following issue:
- Should the Property be listed for sale because Frank Massey reneged on two agreements to purchase the property from the Applicant?
[15] In October 2020, Trimble J. ordered that the Property shall be forthwith listed for sale at a listing price of no less than $1,000,000. The parties did not adhere to the order and, instead, engaged in lengthy discussions culminating in the Respondent’s counsel drafting an Agreement of Purchase and Sale (“APS”) signed by the Applicant on May 25, 2021.
[16] The APS stipulated, among other things, that:
a. Frank will pay the real estate lawyer (Jacquie Knowles) the calculated amount of $697,198.93, as set out on the scheduled attached within 45 days, and;
b. If Frank fails to make that payment as required, the house will be listed for sale pursuant to the court order. If the house is sold, it will be listed with the realtor as directed in the court order.
[17] The Respondent failed to remit payments to the Applicant within 45 days as the contract provided.
[18] The Respondent claims that the contract could not be concluded because of circumstances beyond his control – more specifically, because he did not have a Certificate of Appointment (“Certificate”), which he required to transfer the property to the Respondent. To that extent, he did not breach the May 25, 2021 agreement.
[19] However, there is no evidence that the Respondent had the funds to fully pay the Applicant within 45 days of signing the APS. Indeed, the Applicant testified during examinations that “there was no reason to deliver any funds; there was no Certificate of Appointment within 45 days.” More importantly, the acquisition of a Certificate of Appointment was not a condition of the APS. Significantly, the Respondent testified during examinations that he was told “early in 2021” that they needed the Certificate to transfer the Property and agreed that he “had this understanding before signing the May agreement.”
DID THE RESPONDENT BREACH THE SEPTEMBER AGREEMENT?
[20] The parties agreed to a new agreement for the transaction to take place on September 24, 2021. A few days prior to September 24, 2021, the parties agreed to close the transaction on September 24, 2021. The Applicant’s counsel sent an email to the Respondent’s counsel indicating that she was “ready, willing and able to conclude the transaction that day.” The email also stated that, “if for whatever reason we are unable to have a further agreement for the distribution funds the purchase must close on the 24^th^ as agreed to by the parties and in accordance with the terms of the May 14, 2021 agreement attached thereof. I request your written confirmation that the agreement is to close this Friday September 24, 2021.”
[21] The Applicant states that the estate lawyer contacted the Respondent’s counsel on or about September 23, 2021 to ensure that the transaction would go through on September 24, 2021. She received no response. The Estate’s counsel advised Mr. DeRusha about not receiving a response from the Respondent’s counsel. The Applicant indicates that on September 28, 2021 the office of the Estate’s counsel stated that the Respondent lacked the funds to complete the transaction. He relies on an email from the Estate’s lawyer indicating that “we are not in funds from the lender. This will close tomorrow.”
[22] Despite the Applicant’s assertions that the Respondent lacked the funds to close the transaction on September 28, 2021, I am not persuaded that this is the case. First, the Respondent has filed a letter, captioned “Mortgage Loan Commitment Letter of Approval”, at Tab 11 of his materials, dated September 22, 2021, indicating that Home Trust had approved the application from Frank Massey for a loan in the amount of $779,000 and that he would receive the funds on September 24, 2021.
[23] A more likely explanation for why the transaction did not close on September 24 or 28 can be found in a letter sent to Ms. Knowles dated September 23, 2021, by the Respondent’s lawyer requiring compliance with fifteen difference requisitions, namely:
REQUIRED: Prior to closing, the delivery and registration on title to the Property of good and valid discharge of the Charge/Mortgage and the deletion of same form the parcel register for the Property. In the alternative, in the event that such discharge will not be available on closing, the following is required prior to closing and in accordance with the Purchase Agreement:
a. An unqualified mortgage statement or letter from the Mortgagee (addressed to the Purchaser and this firm_ confirming the amount required to be paid to the Mortgagee to obtain a discharge of the Charge/Mortgage with respect to the Property;
b. A direction from the Vendor to the Purchaser directing payment to the mortgagee, of the amount required to obtain the discharge out of the balance due to the closing date; and
c. A personal undertaking from the Vendor#s solicitor to deliver said amount(s) to the Mortgagee and to obtain and register or cause to be registered a discharge of the said Charge/Mortgage with respect to the Property within a reasonable time after closing the above-captioned transaction and to advise the Purchaser#s solicitor of the registration particulars.
- Instruction No. PR3276770 is a Notice of Security Interest. The Purchaser will assume the rental equipment.
REQUIRED: Prior to closing, the assumption agreement and postponement of the Notice Security Interest.
- It is confirmed that this transaction is to be completed under the electronic land registration system (“e-reg”®), that a Document Registration Agreement will be entered into or otherwise adhered to. You will initiate the preparation of the Transfer for PIN#(s) 13177-0146 and will message same to Kiran Salooja.
REQUIRED: On or before closing, signature of the e-regTM transfer for completeness and for registration release. Please advise when this document has been signed by you for completeness. Please ensure that the Transferee on the title and address for service on the Transfer is engrossed as follows:
Transferee
Massey, Frank
Massey, Nargis
Address for Service 435 Bristol Road, Mississauga . Ontario L5R 3L7
REQUIRED: On or before closing, and in accordance with the terms and provisions of the Purchase Agreement, the completion of the appropriate Planning Act compliance with law statements on the Transfer/Deed of Land.
REQUIRED: On or before closing, the delivery of a draft statement of adjustments for review and approval.
REQUIRED: An up-to-date survey of the Property showing all building(s) and other improvement situate thereon.
REQUIRED: In accordance with the Purchase Agreement, a warranty regarding ureaformaldehyde foam insulation to be provided by the Vendor. The Vendor’s Undertaking, Warranty, Direction and Declaration which is enclosed for execution by the Vendor (or an authorized signing officer of the Vendor, as applicable), and is to be delivered on closing (in duplicate), contains said warranty.
REQUIRED: On or before closing, delivery of the appropriate direction and redirection for the payment of funds due on closing (in duplicate) duly executed by the Vendor (or an authorized signing officer of the Vendor, as applicable), or the Vendor’s solicitor as the case may be, in accordance with the mortgage(s) to be discharged, should any funds be requested to be paid to any other party other than the Vendor set out in the Purchaser Agreement.
REQUIRED: On or before closing, in accordance with the terms of the Purchase Agreement, delivery of a Statutory Declaration executed by the Vendor (or an authorized signing officer of the Vendor, as applicable), to confirm that the Vendor is not a non-resident of Canada within the meaning of Section 116 of the Income Tax Act and any amendment thereto, failing which, in accordance with Section 116 of the Income Tax Act, a hold back will be made of that portion of the purchase price, which the Purchaser is obliged to remit to the Receiver General of Canada in order to satisfy the Purchase’s liability in respect to the tax payable by the Vendor under the non-residency provisions of the Income Tax Act by reason of this purchase. The Vendor’s Undertaking, Warranty and Declaration which is enclosed for execution by the Vendor and is to be delivered on closing (in duplicate) contains this declaration.
REQUIRED: On or before closing, production and delivery of a statutory declaration sworn by the Vendor (or an authorized signing officer of the Vendor, as applicable), confirming the status of the Property as it pertains to the Family Law Act, (Ontario). In addition, a warranty regarding the status of any chattels included in the Purchase Agreement is required. The Vendor’s Undertaking, Warranty, Direction and Declaration which is enclosed for execution by the Vendor (or an authorized signing officer of the Vendor, as applicable), and is to be delivered on closing (in duplicate) contains this declaration.
REQUIRED: Delivery on closing, of an executed undertaking to readjust from the Vendor. The Vendor’s Undertaking, Warranty, Direction and Declaration which is enclosed for execution by the Vendor (or an authorized signing officer of the Vendor, as applicable), and is to be delivered on closing (in duplicate) contains this undertaking. A draft copy of the Purchaser’s Undertaking to Readjust is enclosed. Executed copies of same will be provided on closing.
REQUIRED: On or before closing, and in accordance with the Purchase Agreement, delivery of the Warranty and Indemnity – GST/HST from the Vendor confirming that the Property is a used residential dwelling, the sale of which is exempt from HST. The Warranty and Indemnity – GST/HST is enclosed for execution by the Vendor (or an authorized signing officer of the Vendor, as applicable), and is to be delivered on closing (in duplicate).
REQUIRED: Prior to closing, a reasonable opportunity for final inspection of lands and premises, on closing by the Purchaser or the Purchaser’s agent to ensure that all of the work set out in the Purchase Agreement (if any) has been completed and to ensure that there has been no substantial damaged to the Property, pursuant to the decision of Costello J. in Re: Harkness and Cooney, et al. 1979 CanLII 2720 (ON SC), 131 D.L.R. (3^rd^) 765.
REQUIRED: On or before closing, vacant possession of the Property with all garage and debris removed thereform, and all keys, garage doors openers and other entry devices related to the Property to be provided.
[24] The Applicant probably did not close the transaction because, as the Applicant’s counsel noted in her submissions, the items that the Respondent requested on September 23, 2021 were not part of the agreement.
[25] In my view, the Respondent breached the May 2021 APS by failing to pay the purchase price of the Property within the stipulated 45-day period. However, rather than end the Agreement, the Applicant agreed to extend the payment condition to September 24, 2021. The Applicant then breached the APS on September 24, 2021, and again on September 28, 2021, because he unilaterally decided not to close the transaction.
[26] What is the appropriate remedy? The Respondent seeks to enforce the agreement or, specifically, would like an order for specific performance.
[27] In Heron Bay Investment Ltd. v. Peel-Elder Development Ltd., [1976] O.J. No. 1403 (OSC) at para. 4, the Court noted that,
The remedy of specific performance is one that is peculiar to real estate transactions and is based on the fact that real estate is regarded as unique and of particular importance to the purchaser. Obviously, the purchase of a new house is much different than the buying of a new car, which can be replaced by an almost identical new car. That reasoning does not apply when land is purchased merely as an investment.
See also Mutual Apartments Inc. v. Lam, [2009] O.J. No. 2695 (OSC) at para 68; Hunter’s Square Developments Inc. v. 351658 Ontario Ltd, 2002 CanLII 49491 (ONSC), [2002] O.J. 2800 (OSC) and 2002 CanLII 9163 (ON CA), [2002] O.J. No. 4694 (C.A.)
[28] Is the Property of particular importance to the Respondent? In my view, it is. He lived there with his parents for many years and cared for them before they died. He continues to live there with his family. He clearly has strong emotional ties to it. To that extent, the remedy of specific performance is appropriate.
ORDER
[29] THIS COURT ORDERS that the Applicant Richard Massey (“Richard”) and the Respondent Frank Massey ( “Frank”) shall, as Administrators of the Estate, execute the documents required to transfer the property located at 435 Bristol Rd. West, Mississauga subject to the following:
a. Paying the lawyer, Jacquie Knowles, in trust, $597,198.93 (the “purchase amount”), which is the figure set out in the parties agreement from September 23, 2021.
b. Paying out the various payments which the parties affirmed in the agreement of September 23, 2021; this includes a holdback which Ms. Knowles will hold in her trust account.
c. The holdback will total $200,000 in trust, comprised of $100,000 of each party’s funds, pending a court order.
d. These figures remain applicable unless the parties and their respective counsel reach a written agreement to have other amounts paid out in ways they agree on.
[30] THIS COURT ORDERS that Frank Massey shall have 90 days following the date of this order to pay the purchase amount to Ms. Knowles as described above.
[31] THIS COURT ORDERS that, if Frank Massey cannot obtain the funds to close the transaction regarding the Property as described above within 90 days of the date of this order, the Property thereafter shall be listed for sale and sold.
[32] THIS COURT ORDERS that if either party requires further directions regarding the sale and transfer of the Property, or directions with respect to its listing and sale, they may return to this court to obtain those directions.
[33] THIS COURT ORDERS that the issues of occupation rent, or any claim related to interest on the payment to Ms. Knowles by Frank Massey, to Richard Massey’s benefit, or claims about the rent which Frank Massey has collected from the tenant in the house, may be addressed in further court proceedings. This means that these issues remain unresolved but are open for a judge or mediator to address as he or she sees fit, whether or not the resolution involves awarding costs.
COSTS
[34] Mr. Frank Massey seeks costs in the amount of $46,020.19 and $31,030.82 on a substantial and partial indemnity basis, respectively.
[35] In assessing the amount of costs that is fair and reasonable in the matter, I consider the following factors:
a. The Respondent was substantially successful;
b. Mr. DeRusha was called to the Bar in 1984. His hourly rate of $420 is reasonable;
c. The matter was relatively complex and required a significant amount of preparation, including conducting examinations, doing research, and preparing a factum;
d. The matter consumed a fair amount of court time as a long motion;
e. However, the time claimed for work conducted by the Respondent’s counsel appears excessive. For example, there is a claim for 7.5 hours for preparing a motion for adjournment, 8.6 hours for preparing a factum which did not include caselaw, 8.7 hours for preparing Minutes of Settlement and 9.75 hours for preparing examination of the Respondent, and his examination.
[36] Based on the above, I find that costs fixed at $20,000 inclusive to be fair and reasonable in these circumstances.
[37] I thereby order that the Applicant Richard Massey pay the Respondent Frank Massey, costs fixed in the amount of $20,000 inclusive, within ninety (90) days of today’s date. This amount should be deducted from the amount of money which the Respondent is required to pay the Applicant to purchase his interest in the Property.
André J.
Date: September 12, 2022
COURT FILE NO.: CV-19-4058-00
DATE: 2022 09 12
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Richard Massey
- and -
Frank Armstrong Massey
ENDORSEMENT
André J.
Released: September 12, 2022