Court File and Parties
COURT FILE NO.: CV-22-00687397 MOTION READ: 20220928 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Catherine Fogarty Holdings Inc., Plaintiff AND: Eric Shipley and Leah Shipley as Estate Trustee for the Estate of Fred Harrison Shipley, Eric Shipley, Leah Shipley, Chestnut Park Real Estate Limited, Pat Benson Moore, Rob Plomer and Kate Vader, Defendants
BEFORE: Associate Justice L. La Horey HEARD: Motion in writing, without notice
Endorsement
1The plaintiff brings this motion without notice on an urgent basis for an order for a certificate of pending litigation ("CPL") against property known municipally as 52 Consecon St., Wellington, Ontario (the "Property"). The plaintiff brings the motion without notice stating that the matter is urgent because the sale of the Property is scheduled to close on October 31, 2022.
2The plaintiff commenced this action on September 16, 2022. In its statement of claim, it claims for specific performance of an agreement of purchase and sale between the plaintiff as buyer and the defendants Eric Shipley and Leah Shipley as Estate Trustee of the Estate of Fred Harrison Shipley, Eric Shipley and Leah Shipley as sellers (the "Sellers") dated August 28, 2022 (the "APS"). The statement of claim includes a request for a CPL.
3The motion originally came before Associate Justice Josefo as an urgent motion in writing. The moving party did not provide any affidavit evidence in support of the motion. Pursuant to his endorsement in this matter dated September 21, 2022, Associate Justice Josefo adjourned the motion so that the moving party could file affidavit evidence. He adjourned the motion to a different associate judge given that he provided preliminary observations. Based on the statement of claim, and without having the benefit of any affidavit evidence, Associate Justice Josefo indicated his preliminary view that the plaintiff had not shown a reasonable claim to an interest in land. In his endorsement he wrote:
The seemingly fatal flaw in the plaintiff's case is that, as discerned from her own pleading, there never was an Agreement between the plaintiff and the vendors. At paragraph 15 of the Claim, it is asserted that the vendors agreed to the deposit quantum and the completion date "but for the purchase price". Yet, absent an agreement on all points, especially one as important as price in a transaction, in my view, there simply is no agreement yet made. Paragraph 15 alleges that the vendors made a counter-offer. In fact, and again as pleaded, the vendors through their real estate agent, simply asked the plaintiff and the other bidder to both provide increased bids. The increased amount sought was apparently not specified by the vendors—the increased amount to be offered was left up to the two competing parties bidding.
Accordingly, at this point, there was no agreement reached with either the plaintiff or the other bidder for the purchase of the Property.
At paragraph 16 of the Claim, plaintiff asserts that she "accepted the counter-offer" by making a substantially higher bid. That is not factually correct, however, from the facts of the case as pleaded. Rather than accepting a counter-offer, the plaintiff chose to make a further offer to the vendors, which new offer was then open for vendors to accept or reject. At paragraph 18, the plaintiff again asserts that she had accepted the counter-offer of the vendors by making her higher bid. Thus, it is asserted that, by selecting the other bidder who allegedly bid less, vendors allegedly breached the Agreement of Purchase and Sale ("APS") which vendors had already made with plaintiff.
Yet, again, that is a factually flawed premise based on the facts set out in the Claim itself. It is the choice of the vendor to select from which of the two bidders, the plaintiff or the other bidder, to whom they will sell the Property. Vendors may select either bid, even one which may seem to be counter-intuitive as it was for a lower price. Vendors may choose one bidder over the other for sentimental reasons (for example, preferring a newlywed couple or a young family) or for any reason at all, so long as, of course, there was no illegal discrimination in the selection process. In this case, vendors selected the offer from the other bidder. They were seemingly free to do so.
Accordingly, and contrary to the premise or foundation of this action, in my view, based solely on the allegations in the Claim itself, there simply never was any agreement; there was "no deal" made between the plaintiff and the vendors. Paragraph 23 of the Claim repeats the flawed argument by asserting that the vendors "accepted all the terms but for the purchase price". Yet, that is a very significant "but for" in my view. Again, absent an agreement on price, there was no agreement. If vendors had actually made a counter-offer, seeking a price of $705,000., which plaintiff had then agreed to, and it was no longer open to vendors to consider a better (or worse) offer, such would be quite different facts from what is before me. Yet that is not what is pleaded in the Claim. Based on what is pleaded, my preliminary view of the case is that there never was an APS between plaintiff and vendors. Plaintiff did make a second offer, a higher one. Yet absent acceptance of that offer, a contract simply was not formed. Absent a contract being formed, it could not be breached.
4The plaintiff has now submitted the affidavit of Catherine Fogarty who is the principal of the plaintiff. In addition, the plaintiff submits the affidavit of its real estate agent, Erin Lynn Lachance who, inter alia, recounts dealings with the Sellers' agent. The plaintiff also submits the affidavit of Ms. Fogarty's spouse, Oliver Borgers, who, inter alia, deposes to a telephone conversation that he had with the President of the defendant real estate firm after Ms. Fogarty was advised that the Property had been sold to another bidder (referred to in the plaintiff's materials as the "Other Bidder"). In addition, the plaintiff has delivered a 30 page factum hyperlinked to the authorities, which I have reviewed.
Applicable Test
5Section 103 of the Courts of Justice Act permits the issuance of a CPL when "an interest in land is in question".
6The test for a CPL is well known. The test was recently summarized by Justice Vermette in Shirkhodaeitari v Farkhondeh, 2022 ONSC 3864 at paragraphs 16 to 18 as follows:
[16] A two-part test governs the issuance of a CPL. First, the Court must determine whether the plaintiff has a triable claim to an interest in land. Second, the Court must consider all relevant factors between the parties, including whether damages would be a satisfactory remedy, and balance the interests of the parties in the exercise of its discretion as to whether to grant leave for the issuance of a CPL. See Rahbar v. Parvizi, 2022 ONSC 1104 at para. 20 ("Rahbar").
[17] Regarding the first part of the test, courts have held that in an action involving a failed real estate transaction, the evidence required to show a triable claim to an interest in land is not high. The assessment of whether there is a triable issue as to an interest in land does not require establishing that the plaintiff's claim will succeed. See Rahbar at para. 21. With respect to a claim for specific performance, there must be a triable issue with respect to both breach of contract and the equitable remedy of specific performance: see Interrent v. 1167750 Ontario, 2013 ONSC 4746 at para. 15. The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has a reasonable claim to the interest in the land claimed: see Perruzza v. Spatone, 2010 ONSC 841 at para. 20(iii).
[18] Regarding the second part of the test, as the granting of a CPL is an equitable remedy, the court will look at all of the relative matters between the parties in considering whether to exercise its discretion to grant leave for the issuance of the CPL. The factors that will guide a court's assessment of whether to exercise its discretion to grant leave for the issuance of the CPL include the following: (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the certificate of pending litigation is or is not granted. See Rahbar at paras. 22-23.
7The threshold issue on a motion for leave to issue a CPL is whether there is an "interest in land". The question is whether there is a triable issue with respect to such interest, not whether the plaintiff will likely succeed. (Perruzza v Spatone, 2010 ONSC 841 at para 20). In determining this issue, the court is not to assess credibility or decide disputed issues of fact. (Can-China Real Capital Inc. v Askar, 2021 ONSC 5043 at para 38, Carttera Management Inc. v Palm Holdings, 2011 ONSC 4574 at para 6).
Analysis
8In Ms. Fogarty's affidavit, she states that the plaintiff made an offer above the listing price for the Property in the amount of $651,000 with a $50,000 deposit on August 28, 2022. A copy of this offer is attached to her affidavit (the "First Offer").
9Ms. Fogarty then deposes that she was told by her agent, Erin Lachance, that there had been three offers and the Sellers were sending two back for a higher price, including the plaintiff's offer. Ms. Lachance's affidavit confirms this conversation with the Sellers' agent and states that the Sellers' agent had asked the plaintiff to increase the purchase price. At paragraph 14 of her affidavit, Ms. Fogarty states:
I understood this to mean that all the other terms of the First Offer were accepted and that if I offered more money than the Other Bidder, the Sellers would sell me the Property. Accordingly, I increased my First Offer by $54,000 to $705,000.00 and kept the other terms the same (the "APS"). Erin [Lachance] told me she was confident I would get the Property at that price.
10The APS is then attached to the affidavit. It is an offer to purchase the Property (in OREA Form 100) for $705,000 open for acceptance to August 30, 2022 at 3:00 p.m. with a deposit payable in the sum of $50,000 "on acceptance". It is not signed by the Sellers.
11Therefore, the plaintiff did not have a binding agreement of purchase and sale with respect to the Property. Indeed, Ms. Fogarty admits as much in her affidavit in paragraph 15 where she says: "I heard from Erin later that day, at approximately 5 p.m. that the Sellers had agreed to sell the Property to the Other Bidder. Although I was disappointed, I assumed that the Other Bidder had offered more money and thought nothing more of it."
12It is only because she believes that the Sellers sold the Property to another bidder for a lower price than that offered by the plaintiff, that Ms. Fogarty is concerned. She says that she does not know whether her APS was conveyed to the Sellers (paragraph 26) which also suggests that there is no binding contract. If the Sellers did not know of the plaintiff's offer they cannot be bound to sell the Property pursuant to its terms.
13Ms. Fogarty further says that she does not know whether the agents complied with their obligations to the Sellers and whether she was treated fairly. She says she does not know why the Sellers "would decide to send two offers back for the express purpose of obtaining a higher purchase price if they had already decided to sell the Property to the Other Bidder for reasons that had nothing to do with the price."
14Ms. Fogarty then deposes at paragraph 28: "The only rational explanation is that the listing and/or buying agents acted in some manner to ensure that the Property was sold to the Other Bidder, and not me. However, absent this lawsuit, I have no way of eliciting this evidence."
15Ms. Fogarty's affidavit does not support a claim to a reasonable interest in the Property. Ms. Fogarty is clearly disappointed that she was not the successful bidder and she suspects that the defendant agents engaged in unethical misconduct, however that is not a basis for a claim in contract for the sale of land. Ms. Fogarty has other claims. She seeks a declaration that the defendant real estate agents conspired to deprive the plaintiff of the benefit of the APS and a declaration the defendant real estate agents unlawfully interfered with contractual or economic relations and claims against them for punitive damages. These claims may or may not be valid, but they are not claims for an interest in land.
16There is nothing in Ms. Fogarty's affidavit (or the other two affidavits submitted) that changes the analysis in Associate Justice Josefo's endorsement.
17The plaintiff submits that there is a triable issue as to price and whether there was a meeting of the minds. As the First Offer had been rejected, the price of $651,000 was not agreeable to the Sellers. The plaintiff offered a higher price which was not accepted. The Sellers did not have to take the highest price for the Property. They did not have to sell to the plaintiff. If there was a meeting of the minds, then the Sellers would have signed the plaintiff's second offer, the APS. If the offer wasn't presented to the Sellers, a possibility raised by Ms. Fogarty, there was no meeting of the minds and no contract.
18The plaintiff in its factum submits that: "The failure to fix a price for a property is not in and of itself grounds for finding that there is no enforceable contract for the sale of that property, where the price itself is not vital to the arrangement between the parties." The plaintiff relies on Boult Ent. v Bissett, 1985 260 (BCCA). However, the facts of that case are very different. In Boult the "main contract" was for the sale of the lot which was to be subdivided by the buyer. It contained a covenant requiring the buyer to build a new house for the seller on one of the lots after subdivision "at a price to be agreed upon". However, that defect (failure to state a price for the new house) did not affect the binding force of the contract to sell the lot at the stipulated price. The court said that the contract was primarily one for the sale of the lot. The agreement to build a new house "at a price to be agreed upon" was incidental to the main contract. In the case at bar, the APS is only for the sale of the Property.
19The plaintiff contends, in the context of the sale of residential real estate, that a situation where the parties had agreed to all terms except for price (with the only caveat that it has to be higher than the previous offer) can be a binding agreement for the purchase and sale of land. This submission defies common sense.
20At paragraph 56 of the its factum, the plaintiff submits that in all the circumstances, "the Sellers' agent's request for more money constituted a counteroffer capable of acceptance." If accepted this would turn the residential real estate market on its head.
21The plaintiff submits at paragraph 58 that: "To conclude that the request for an increased offer was not a counteroffer capable of acceptance, the court must make findings regarding the Sellers' intentions and therefore, of their credibility." However, the fact is that the offer was not accepted by the Sellers as they did not sign the APS and instead, signed another offer. No credibility finding is required.
22The plaintiff submits that it can overcome the requirement in s. 4 of the Statute of Frauds (R.S.O. 1990 c. S.19). The plaintiff relies on Carttera Management Inc. v Palm Holdings, 2011 ONSC 4574 where Justice Newbould held that there was a triable issue as to whether an agreement satisfied the Statute of Frauds. However, in that case, there was a signed letter of intent, followed by an exchange of emails which according to the plaintiff indicated an agreement on all terms. Here, there is only the APS signed by the plaintiff, which specifically contemplates the signature of the Sellers and no document or writing from the Sellers to the plaintiff in an email or any other form of writing.
23I conclude that there is no triable issue for a claim to an interest in the Property on the plaintiff's own evidence.
24The plaintiff argues in its factum, that even if relief is refused because the court concludes that there is no triable issue with respect to a reasonable claim to an interest in the Property on the basis of the APS, that:
the unusual circumstances of this case nonetheless favour granting the CPL on the basis of unlawful interference with economic relations. But for the defendants' tortious conduct, the plaintiff would have had an enforceable APS and an undeniably reasonable claim to an interest in the Property.
25The plaintiff has pointed to no case where a claim for unlawful interference with economic relations has given rise to a claim in land. The case law cited by the plaintiff is clear that unlawful interference with economic relations is a tort. The plaintiff cites authority that says that the scope of this tort is uncertain, and therefore argues that the court ought to take a generous view in determining whether unlawful economic interference with economic relations "which act to deprive a plaintiff of a valid and enforceable APS is sufficient to ground a reasonable claim to an interest in land." Even a claim to an interest land is a remedy for this tort, the alleged defendant tortfeasors are the real estate agents of the Sellers and Other Bidder who have no interest in the Property. The plaintiff, not surprisingly, does not offer up any rationale why the alleged wrongdoing of the defendant real estate agents should tie up the Sellers' Property, in circumstances where the plaintiff does not allege that the Sellers or the Other Bidder (who is not a defendant) are part of the conspiracy and who are not alleged to have acted tortiously. In my view, these claims do not ground a reasonable claim to an interest in land.
26Because of my finding that the plaintiff has not shown a triable claim to an interest in land, I do not need to go on to consider the second step of the CPL test.
Disposition
27The plaintiff's motion is dismissed.
L. La Horey, A.J.
Date: September 28, 2022