Cohen v. Woodcliffe Corporation, 2022 ONSC 5599

COURT FILE NO.: CV-16-553042

DATE: 20221003

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MITCHELL COHEN

Plaintiff

– and –

WOODCLIFFE CORPORATION, WESTDALE CONSTRUCTION CO. LIMITED, PRICE EQUITIES LIMITED, PRICE LEASEHOLDS LIMITED and ROSEDALE EQUITIES LIMITED

Defendants

Jamie VanWiechen, for the Plaintiff

Maureen Whelton and Neil Wilson, for the Defendant Woodcliffe Corporation

HEARD: September 20-24, 27-29, October 1, 4, 2021 and February 14, 2022

REASONS FOR JUDGMENT

VERMETTE J.

A. OVERVIEW

[1] The Plaintiff, Mitchell Cohen, worked for the Defendant Woodcliffe Corporation (“Woodcliffe”) from 2001 to 2008. His title was Executive Vice-President. Woodcliffe is a property developer which specializes in the redevelopment of historic properties. Woodcliffe is the only remaining Defendant as the action was discontinued against all the other Defendants.

[2] Mr. Cohen claims that Woodcliffe, through its principal, Paul Oberman, granted him a 5% interest in the profit from the development or sale of a project that was being developed by Woodcliffe while he was working for Woodcliffe. Mr. Cohen’s entitlement to this interest was recognized in a letter that was sent to him in the context of his termination. The letter in question enclosed a release and one of the issues in this case is whether the interest was extinguished by the release. Another issue is whether the terms of the agreement to grant a 5% interest to Mr. Cohen are sufficiently certain to constitute an enforceable contract.

[3] Mr. Oberman tragically passed away in March 2011 in a plane accident, three years after Mr. Cohen’s termination. After Mr. Oberman’s death, his wife, Eve Lewis, took over the management of Woodcliffe.

[4] At some point in 2013, Mr. Cohen raised with Ms. Lewis the issue of his interest in the project. After investigating the matter, Woodcliffe took the position that Mr. Cohen did not have an enforceable interest in the project. The lands involved in the project were sold in May 2016, and Woodcliffe refused to give a share of the net proceeds of the sale of the lands to Mr. Cohen. As a result, Mr. Cohen commenced this action on May 18, 2016. He claims damages in an amount equal to 5% of the net proceeds of the sale of the lands.

[5] In the event this Court finds that Mr. Cohen has an enforceable interest in the project, the parties also disagree as to how the value of a 5% interest in the profit from the sale of the lands is to be calculated.

B. FACTUAL BACKGROUND

1. Witnesses at trial

[6] The Plaintiff gave evidence at trial. He also called the following witnesses: (1) Rick Morante, Woodcliffe’s controller at the relevant time; (2) Peter Lesti, an accountant who worked for the accounting firm retained by Woodcliffe at the relevant time; and (3) Paul Mandel, an accounting expert.

[7] The Defendant called the following witnesses: (1) Eve Lewis, Woodcliffe’s President and Chief Executive Officer; (2) William Trotter, Woodcliffe’s external accountant; (2) Robert Colson, Woodcliffe’s lawyer in relation to Mr. Cohen’s termination; (3) Robert Ryan, Woodcliffe’s Chief Operations Officer at the time of Mr. Cohen’s termination;[^1] (4) Ken Froese, an accounting expert; and (5) Todd Lisso, an expert in land development and profit-sharing and joint venture agreements in land development.

2. Woodcliffe’s acquisition of the Summerhill Site and Mr. Cohen’s start at Woodcliffe

[8] From 1987 to 1998, Mr. Cohen worked for Marathon Realty Company Limited and related entities (“Marathon”).

[9] While Mr. Cohen was working for Marathon, he was in charge of the development and sale of several parcels of lands in the Yonge and Summerhill area in Toronto (“Summerhill Site”). The diagram below represents the Summerhill Site (“Diagram”).

[10] The Summerhill Site owned by Marathon was comprised of the lands shown on the Diagram as parcels ## 1 to 6, except # 2 on Price Street and # 2 facing Scrivener Square (i.e. the land owned by Marathon only included the parcel # 2 facing Yonge Street). Mr. Cohen was in charge of zoning, planning, architecture, heritage restoration, public relations, etc., with respect to the overall site.

[11] The Shops of Summerhill (parcel # 3 on the Diagram) were sold by Marathon early on while Mr. Cohen was at Marathon. Marathon also sold parcel # 6 to the Toronto Lawn Tennis Club. Marathon subsequently sold the balance of the Summerhill Site to Woodcliffe. During the sale process, Mr. Cohen worked closely with Mr. Oberman.

[12] In 1998, after the sale of the Summerhill Site, Mr. Cohen left Marathon and went to work for Revenue Properties Company Limited. In October 2000, Mr. Oberman reached out to him to ask him to join Woodcliffe and work on Woodcliffe’s projects for the Summerhill Site. Mr. Cohen eventually agreed to do so and started working at Woodcliffe in January 2001. As stated above, his title was Executive Vice-President.

3. Joint venture between Woodcliffe and Westdale

[13] Shortly before Mr. Cohen joined Woodcliffe, Woodcliffe formed a joint venture with Westdale Construction Co. Limited (“Westdale”) with respect to the Summerhill Site. Westdale operates in the real estate industry as an owner, manager, lender and developer. Its principal is Ronald Kimel.

[14] Woodcliffe and Westdale entered into a Co-Tenancy Agreement made as of October 31, 2000. According to the Co-Tenancy Agreement, Woodcliffe conveyed to Westdale a 50% interest as a tenant-in-common in the lands of the Summerhill Site that Woodcliffe still owned on November 1, 2000 at a price of $6 million. On the same day, a $6.5 million mortgage was granted to a Westdale-related entity bearing interest at prime plus one percent. The Co-Tenancy Agreement outlines the obligations and rights of the co-tenants (i.e. Woodcliffe and Westdale), and deals with the decision-making process and financial and accounting matters. It also includes a buy/sell clause.

[15] The same joint venture model that was used with respect to the Summerhill Site was used by Woodcliffe and Westdale over the years with respect to other properties. Mr. Cohen described the joint venture as Westdale providing the “financial strength” and Woodcliffe providing the sweat equity. When a property was acquired by Woodcliffe and Westdale, the typical structure was that the property would be owned by a nominee or joint venture company in which Westdale and Woodcliffe each had a 50% interest.

[16] While the Co-Tenancy Agreement, by its terms, only applied to the Summerhill Site and adjacent lands that the parties were proposing to acquire, the parties’ evidence is that the terms of the Co-Tenancy Agreement were generally applied to all the subsequent joint ventures entered into by Westdale and Woodcliffe with respect to other properties.

[17] The Co-Tenancy Agreement included the following provisions, among others:

5.5 It shall be the responsibility of Westdale to provide or arrange any funding or financing required by the Co-Tenancy to construct and develop the Property (including the Adjacent Lands). Any and all funding provided or arranged by Westdale shall be treated as a loan by Westdale to the Co-Tenancy, but Westdale shall be responsible for all costs associated with the obtaining of such funds or financing and such “cost of funds” will not be treated as a loan to the Co-Tenancy. Any guarantees required in order to obtain such funding or financing shall be provided by Ronald S. Kimel.

8.7 Except as may be approved by the Co-Tenants, no payment will be made to any Co-Tenant for its services or the services of its shareholders, directors or employees.

[18] At around the time that Mr. Cohen joined Woodcliffe, Woodcliffe and Westdale acquired two properties on Price Street – 8 and 10 Price Street (the two parcels # 2 on the Diagram that were not included in the sale from Marathon). They subsequently also acquired the Shops of Summerhill (parcel # 3 on the Diagram). Before Mr. Cohen joined Woodcliffe, Woodcliffe had entered into an agreement of purchase and sale with a condominium developer with respect to parcels # 4 and # 5, but Woodcliffe still had servicing and other obligations to fulfil before the developer would be allowed to go ahead with its condominium project.

[19] Title to the various parcels on the Diagram was held by different corporations in which Woodcliffe and Westdale each had a 50% interest. Title to parcel # 1, the North Toronto Station, was held by North Toronto Station Corporation. Title to parcel # 2 facing Yonge Street – which Woodcliffe originally acquired from Marathon – was held by Rosedale Equities Limited. Title to the two properties that were subsequently acquired by Woodcliffe and Westdale and that are part of # 2 on the Diagram was held by Price Equities Limited (8 Price Street) and Price Leaseholds Limited (10 Price Street), respectively. Title to parcel # 3, the Shops of Summerhill, was held by 1101 Yonge Street Limited.

4. Mr. Cohen’s 5% interest in the profit from the development or sale of the Summerhill Condominium Site

[20] After Mr. Cohen started at Woodcliffe, he did a lot of work in relation to the North Toronto Station (parcel # 1 on the Diagram). He negotiated a lease with the LCBO and, after the work on the building was completed, the LCBO opened a flagship store in the North Toronto Station. Mr. Cohen also started and managed major renovations of the Shops of Summerhill and worked on a condominium project to be developed on the three # 2 parcels on the Diagram (“Summerhill Condominium Site”). In addition to the properties mentioned above, Mr. Cohen worked on the acquisition, financing and management of approximately ten other properties owned by Woodcliffe and Westdale.

[21] At some point after the opening of the North Toronto Station, Mr. Oberman offered to Mr. Cohen an interest in the Summerhill Condominium Site, more specifically five percent of the profit from the development or sale of the site. This offer was made while Mr. Oberman and Mr. Cohen were walking around the North Toronto Station. According to Mr. Cohen, Mr. Oberman’s offer was precipitated by the success achieved by Mr. Cohen on the North Toronto Station project, about which Mr. Oberman was very happy and grateful.

[22] Mr. Cohen does not remember when exactly this conversation occurred. He remembers that it was shortly after the bar mitzvah of one of Mr. Oberman’s sons, which took place in the North Toronto Station after the work was completed. During his examination-in-chief, Mr. Cohen estimated that the conversation occurred sometime in 2004 or 2005, but when he was later advised that the bar mitzvah of Mr. Oberman’s youngest son took place in November 2002, he was not sure whether the conversation would have occurred in 2002 – which would have been less than two years after he joined Woodcliffe – or later.

[23] Mr. Cohen acknowledged that he never had any detailed discussions with Mr. Oberman about the meaning of the various terms of their agreement regarding the Summerhill Condominium Site – including the meaning of “profits” – and that the terms were never put in writing. However, Mr. Cohen said that he and Mr. Oberman would often “chitchat” about Mr. Cohen’s interest in the Summerhill Condominium Site before his termination.

[24] At the time the agreement was entered into, there was no specific timeline for the sale or development of the Summerhill Condominium Site, but everyone’s understanding was that completing a project of this nature would take a long time.

5. Mr. Cohen’s interest in Chambers Equities

[25] One of the properties acquired by Westdale and Woodcliffe was a property in Ottawa owned by a company called The Chambers Equities Limited (“Chambers Equities”). Woodcliffe’s 50% interest in Chambers Equities was held by a corporation called Ottawa Chambers Limited (“Ottawa Chambers”).

[26] At some point in 2003, Mr. Oberman agreed to allow Mr. Cohen to purchase a 5% interest in the Chambers Equities project, which was equivalent to a 10% interest of Woodcliffe’s part of the project. Mr. Cohen’s evidence is that the offer was initially made orally by Mr. Oberman and was presented as a 5% interest in the project. According to Mr. Cohen, he was being compensated with “some skin in the game”. Mr. Cohen purchased this interest by paying approximately $500,000. Mr. Cohen’s 5% interest in the project was implemented as a 10% interest in Ottawa Chambers, i.e. the corporation that held Woodcliffe’s 50% interest in Chambers Equities. Woodcliffe and Mr. Cohen entered into a Trust Agreement made as of August 11, 2003 pursuant to which Woodcliffe agreed to hold the common shares and special shares of Ottawa Chambers as a bare trustee for and on behalf of the following two beneficiaries: (1) Woodcliffe as to a 90% interest, and (2) Mr. Cohen as to a 10% interest.

6. Events leading to Mr. Cohen’s termination

[27] The evidence shows that Mr. Cohen expressed unhappiness at work in the fall of 2007, at about the same time that Woodcliffe hired Robert Ryan as Chief Operations Officer of Woodcliffe.[^2] Mr. Cohen told Mr. Oberman that he thought that he was being constructively dismissed. In addition to the hiring of Mr. Ryan, Mr. Cohen identified another factor that contributed to his unhappiness at work, which was a conversation he had with Mr. Oberman in the fall of 2007 about having a five percent interest in the profits of new projects going forward. Mr. Oberman did not agree to that. At the time of this conversation, Mr. Cohen was under the impression that Mr. Oberman had previously agreed to give him a carried interest in deals and that the process that took place with respect to Chambers Equities and the Summerhill Condominium Site would continue.

[28] At the end of October 2007, Mr. Oberman consulted with his lawyer, Robert Colson, about Mr. Cohen. Mr. Colson’s notes of a telephone conversation that he had with Mr. Oberman on October 31, 2007 include the following paragraph:

Mich told Paul about a year or so ago that he thought he was getting a carried interest in all of Paul’s deals. He’s wrong: he was allowed to buy into one deal. Marvin has been trying to resolve this, so far w/o success. Mitch is also complaining his bonuses are too small, and thought he had a carried interest b/c Paul had always said he’d look after Mitch, and b/c on one deal where Mitch put money in Paul had said they shd use this as a template for other deals. Mitch has been unhappy/grumpy ever since.

[29] On November 29, 2007, Mr. Colson had a telephone conversation with Mr. Ryan about Mr. Cohen. Mr. Colson’s notes of this call read, in part:

Mitch is an EVP, paid as a consultant, no employment ag’t, bills as a consultant, 6 1/2 years. Has told Paul that hiring of a COO is a wrwongful [sic] dismissal and he’s threatening to sue. Earns $200K, has a documented equity interest in one of the prties at 5% that he’s getting paid on, and an UNdocumented interest that we acknwoeldge [sic] in another development site. Minority shareholder, no triggers, dragged along, no decision making rights.

Paul thinks that if he stays any longer he’ll build his case, and they want to move him out.

Bob [Ryan] has suggested that they separate employment issue from the equity and proceed to sever him on theory that things will work themselves out.

Told him I understand Mitch is claiming an equity interest in other prties and Paul disputes it. Says Paul has decided that it’s time to be rid of Mitch as long as I don’t tell him otherwise.

Letter w/ a 6 mnth notice period. Release etc. Bob will look into bonus hixtory [sic] and get back to me with instns after s/w Paul. Agrees it’s better to err on generous side particularly if we expect litigation over thge [sic] alleged equity interest in other projects: shows we are responsible, reasonable, etc. when Mitch will have to argue otherwise and call us liars. [Emphasis added.]

[30] Mr. Colson continued to communicate with Messrs. Ryan and Oberman in the following weeks about Mr. Cohen and the steps that should be taken with respect to his position at Woodcliffe. On January 28, 2008, Mr. Oberman sent an e-mail to Mr. Colson, with a copy to Mr. Ryan, which summarized the compensation received by Mr. Cohen from 2001 to 2007. Mr. Oberman’s e-mail also included the following sentence: “He was also granted a 5% interest in the profits from an as yet undeveloped condo project at Summerhill and he was permitted to purchase a 5% interest in an office building in Ottawa.”

[31] On January 30, 2008, Mr. Colson sent a letter to Mr. Oberman in which he set out his advice and recommendations regarding Mr. Cohen. The letter included the following paragraph:

Although Mr. Cohen is claiming entitlement to an interest in a number of projects, that entitlement is very much in dispute with the exception of a 5% carried interest in the profits from the as yet undeveloped condo project at Summerhill and a purchased 5% interest in an office building in Ottawa, both of which are addressed in your e-mail.

[32] On February 4, 2008, Mr. Ryan called Mr. Colson to advise him that Mr. Oberman wanted to go ahead with terminating Mr. Cohen. The terms of the termination were discussed, but Mr. Ryan stated that he needed to get instructions from Mr. Oberman on certain points, including Mr. Cohen’s interest in the Summerhill Condominium Site.

[33] Later on February 4, 2008, Mr. Ryan sent the following e-mail to Mr. Colson:

Mr. Colson,

Further to our discussion I wish to clarify the following outstanding items,

1. A full and final release is required for Woodcliffe Corporation, Westdale Construction Co. Limited and their respective officers, directors and affiliates,

2. Mr. Cohen has a registered minority interest in The Chambers Equities Limited,

3. Mr. Cohen’s interest in the future condominium site at Yonge St. and Birch Street in Toronto has to the best of my knowledge not been documented. Paul indicates that Mr. Cohen’s interest was on future development profit after deducting for all costs inclusive of debt, interest, expenses and land value and that it was not intended to survive termination of employment. The termination agreement is not to acknowledge this interest.

Please move forward as discussed,

Thank you.

[34] On February 6, 2008, Mr. Colson sent an e-mail to Mr. Oberman attaching a termination letter addressed to Mr. Cohen and Cohen Consulting that was to be delivered to Mr. Cohen. Mr. Colson’s letter dated February 6, 2008 to Mr. Cohen and Cohen Consulting (“February 6, 2008 Letter”) read as follows:

This letter confirms our clients’ advice that your relationships with them are being terminated, effective immediately.

On a strictly without prejudice basis, our clients are prepared to continue to make payments at a rate consistent with your current billing arrangement which is to say that payments will be based on the annualized sum of $200,000.00 per annum. Those payments will continue for seven months from today’s date and will be paid at the time and in the manner that you would have received payment but for the termination. While it is not unusual in circumstances of this kind to insist that the receiving party mitigate his damages by seeking out and obtaining a replacement source of income with the result that the continuance payments are ordinarily reduced by all or some portion of the income received, our clients do not take that position in this instance and are not seeking accountability for replacement earnings. Consequently, if you were to become employed or enter into similar income generating arrangements with other parties, that will be entirely for your benefit and our clients do not seek any reduction in the amounts that they would otherwise have to pay.

Our clients’ willingness to make the aforesaid payments is conditional upon you signing and returning three originally executed and witnesses [sic] copies of the enclosed Full and Final Release on or before end of business on Friday of this week. We encourage you to seek out independent legal advice prior to signing the release and returning it. All copies should be returned directly to either Mr. Ryan or Mr. Oberman.

We understand that you have a registered minority interest in a project in Ottawa known as The Chambers Equities Limited, and as per the terms of the release your interest in that project is unaffected.

Our clients wish to thank you for your efforts in recent years and they wish you all the best in your future endeavours.

[35] The February 6, 2008 Letter enclosed a Full and Final Release which read, in part:

IN CONSIDERATION of the promise to make the payments set out in a letter dated February 6, 2008 from Teplitsky, Colson LLP to Mitchell Cohen and to Cohen Consulting, (collectively the “Releasors”) to one or both of the Releasors as Mitchell Cohen may direct, and for other good and valuable consideration, the receipt and sufficiency of which are hereby irrevocably acknowledged by the Releasors, each of the Releasors hereby collectively and individually hereby releases WOODCLIFFE CORPORATION and WESTDALE CONSTRUCTION CO. LIMITED and all of their respective officers, directors, and affiliated corporate and business entities including any companies or other entities owned by them and/or by their respective officers and directors (including but not limited to all of the entities listed in Schedule ‘A’ hereto) (collectively the “Releasees”) from any and all manner of actions, causes of action, suits, debts, duties, accounts, arrears, payments, complaints, contracts, claims, covenants and demands whatsoever whether arising at common law, by contract, by tort, by statute, by rule, regulation or otherwise, which against them or any of them, they now have, ever had, or hereafter can, shall or may have for or by reason of any cause, matter or thing whatsoever existing to the present time, in connection with or against any of the Releasees or any related, associated, or affiliated corporation, partnership, proprietorship, business or organization, including, without limiting the generality of the foregoing, all claims and demands for or with respect to salary, remuneration, bonuses, commission, advances on commission, fringe benefits, share entitlement, vacation time, vacation pay, severance allowance, termination pay, severance pay, notice of termination, deferred compensation, employee participation in any company interest, employee medical and dental plan, bonus and incentive plan, insurance of any kind, or any other employment benefit or fringe benefit or other compensation of any kind whatsoever.

PROVIDED and it is hereby agreed that notwithstanding any of the other terms hereof, the registered minority interest of Mitchell Cohen or Cohen Consulting in a project known as The Chambers Equities Limited shall not be affected, impaired or in any other way reduced by virtue of the terms hereof, with the result that his interest in that project shall continue in accordance with its terms.

[36] Schedule “A” to the Full and Final Release listed fifteen corporate entities, which were joint venture companies in which Woodcliffe and Westdale had an interest. It included Price Equities Limited, Price Leaseholds Limited and Rosedale Equities Limited, i.e. the corporations that held title to all the # 2 parcels on the Diagram (the Summerhill Condominium Site). Schedule “A” did not list Chambers Equities, Ottawa Chambers or Chambers Ottawa Limited, which was the corporation holding Westdale’s 50% interest in Chambers Equities. It also omitted a few other corporate entities owned by Westdale and Woodcliffe, including a corporation in which Wesdtdale and Woodcliffe each had a 50% interest (Woodcliffe Construction Corporation) and corporations that were holding Westdale’s or Woodcliffe’s 50% interest in a particular joint venture (e.g., Rosedale Station Corporation, Summerhill Station Corporation and King James Place Equities Limited).

[37] Mr. Oberman gave the February 6, 2008 Letter to Mr. Cohen in the morning of February 6, 2008. Mr. Cohen started working for Westdale within a day or two of his termination by Woodcliffe. He is still employed by Westdale.

7. Post-termination negotiations between Woodcliffe and Mr. Cohen

[38] Mr. Cohen did not sign the release by February 8, 2008, as requested in the February 6, 2008 Letter. Instead, he started having discussions with Mr. Oberman about the terms of his termination.

[39] On March 26, 2008, Mr. Oberman sent the following instructions to Mr. Colson:

Please draft a release with Mitch. He gets the salary we had previously offered him plus $65,000 in lieu of bonuses. In addition, he will receive 5% of the profit from the sale or redevelopment of the 8-10 Price Street condo site, excludion [sic] the buildings known as The Five Thieves. [Emphasis added.]

[40] On April 14, 2008, Mr. Colson sent the following letter to Mr. Oberman to seek instructions/clarification with respect to the release that Mr. Oberman had asked him to draft for Mr. Cohen:

I left a couple of messages asking you to get back to me with respect to the details of the Release that you wanted us to draft from Cohen in favour of Woodcliffe and related entities, but I have not heard back as of yet.

I left for a three week vacation with my daughter in New Zealand on Friday and I will be back in the office on May 4. If you could get me the information that I have asked for I would be more than happy to look after this for you. I need to know precisely what the terms of settlement were, whether those terms were confirmed in writing (and if so I will want a copy of the document recording the terms), an answer to the question of whether or [sic] the Price Street condo site which you refer to in your e-mail of March 26 is what we called the Chambers Equities Limited in the draft Release which we had prepared originally, and a more precise definition of what is meant by “the profit from the sale or redevelopment” of the 8-10 Price Street condo site. It would also be helpful to have specific instructions about the entities that you wish Cohen to Release. You will recall that when we did the original form of Release we listed a number of companies in Schedule A, but I see, for example, that the Chambers Equities Limited is not one of them and I know that this list was put together in a bit of a hurry at your end so this is our opportunity to make sure that everyone who we need to include is listed.

Please get back to me when you have a moment.

[41] A series of communications followed between Mr. Ryan and Mr. Colson from which it is apparent that (a) neither of them knew what Mr. Oberman and Mr. Cohen had agreed upon, and (b) Mr. Ryan was not providing to Mr. Colson the information that he was requesting. On May 6, 2008, Mr. Ryan sent the following e-mail to Mr. Colson, on which Mr. Oberman was copied:

Good morning Mr. Colson,

Paul forwarded your recent correspondence to my attention for reply.

Both Paul and Ron Kimel have met with Mr. Cohen to discuss settlement terms.

As I understand it the ball is in Mr. Cohen’s court and they await his response regarding moving forward on the basis discussed.

I will keep you posted as things unfold.

[42] On May 7, 2008, Mr. Colson sent the following letter in response to Mr. Ryan’s e-mail:

Thanks very much for your e-mail which I assume was sent in response to my letter to Paul asking for detailed instructions.

What generated that letter was Paul’s request that I prepare draft Minutes of Settlement and a Release. He told me at the time that matters had been resolved with Mr. Cohen.

Any of three things are possible:

1. I have [sic] may have misunderstood;

2. Paul may have jumped the gun; or

3. He may not have brought you fully up to date.

Perhaps you could let me know which it is since my assumption, based on what Paul had asked me to do at the time, was that the matter has been resolved but for the necessary paperwork and in order to do that paperwork I will need clear instructions.

Your co-operation is appreciated.

[43] On May 23, 2008, Mr. Ryan sent the following e-mail to Mr. Colson:

Good morning Bob,

Paul advises he has reached a settlement with Mr. Cohen.

In addition to the original severance offer a bonus payment in the amount of $65,000 is to be included.

Please prepare a formal agreement for execution. Give me a call should you require any information.

Thank you.

[44] I pause here to note that the May 23, 2008 e-mail from Mr. Ryan, which allegedly outlines the terms of the settlement reached by Messrs. Cohen and Oberman, does not mention the interest in the Summerhill Condominium Site, contrary to Mr. Oberman’s e-mail dated March 26, 2008. It would be very unusual if, after agreeing on a settlement that included a 5% interest in the Summerhill Condominium Site in March 2008, Mr. Cohen were to agree two months later to a settlement that did not include the 5% interest but with all the other terms unchanged.

[45] There appears to have been no progress for another two-month period. On July 16, 2008, Mr. Colson had a telephone conversation with Mr. Oberman. Mr. Colson’s notes of the call read as follows:

Told him Ryan’s email is a little cryptic and I want to confirm instructions:

Went over deal: 7 moths [sic] from 6Feb at $200K plus $65K plus Chambersx [sic] Equity.

NO: he says Mitch also gets “a 5% interested [sic] in the profit from the development or sale of the Summerhill Condo lands excluding the 5 thieves”.

Take out word “registered” wrt Chambers Equity Limited.

Bonus payable at end of the 7 months.

Wanted me to send this to Mithc [sic] at same time as I send it to him (Paul): said I won’t do that b/c I want him to read and ok this first, and I din/h Mithc’s [sic] address: says he’ll gat [sic] that to me.

[46] During his examination-in-chief, Mr. Colson stated the following with respect to the third paragraph of his notes above:

[…] You see the next paragraph has the word No in capital letters. That wouldn’t have been there, it would have read initially he, being Mr. Oberman, says Mitch still gets the five percent adjusting the profit from Summerhill lands excluding Five Thieves. As the conversation went on, I queried him about that and he said, you’re right, he doesn’t get a five percent interest, there’s no reason for it, take it out. And I added the word “No” there in caps […].

[47] Later on July 16, 2008, Mr. Colson sent revised versions of the February 6, 2008 Letter and the Full and Final Release to Mr. Oberman for his review and approval. On July 22, 2008, Mr. Ryan confirmed that the drafts were acceptable and that they should be sent to Mr. Cohen. Mr. Colson sent them to Mr. Cohen later that day.

[48] The revised version of the February 6, 2008 Letter sent to Mr. Cohen on July 22, 2008 indicated that it was revised on July 16, 2008 (“July 16, 2008 Letter”). The July 16, 2008 Letter contained two significant additions, when compared to the original February 6, 2008 Letter: (1) an additional “termination payment” of $65,000; and (2) the mention of an entitlement “to a 5% interest in the profit from the development or future sale of the Summerhill Condominium lands”. While large parts of the July 16, 2008 Letter are identical to the February 6, 2008 Letter, I reproduce below the entirety of the July 16, 2008 Letter given its importance, with emphasis added on the significant additions:

This letter confirms our clients’ advice that your relationships with them are being terminated, effective February 6, 2008.

As per your agreement with Mr. Oberman, our clients will continue to make payments at a rate consistent with your current billing arrangement which is to say that payments will be based on the annualized sum of $200,000.00 per annum. Those payments will continue for seven months from the original date of this letter (i.e. February 6, 2008) and will be paid at the time and in the manner that you would have received payment but for the termination. While it is not unusual in circumstances of this kind to insist that the receiving party mitigate his damages by seeking out and obtaining a replacement source of income with the result that the continuance payments are ordinarily reduced by all or some portion of the income received, our clients do not take that position in this instance and are not seeking accountability for replacement earnings. Consequently, if you become employed or enter into similar income generating arrangements with other parties, that will be entirely for your benefit and our clients do not seek any reduction in the amounts that they would otherwise have to pay. In addition, our clients will make a termination payment of $65,000,00 (less statutory withholdings) on September 6, 2008 (seven months from the actual date of termination) in consideration of any and all other claims save and except for your continuing interest in the Chambers Equity Limited.

We understand that you have a minority interest in a project in Ottawa known as The Chambers Equities Limited, and as per the terms of the release your interest in that project is unaffected. You are also entitled to a 5% interest in the profit from the development or future sale of the Summerhill Condominium lands and, for greater certainty, it is agreed that those lands do not include the properties occupied by what are commonly known as the “The Five Thieves”.

Our clients’ willingness to make the aforesaid payments is conditional upon you signing and returning three originally executed and witnesses [sic] copies of the enclosed Full and Final Release on or before end of business on Friday of next week. We encourage you to seek out independent legal advice prior to signing the release and returning it. All copies should be returned directly to either Mr. Ryan or Mr. Oberman.

Our clients wish to thank you for your efforts in recent years and they wish you all the best in your future endeavours.

[49] The Full and Final Release enclosed with the July 16, 2008 Letter is, for all intents and purposes, identical to the Full and Final Release enclosed with the February 6, 2018 Letter, except that: (a) the July 16, 2018 Letter is referred to at the beginning of the release instead of the February 6, 2018 Letter and is attached as Schedule “A” to the release; (b) the list of released corporate entities is now Schedule “B” to the release; and (c) the description of Mr. Cohen’s interest in Chambers Equities is now described as a “minority interest” instead of a “registered minority interest”. The list of corporate entities in Schedule “B” is the same as the list of corporate entities in Schedule “A” to the Full and Final Release enclosed with the February 6, 2008 Letter. The list of corporate entities did not change throughout the various drafts.

[50] Mr. Cohen subsequently retained counsel, Stuart Ducoffe of the law firm Woolgar VanWiechen Ketcheson Ducoffe LLP. On August 18, 2008, Mr. Ducoffe sent a letter to Mr. Colson in which he requested revisions to the July 16, 2008 Letter and the Full and Final Release. Among other things, Mr. Ducoffe requested revisions to the two parts of the July 16, 2008 Letter that are emphasized above. With respect to the first part, he asked for the deletion of “(less statutory withholdings)”, and that “Chambers Equity Limited” be replaced by “Chambers Equities Limited”. With respect to the second part, he asked that the passage be amended to read as follows:

We understand that you have a minority interest in a company operating as Ottawa Chambers which owns 50% of a project in Ottawa known as Chambers Equities Limited, and as per the terms of the release your interest in that project is unaffected. You are still entitled to a 5% interest in the profit from the development or future sale of the Rosedale Condominium and, for greater certainty, it is agreed that those lands do not include the properties occupied by what are commonly know [sic] as “The Five Thieves”.

[51] Mr. Ducoffe also requested that his August 18, 2008 letter be included in Schedule “A” to the release along with the July 16, 2008 Letter. The main changes that he requested with respect to the Full and Final Release were: (a) to limit the scope of the release to claims that the Releasors had up to February 8, 2008; and (b) to add a paragraph providing for a release from Woodcliffe to Mr. Cohen.

[52] Mr. Colson forwarded Mr. Ducoffe’s letter to Mr. Oberman on August 20, 2008 and sought his instructions on the requested changes. Mr. Oberman and Mr. Colson had a telephone conversation on August 27, 2008 during which they discussed the changes requested by Mr. Ducoffe. Among other things, Mr. Oberman confirmed that the “Rosedale Condominium” referred to the same project as the “Summerhill Condominium”.

[53] Mr. Colson responded to Mr. Ducoffe’s letter on August 28, 2008. Among other things, he stated that Mr. Ducoffe’s proposed changes to the third paragraph of the letter (i.e. the paragraph dealing with the Summerhill Condominium) were “probably satisfactory”. He also advised that his client did not agree to the proposed changes to the release.

[54] Mr. Ducoffe sent another letter to Mr. Colson on September 5, 2008 (which was initially sent to the wrong fax number). This letter enclosed a revised draft of the July 16, 2008 Letter. The last sentence of the second paragraph and the third paragraph of the revised draft read as follows:

[…] In addition, our clients will make a termination payment of $65,000.00 by no later than September 17, 2008 (approximately seven months from the actual date of termination) in consideration of any and all other claims save an [sic] except for your continuing interest in the Chambers Equities Limited.

We understand that you have a minority interest in a company operating as Ottawa Chambers which owns 50% of a project in Ottawa known as Chambers Equities Limited, and as per the terms of the release your interest in that project is unaffected. You are also entitled to a 5% interest in the profit from the development or future sale of the Rosedale Condominium and, for greater certainty, it is agreed that those lands do not include the properties occupied by what are commonly known as the “The Five Thieves”.

[55] On September 29, 2008, Mr. Colson had a telephone conversation with Mr. Oberman. His notes of the call are as follows:

Excludfe [sic] permanent 5 Theives [sic] (to the south).

W/n cut a cheque until we get language finalized.

[56] On September 30, 2008, Mr. Colson sent a letter to Mr. Ducoffe (“September 30, 2008 Letter’) which read, in part:

There are deficiencies in the form of Release which was attached to your e-mail of September 15 which we will have to discuss and in addition we wish to make a clarification to the July 16 revision to our letter of February 6 insofar as it relates to what are called “... the properties occupied by what are commonly known as “The Five Thieves””. We are in agreement that the property referred to in that paragraph relates to the permanent rather than the temporary location of The Five Thieves, i.e. it relates to the property on the southwest corner of the Summerhill lands.

With that in mind, I would appreciate if you would further amend the Release to make reference to this letter and if you would then provide me with a final form of Release, duly executed by Mr. Cohen which contains both this change and the others which you and I have discussed.

[57] The reference to the permanent and temporary locations of the Five Thieves related to the major renovations that had been undertaken with respect to the Shops of Summerhill and the fact that the tenants could not continue carrying on business in the building during parts of the renovations. As a result, large construction trailers were rented from which the tenants could run their business during the renovations. The trailers were located on parcel # 2 on the Diagram facing Yonge Street, immediately to the north of the Shops of Summerhill (which is parcel # 3). Thus, the trailers or temporary location of the Shops of Summerhill/Five Thieves were on the Summerhill Condominium Site.

[58] Mr. Ducoffe responded to Mr. Colson on October 8, 2008. He sent an e-mail that read, in part:

I acknowledge receipt of your correspondence of September 30, 2008. Although you and I have not yet spoken regarding the contents of this letter, it appears likely there will be no issues regarding any proposed changes to the language of the Release or the July 16, 2008 letter as it relates to the description of the “Five Thieves” property. What is an issue however and what my client has communicated directly to your client is his disagreement with your client’s apparent resistance to paying the severance monies as fees. […]

[59] Mr. Cohen eventually signed the final version of the Full and Final Release on November 6, 2008 (“Signed Release”), while Mr. Colson was out of the country. Mr. Oberman finalized the settlement with Mr. Cohen and made the agreed-upon payments. The first paragraph of the Signed Release refers to the correspondence exchanged between counsel, which is attached as Schedule “A” to the Signed Release. The beginning of the Signed Release reads as follows:

IN CONSIDERATION of the promise to make the payments set out in a letter dated February 6, 2008 from Robert Colson of Teplitsky, Colson LLP to Mitchell Cohen and Mitchell Cohen Consulting as revised by counsel correspondence of July 16, 2008 from Robert Colson of Teplitsky, Colson LLP to Mitchell Cohen and Mitchell Cohen Consulting; as further revised by correspondence dated August 18, 2008 from Stuart Ducoffe of Woolgar VanWiechen Ketcheson Ducoffe LLP to Robert Colson of Teplitsky, Colson LLP; as further revised by correspondence dated September 5, 2008 from Stuart Ducoffe of Woolgar VanWiechen Ketcheson Ducoffe LLP to Robert Colson of Teplitsky, Colson LLP; and as further revised by correspondence dated September 30, 2008 from Robert Colson of Teplitsky, Colson LLP to Stuart Ducoffe of Woolgar VanWiechen Ketcheson Ducoffe LLP (excluding the reference in the second to last paragraph regarding tax withholdings) annexed hereto as Schedule ‘A’, Mitchell Cohen and Cohen Consulting, (collectively the “Releasors”) and for other good and valuable consideration, the receipt and sufficiency of which are hereby irrevocably acknowledge [sic] by the Releasors, each of the Releasors hereby collectively and individually hereby releases collectively WOODCLIFFE CORPORATION AND WESTDALE CONSTRUCTION CO. LIMITED and all of their respective officers, directors, and affiliated corporate and business entities including any companies or other entities owned by them and/or by their respective officers and directors (including but not limited to the entities listed in Schedule ‘B’ hereto) (collectively the “Releasees”) from […].

[60] Ms. Lewis was not involved in the negotiations with Mr. Cohen. She testified that one day in the summer of 2008, Mr. Oberman mentioned to her in passing after he came home that everything had been resolved with Mr. Cohen and that Mr. Cohen’s interest in the Summerhill Condominium Site was now gone as Mr. Oberman had agreed to pay him more. Ms. Lewis did not ask any questions of Mr. Oberman on this issue. She did not give evidence regarding any subsequent conversations with Mr. Oberman regarding the negotiations with Mr. Cohen, although she remembers that Mr. Kimel called Mr. Oberman at some point in the fall because the agreement with Mr. Cohen had not been completed yet. Ms. Lewis stated that she was not aware when everything was done and signed.

8. Woodcliffe’s reaction to Mr. Cohen’s alleged interest in the Summerhill Condominium Site after Mr. Oberman’s death

[61] As stated above, Paul Oberman tragically passed away in March 2011 in a plane accident. After his death, Ms. Lewis took over the management of Woodcliffe.

[62] After Mr. Oberman’s death, Ms. Lewis did not hear anything about Mr. Cohen’s alleged 5% interest in the Summerhill Condominium Site until 2013. At the end of a meeting she had with Mr. Kimel, he told her that Mr. Cohen would be contacting her about his interest in the Summerhill Condominium Site. When she spoke with Mr. Cohen about this, she asked him for documentation. She also contacted Mr. Colson to ask him to give her the background information. Mr. Colson told her that he would prepare an opinion letter.

[63] After a significant delay that was due to some personal and family issues, Mr. Colson sent an opinion letter to Ms. Lewis on September 16, 2014 (“September 16, 2014 Letter”). The September 16, 2014 Letter read, in part:

I understand that you have been contacted by Mitch Cohen and that Mr. Cohen is asserting that he continues to own a 5% interest in any profits which might be made from the development or future sale of the Summerhill Condominium lands.

You requested that we review our file and, to the best of our ability, that we provide you with information relating to Mr. Cohen’s claim. In order to do so we have retrieved our file from the warehouse and reviewed the relevant correspondence that is in our possession, some of which is referenced below.

Our file indicates that Mr. Cohen was informed in writing of Woodcliffe’s decision to terminate what it believed at the time was an employment relationship with Mr. Cohen on February 6, 2008. On or about that date, we provided Woodcliffe with a letter informing Mr. Cohen of the decision to terminate and providing the draft form of a Release that Woodcliffe required in order to make the payments which it was proposing be made to Mr. Cohen. The letter provides, inter alia, that the making of the payments was conditional upon Mr. Cohen signing and returning three originally executed and witnessed copies of the Release by Friday, February 8 which, as you may know, did not occur. The form of Release which accompanied this letter was a Full and Final General Release by Cohen of the various Woodcliffe entities, although there was a proviso exempting the registered minority interest of Mr. Cohen or his sole proprietorship, Cohen Consulting, in a project known as the Chambers Equities Limited, which interest was to continue in accordance with its terms.

To my understanding, discussions ensued between Paul and Mr. Cohen and possibly with Mr. Kimel who I understand was contributing to Mr. Cohen’s salary while he was at Woodcliffe. I further believe that subsequent to Mr. Cohen’s departure from Woodcliffe, he went to work for one or more of Mr. Kimel’s companies.

While I do not have much information about what transpired between the date of our original letter and mid-July of 2008, a period of just over five months, I was advised by e-mail from Bob Ryan in late May of 2008 that matters with Mr. Cohen had been resolved and asked to prepare documents for execution. I spoke with Paul on the 15^th of July requesting clarification of Mr. Ryan’s instructions and I was advised by Paul that he and Cohen had agreed upon improved financial terms and that Mr. Cohen was also to be permitted to retain his minority interest in the Chambers Equities Limited and that he was entitled to a 5% interest in the profit from the development or sale of the Summerhill Condominium lands, excluding The Five Thieves. A revised Release and a cover letter addressed to Mr. Cohen was sent to Paul via e-mail on July 16, 2008 as per the enclosed. Please note the paragraph at the top of page 2 as well as the revised financial terms which are for the most part reflected in the paragraph at the bottom of page 1. You will also note that the February 6 date, while it remains, is followed by the words “Revised July 16, 2008”.

On August 18, 2008 we received a letter from Stuart Ducoffe who introduced himself as counsel to Mr. Cohen and to Cohen Consulting. In his letter, Mr. Cohen was seeking a number of revisions to the July 16 form of Release. I forwarded Mr. Ducoffe’s letter to Paul and took instructions to respond to his various requests for changes to both the letter and the Release. In that letter I state “My client will accept nothing less than a Full and Final Release from yours. The language which we have proposed and which you deleted must remain. Furthermore, your proposed added paragraph is unacceptable to my client”. The added paragraph to which I made reference is one which would have resulted in the Releases being mutual, i.e. it would have resulted in Woodcliffe and its related entities releasing Mr. Cohen which, as you can imagine, was never part of the deal. Mr. Ducoffe responded to my letter of August 28 on September 5, 2008. […] In his cover letter, Mr. Ducoffe proposed a number of changes to the February 6 draft letter and he indicated that while his client was disappointed in Woodcliffe’s refusal to recognize and make certain requested changes, Mr. Cohen was “... currently more interested in finalizing this matter than pursing [sic] the foregoing”. He goes on to say that as a result he is attaching an executed Full and Final Release which does not incorporate the proposed revisions, one of which was the inclusion of a reference to the Summerhill lands as set out above.

In Ducoffe’s letter of August 18, 2008 he proposes that the last sentence of the second paragraph of the July 16 letter be amended to add “In addition, your clients will make a termination payment of $65,000.00 on September 6, 2008 (7 months from the actual date of termination) in consideration of any and all other claims save and except for your continuing interest in the Chambers Equities Limited”.

This language was incorporated into the July 16, 2008 revision of the February 6, 2008 letter and his counsel having proposed that very language, it is difficult to see how Mr. Cohen is entitled to argue that his interest in the Summerhill lands is preserved, particularly in the context of what follows.

On December 17 I followed up again with Paul and asked that he bring me up to date and he responded on December 23 apologizing for not keeping me in the loop and indicating that he had settled with Cohen and paid him as agreed and that a copy of the executed Release and the payment details would be forwarded to me. I did not in fact receive that material until later and I enclose what I did receive at that time which includes a Full and Final Release signed by Mr. Cohen and dated November 6, 2008 and duly witnessed along with two schedules which formed a part of that Release. I reference the first full paragraph on page 2 thereof wherein the minority interest of Cohen or Cohen Consulting in the Chambers Equity Limited is expressly preserved. There is nothing in the Release which references anything having to do with the Summerhill lands. That said, page one of the Release does reference correspondence passing between counsel of July 16, August 18, September 5 and September 30, 2008, copies of which are also enclosed.

In the final analysis, the Release that Mr. Cohen signed in favour of Woodcliffe and its related entities is full and final and not qualified to reference any interest in the Summerhill lands. By contrast, Cohen’s interest in the Chambers Equities Limited is specifically referenced and preserved. Further, the correspondence suggests that any issues relating to the Summerhill lands were abandoned on or before September 15, a fact which is apparent from a review of the Ducoffe letter of September 5 (received September 15) and the Release which Mr. Cohen signed on September 5 which, as you will recall, also contains no reference to Summerhill. Indeed, while there is correspondence from Mr. Ducoffe on the subject of the Summerhill lands which he sent as a proposed revision to our original letter of February 6 which had already been revised on July 16, all that he says in that regard is the following:

We understand you have a minority interest in a company operating as Ottawa Chambers which owns 50% of a project in Ottawa known as Chambers Equities Limited, and as per the terms of the Release your interest in that project is unaffected. You are also entitled to a 5% interest in the profit from the development or future sale of the Rosedale Condominium and, for greater certainty, it is agreed that those lands do not include the properties occupied by what are commonly known as “The Five Thieves”.

I suggest to you that even at its highest, that language (even if it had been agreed to which I do not believe to be the case) does not preserve Mr. Cohen’s alleged interest in Summerhill in the face of the Full and Final Release which he signed. The treatment of the Chambers project as compared with the treatment of Summerhill in this paragraph is clear and unequivocal: Chambers is specifically said to be unaffected (a fact which is addressed in the Release itself) whereas all that is said about Summerhill is an indication that Mr. Cohen is “also entitled” to same. It seems to me that on a proper reading of this paragraph in the unaccepted revision that Mr. Ducoffe prepared, it is clear that whereas the Chambers interest is continued and unaffected, the Summerhill interest is not. Rather, insofar as Summerhill is concerned, what is being pointed out is the fact that there is an entitlement but that entitlement, such as it is, was clearly dealt with and determined in the Release document.

I will, as a final point, remind you of the fact that Paul took this matter over and presumably conduced [sic] negotiations directly with Mr. Cohen and I was advised only after the fact that a settlement was made. As a result, I have no knowledge at all of what transpired from the date of my last involvement in the file forward.

[Bold and underlined added. Italics in the original.]

[64] The bold and underlined passages in the September 16, 2014 Letter above indicate the passages that are inaccurate. Among other things, the September 16, 2014 Letter appears to suggest that the sentence about Mr. Cohen’s interest in the Summerhill Condominium Site in the letter enclosing the Full and Final Release was an addition proposed by Mr. Ducoffe, which may not have been agreed upon by the parties. However, this sentence was added to the July 16, 2008 Letter by Mr. Colson himself, before any correspondence from Mr. Ducoffe.

[65] During the examination for discovery of Woodcliffe, an undertaking was given to: (a) confirm with Mr. Colson that the conversation between Mr. Colson and Mr. Oberman referred to in the September 16, 2014 Letter took place on July 15, 2008; and (b) provide Mr. Colson’s complete recollection of that conversation. The answer to the undertaking clarified that the conversation took place on July 16, 2008, not July 15. It also stated that “Mr. Colson’s recollection is set out in his letter of September 16, 2014.” On February 2, 2020, just before the trial of this matter was initially scheduled to start, this answer to undertaking was changed as follows:

Mr. Colson’s evidence will be different than what is contained in the answer to this undertaking. Mr. Colson has now reviewed his file in detail and has reviewed the phone note from this conversation and he believes that Mr. Oberman told him in that telephone conversation that Mr. Cohen was not to receive a 5% interest in the Summerhill Condominium Lands.

[66] Mr. Colson explained the alleged error in his September 16, 2014 Letter by the fact that he had asked an associate at his firm to assist him with the review of the file and the drafting of the letter. He stated the following with respect to how the September 16, 2014 Letter was prepared:

And I asked her to get things organized to take a look at it and to - and, and, and she came back with some preliminary conclusions and she and I reviewed those and looked at the documents I think I sent her and then over to about other things that I wanted her to look at and ultimately, she prepared this letter in draft. I reviewed it and signed it and it was sent to Ms. Lewis.

[67] According to Mr. Colson, his associate did not understand his notes of the July 16, 2008 telephone conversation properly, and he did not read the draft letter that she prepared sufficiently carefully before signing it.

[68] After receiving the September 16, 2014 Letter, Ms. Lewis sent a handwritten note to Mr. Cohen which read as follows:

Hi Mitch

As I am sure you are aware, I was surprised about your interest in Summerhill, 3 years after Paul died. I had Bob Colson review the documentation that you gave me and attached is his response.

When I saw Ronnie [Mr. Kimel] last week, he suggested that the three of us get together to discuss it Mitch. Your thoughts? To the 3 of us meeting?

[69] While Mr. Cohen and Ms. Lewis had several conversations during which they tried to reach an agreement, they were not able to do so.

[70] Ms. Lewis’/Woodcliffe’s position is that the $65,000 payment that was added to the package offered to Mr. Cohen on July 16, 2008 was given in exchange for Mr. Cohen releasing his interest in the Summerhill Condominium Site. For a period of time in the litigation, Woodcliffe’s position was that Mr. Cohen had received a payment in the amount of $400,000 (i.e. in addition to the payments set out in the July 16, 2008 Letter) in exchange for his giving up his interest in the Summerhill Condominium Site. This position was later abandoned as it became clear that Mr. Cohen had not received an extra $400,000.

9. Sale of Chambers Equities, the Summerhill Lands and the Shops of Summerhill

[71] The Chambers Equities property was sold by Woodcliffe and Westdale approximately one year after Mr. Oberman passed away. Mr. Cohen received payments on account of his interest in Ottawa Chambers. No evidence was adduced regarding how Mr. Cohen’s entitlement was calculated, and any deductions that may have been made for certain expenses. For instance, there is no evidence that deductions were made for notional expenses for senior management compensation and interest on capital invested.

[72] In or around 2015, Westdale and Woodcliffe made the decision to sell all of the properties in the joint venture’s portfolio, including the Shops of Summerhill and the lands comprising the Summerhill Condominium Site (“Summerhill Lands”).

[73] Westdale and Woodcliffe received a number of expressions of interest with respect to the Summerhill Lands and the Shops of Summerhill. In March 2016, they received a letter of intent from affiliates of Diamond Corp. and Tricon Capital Group Inc. to purchase both the Summerhill Lands and the Shops of Summerhill for $83 million, with the purchase price being allocated as follows: $43 million for the Summerhill Lands and $40 million for the Shops of Summerhill (“Letter of Intent”). Negotiations ensued.

[74] On May 5, 2016, Westdale, Woodcliffe, Price Equities Limited, Price Leaseholds Limited and Rosedale Equities Limited entered into an agreement of purchase and sale with respect to the Summerhill Lands with: (a) Scrivener Square GP Inc., in its capacity as general partner for and on behalf of Scrivener Square LP, and (b) WNUF 3 Oakmont GP Inc., in its capacity as general partner for and on behalf of WNUF 3 Oakmont LP (“Lands APS”). The purchase price was $43 million.

[75] On the same day, Westdale, Woodcliffe and 1101 Yonge Street Limited entered into an agreement of purchase and sale with respect to the property occupied by the Shops of Summerhill/Five Thieves with: (a) Riocan Acquisitions Inc., and (b) Summerhill Shops GP Inc., in its capacity as general partner for and on behalf of Summerhill Shops LP (“Shops APS”). The purchase price was $42 million.[^3]

[76] It was a condition in both agreements of purchase and sale that the other agreement close concurrently. Further, the purchasers under both agreements jointly assumed the mortgages registered against both properties.

10. Expert evidence

[77] The Plaintiff adduced the evidence of Paul Mandel, who was qualified as an expert in business valuation and loss quantification. Mr. Mandel was asked to calculate the value of a 5% interest in the profit from the development or sale of the Summerhill Condominium Site. For the purposes of calculating profit for the value of the 5% interest, Mr. Mandel defined profit as follows:

Profit = Proceeds of disposition

Less: Capitalized cost of land

Less: Capitalized cost of buildings and development costs

Less: Selling costs

Less: Cumulative lost rental for the period November 1, 2000 to October 31, 2016

[78] Adopting this definition, Mr. Mandel came to the conclusion that the value of Mr. Cohen’s 5% interest in the profit from the sale of the Summerhill Condominium Site was $1,372,992.

[79] In response to Mr. Mandel’s evidence, the Defendant called Ken Froese, who was qualified as an expert in accounting and loss quantification. Mr. Froese stated that the definition of profit adopted by Mr. Mandel was reasonable from a financial accounting perspective.

[80] However, Mr. Froese noted that Mr. Mandel’s calculations did not take into consideration certain indirect costs in Woodcliffe such as senior management compensation and interest on invested capital. He expressed the view that both of these adjustments fit within the definition of profit.

[81] With respect to management compensation, Mr. Froese relied on a letter provided by Mr. Trotter in the context of a different piece of litigation which states that Mr. Oberman’s compensation (interest and dividends) for the period from January 1, 2000 to February 28, 2011 averaged $456,000 per year. Mr. Froese described the figure used for management compensation as a “very estimated number”.

[82] Mr. Froese’s report sets out calculations for the value of Mr. Cohen’s interest that include an allocation of senior management compensation and interest on capital invested. There are two sets of calculations: one based on a 5% profit participation in Woodcliffe’s 50% interest in the Summerhill Condominium Site, and one based on a 10% profit participation in Woodcliffe’s 50% interest. Mr. Froese prepared a number of calculations using different interest rates and different allocations of management compensation to the relevant joint ventures. Based on these calculations, the range of values for the 5% interest is $963,000 to $1,128,000 if Mr Cohen is entitled to 10% of Woodcliffe’s 50% interest, and $481,500 to $564,000 if Mr. Cohen is entitled to 5% of Woodcliffe’s 50% interest.

[83] Relying on a TRNTO.com article and a City of Toronto Staff Report, Mr. Froese expressed the view that the Summerhill Lands and the Shops of Summerhill were sold to the same buyers, with the buyers planning a development incorporating both properties. Based on this, Mr. Froese proposed an alternative allocation of proceeds based on the adjusted cost base of the properties, which equalizes the profit margin for both projects and reduces Woodcliffe’s share of the adjusted proceeds to approximately $15.5 million as compared to $21.5 million (i.e. a reduction in the gain on sale of approximately $6 million). Using an adjusted cost base approach significantly impacts the ranges of value set out above which are reduced as follows: $363,000 to $528,000 if Mr. Cohen is entitled to 10% of Woodcliffe’s 50% interest, and $181,500 to $264,000 if Mr. Cohen is entitled to 5% of Woodcliffe’s 50% interest.

[84] In his evidence in chief, Mr. Froese stated that the best number to use to calculate profit was the price in the agreement of purchase and sale, if it was reliable. He said that if it was not reliable, a very good second choice would be to use appraisers to determine the value of the property. With respect to the adjusted cost base approach, he stated the following: (a) that it could be a good number to use to negotiate instead of litigating; (b) that there was a lot of “softness” in the numbers; (c) that it was an indication, at best; and (d) that it was a “very, very rough tool”.

[85] Mr. Mandel did not agree with Mr. Froese’s view that it was appropriate to deduct notional expenses for management compensation and interest on joint venture capital. He noted that all capital invested was loaned on an interest-free basis by each of Woodcliffe and Westdale. He stated the following in his reply report with respect to management compensation:

The $450,000 management compensation was not actually paid to Oberman/Lewis and this deduction is a notional allocation. In addition, little or no information has been provided as to the actual services rendered or value of such services and whether it is even appropriate to deduct notional management compensation. Based on the foregoing and in light of the Co-Tenancy Agreement, we disagree with deducting a notional expense for the management compensation nor is the quantum based on any objective analysis.

[86] Mr. Mandel also expressed the view that the documentation relied upon by Mr. Froese did not support the conclusion that the Summerhill Lands and the Shops of Summerhill were sold to the same purchasers. In his view, there was no basis to change the allocation of the proceeds from that indicated in the Lands APS and Shops APS.

[87] The different approaches adopted by Mr. Mandel and Mr. Froese are discussed further below.

[88] Todd Lisso was called as an expert witness by the Defendant and was qualified as an expert in land development and profit-sharing and joint venture agreements in land development. Following a ruling at trial, Mr. Lisso was permitted to give expert evidence only with respect to how profit is typically calculated and distributed within various types of ownership and co-venture agreements that are utilized in the land development field. Mr. Lisso’s experience in the land development industry is primarily in the area of retail and shopping centres. He had very limited experience dealing with carried interests.

[89] I do not discuss Mr. Lisso’s evidence further below as I give no or very little weight to his evidence. The context and nature of Mr. Lisso’s experience in the land development industry are very different from the context of the present case and the nature of Mr. Cohen’s alleged interest. His experience was primarily with respect to agreements between entities like Woodcliffe and Westdale, but even then, the Co-Tenancy Agreement entered into by Westdale and Woodcliffe, the validity of which is not in dispute, does not completely fit within what Mr. Lisso described as the “industry norms” for joint venture agreements in his report and oral evidence.[^4] In my view, this significantly undermines the relevance of Mr. Lisso’s evidence, as well as the credibility of the position that there are “industry norms” throughout the land development industry, irrespective of the type of development and the nature of the interest in question. Further, there is no evidence that Mr. Cohen and/or Mr. Oberman were aware of the “industry norms” described in Mr. Lisso’s report and the practices of joint venturers in the shopping mall industry. However, there is no doubt that they were both aware of the terms of the Co-Tenancy Agreement.

[90] Ultimately, I have to apply the various legal principles regarding the formation of contract and the interpretation of contract to the particular context, parties and alleged agreement in this case. In my view, Mr. Lisso’s evidence is of little or no assistance to me with respect to this task. A contract can be validly entered into even if its terms are different from, and significantly less detailed than, contracts that are regularly entered into by other players in the industry with the assistance of lawyers.

C. POSITIONS OF THE PARTIES

1. Whether there was an enforceable agreement between Woodcliffe and Mr. Cohen

(i) Position of the Plaintiff

[91] The Plaintiff submits that the evidence is clear that Mr. Oberman granted to Mr. Cohen a 5% interest in the profit from the development or sale of the Summerhill Condominium Site, excluding the Five Thieves/Shops of Summerhill. He points out that Mr. Oberman acknowledged the agreement in writing, including in his e-mails dated January 28, 2008 and March 26, 2008 to Mr. Colson. Mr. Cohen’s entitlement is also recognized in the July 16, 2008 Letter (whether or not this entitlement was released as a result of the Signed Release).

[92] The Plaintiff argues that Woodcliffe’s position that the terms of the agreement/interest are too vague or uncertain to be enforced should be rejected. He relies, among other things, on the following statement of the House of Lords in Hillas & Co. v. Arcos, [1932] All E.R. 494 at 514, cited with approval by the Court of Appeal for Ontario in Canada Square Corp. v. Versafood Services Ltd. (1981), 34 O.R. (2d) 250 at para. 32 (“Canada Square”):

... [I]t is clear that the parties both intended to make a contract and thought that they had done so. Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the Court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat [words are to be understood that the object may be carried out and not fail]. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail.

[93] The Plaintiff submits that this is the situation in this case and that Mr. Oberman and Mr. Cohen knew what they meant by the Summerhill Condominium Site, a 5% interest, profit from the sale or development, and the time period of the interest. The Plaintiff argues that the court has a duty to attempt to carry out the intent of the parties and to interpret the agreement fairly and broadly. His position is that that there was an ascertainable and determinate intention to contract, and the court should give effect to that intention, looking at substance and not mere form.

[94] Included lands. According to the Plaintiff, there has never been any doubt about the lands over which he had an interest. He states that the three # 2 parcels on the Diagram were always treated as one block of land that would be developed together for the purpose of building a condominium. He also points out that Ms. Lewis agreed during her examination for discovery that the lands sold under the Lands APS were the “Summerhill Condominium lands”.

[95] Time period. The Plaintiff’s position is that he is entitled to 5% of the profit from the sale or development of the Summerhill Condominium Site calculated over the lifetime of the project, i.e. from when Woodcliffe purchased the properties making up the Summerhill Condominium Site, and not from the date that he was granted an interest in the project. He submits that this is consistent with the fact that what precipitated the granting of the 5% interest was the success of the related North Toronto Station project on which Mr. Cohen worked very hard and achieved a very successful result.

[96] The Plaintiff points out that Woodcliffe’s own expert used the time period from when Woodcliffe started purchasing the properties making up the Summerhill Condominium Site until Woodcliffe sold the Summerhill Lands when calculating the value of Mr. Cohen’s interest. He states that Woodcliffe’s only argument as to how to calculate the value of Mr. Cohen’s interest from the date of the granting of the interest is based on historic statistics of the Toronto Regional Real Estate Board (“TRREB”) with respect to the average sale price of residential properties over the years. The Plaintiff submits that these statistics have not been proven and do not relate to commercial properties. Further, he argues that the difference in the value of the lands would be insignificant if he was granted his interest in the project in 2002, i.e. right after the bar mitzvah of Mr. Oberman’s youngest son. He also points out that the Defendant’s approach to the time period issue is inconsistent and its calculations include costs that were incurred before the time he acquired his interest. According to the Plaintiff, given the evidence at trial, the only reasonable commencement date for the Plaintiff’s interest in the Summerhill Condominium Site is the date of acquisition of the underlying properties.

[97] Whole project vs. Woodcliffe’s share. The Plaintiff’s position is that he was granted 5% of the whole project – i.e. 5% of the entire profit from the sale of the Summerhill Condominium Site – not 5% of Woodcliffe’s share of the project or profit. Mr. Cohen’s evidence was that when he was discussing with Mr. Oberman about the projects they were working on, they would always talk about the total value of the projects, not the value of Woodcliffe’s interest in the projects (i.e. 50%). To further support his position that his 5% interest in the Summerhill Condominium Site was a 5% interest of the whole project and not only of Woodcliffe’s interest in the project, the Plaintiff refers to his interest in Chambers Equities which was always described as a 5% interest of the whole project even though his interest was structured or implemented as a 10% interest in the corporation that held Woodcliffe’s 50% interest in the project (Ottawa Chambers). The Plaintiff also points to Mr. Oberman’s e-mail dated January 28, 2008 to Mr. Colson in which Mr. Oberman: (a) describes Mr. Cohen’s interest in Chambers Equities as a 5% interest in the project, and (b) refers in the same sentence to Mr. Cohen’s 5% interest in the Summerhill Condominium Site.

[98] Profit. Mr. Cohen’s evidence was that he had an understanding of the meaning of the word “profit”. He states that profit is a generally understood term that is neither unclear nor impossible to understand. He points out that the accounting experts of the Plaintiff and the Defendant essentially agreed on the meaning of the word “profit” in the circumstances of this case. According to the Plaintiff, the three caveats raised by the Defendant’s expert – management compensation, interest on invested capital and allocation of proceeds of sale – only show a slight difference with respect to the application of the meaning of “profit”.

[99] With respect to management compensation and interest on invested capital, the Plaintiff argues that these are costs that were potentially incurred by Woodcliffe itself, and not by the joint venture companies. He points out that the 5% interest that he was granted was an interest in the profit of the entire project, not a 5% interest of Woodcliffe’s share of the project. The Plaintiff states that the amount paid out by the joint venture companies, not Woodcliffe, constitutes the profit from the sale of the Summerhill Condominium Site. He submits that he is entitled to receive his share of the profit at the same level that Woodcliffe received it, from the joint venture companies and before the deduction of any indirect costs incurred by Woodcliffe.

[100] The Plaintiff argues that Mr. Froese’s third caveat, the allocation of proceeds of sale, is an issue manufactured by Woodcliffe based on the circumstances of the sale of the Summerhill Condominium Site. However, he submits that this caveat does not change the clarity of his agreement with Woodcliffe regarding the meaning of profit. He states that if the purchase price paid by the purchasers was not actually the amount realized by the joint venture companies from the sale of the Summerhill Condominium Site, he would be entitled to receive 5% of whatever different amount was realized by the joint venture companies. This issue is discussed in more detail in the damages section.

(ii) Position of the Defendant

[101] The Defendant argues that while the topic of a 5% interest may have been discussed by Mr. Cohen and Mr. Oberman, there is insufficient evidence of a meeting of the minds between them. The Defendant states that Mr. Cohen and Mr. Oberman had not agreed on the terms of the alleged agreement at the time of Mr. Cohen’s termination.

[102] Further, and in any event, the Defendant’s position is that any agreement to grant a 5% interest in the Summerhill Condominium Site to Mr. Cohen was not sufficiently certain to create a binding contract. The Defendant states that it does not matter whether the parties thought that they had an agreement. It argues that vagueness permeates everything in this case about the claimed 5% interest, from the first discussion about the 5% interest to Mr. Cohen’s evidence at trial.

[103] The Defendant points out that there was no agreement as to how to calculate profit. It argues that there is uncertainty as to all the elements necessary to calculate profit, including revenue, expenses, period of time and percentage. According to the Defendant, there was no agreement as to: (a) whether Mr. Cohen’s interest was 5% of Woodcliffe’s profits or 5% of the joint venture’s profits (i.e. 10% of Woodcliffe’s profits); (b) when the start date for the calculation of the interest was; and (c) whether 5% of profits meant the actual profits or the profits recorded in the financial statements of the joint venture companies. The Defendant states that these items are essential terms of the contract and are necessary for any determination of profit.

[104] Whole project vs. Woodcliffe’s share. The Defendant’s position is that it would not have made sense for Mr. Oberman to agree to grant 5% of the profits of the project or joint venture as Woodcliffe could not agree to give a share of Westdale’s profits. The Defendant argues that Mr. Cohen’s own statements and actions suggest that he would only get 5% of Woodcliffe’s profits, including the fact that the Plaintiff initially sued Westdale and the joint venture companies in addition to Woodcliffe, which is consistent with Woodcliffe’s position that it should not pay someone else’s profit. While the Defendant acknowledges that Mr. Oberman on at least one occasion described Mr. Cohen’s interest in the Chambers Equities as a 5% interest in the project while, in fact, Mr. Cohen held a 10% interest in the corporation holding Woodcliffe’s 50% interest in the project, the Defendant tries to distinguish the two projects and argues that there was only one e-mail from Mr. Oberman containing such a description with respect to Chambers Equities.

[105] The Defendant argues that another reason for using Woodcliffe’s profits instead of the joint venture companies’ profits for the purpose of the calculation in this case is that Woodcliffe could not charge all of its expenses to the joint venture companies as a result of its agreement with Westdale. The Defendant submits that the profits of the joint venture do not represent the real profit of the business as they were the result of the relationship between Messrs. Oberman and Kimel.

[106] Time period. The Defendant argues that none of the written references identify the time period for determining profit. Relying on the evidence of Mr. Lisso, the Defendant argues that the profit should be calculated using the year in which the agreement was entered into between Mr. Cohen and Woodcliffe, not the year of the beginning of the project. The year in which the agreement was entered into is uncertain based on the evidence, but the Defendant submits that it would not make sense for Mr. Cohen to have been granted the interest in 2002, so soon after he started at Woodcliffe. According to the Defendant, the court should find that the agreement was entered into in 2004 or 2005.[^5] The Defendant states that in order to calculate the adjustment for the increase in land value between 2001 and 2004/2005, it is appropriate to use the general rate of inflation for real estate in Toronto. The Defendant points out, based on TRREB’s historic statistics with respect to the average sale price of residential properties over the years, that property values increased significantly between 1997 and 2004. The Defendant expresses the view that it is appropriate to use these statistics in this case as it was not possible to obtain an appraisal of the Summerhill Lands for an unspecified date in 2002, 2003, 2004 or 2005.

[107] Profit. The Defendant points out that none of the written references state whether the determination of profit was to be made using actual profits or profits recorded in the joint venture companies’ financial statements. According to the Defendant, the expert evidence does not assist in this case as it is based on assumptions provided by the lawyers regarding the time period, the expenses to take into consideration, etc. It states that neither expert can assist the court in determining what the agreed-upon parameters were. The Defendant submits that if Mr. Oberman was still alive, there would be further discussions and negotiations between Mr. Oberman and Mr. Cohen, which shows that the agreement is not sufficiently certain and that Mr. Cohen is asking the court to make an agreement for the parties. The Defendant points out that the evidence does not show that there is an industry norm that can readily fill in the blanks.

2. Whether the Signed Release extinguished Mr. Cohen’s interest in the Summerhill Condominium Site

(i) Position of the Plaintiff

[108] According to the Plaintiff, the Signed Release unambiguously provides that he is entitled to retain his interest in the Summerhill Condominium Site after the execution of the Signed Release. In the alternative, if the Signed Release is found to be ambiguous, the Plaintiff submits that the ambiguity should be resolved in favour of finding that he retained his 5% interest in the profit from the development or sale of the Summerhill Condominium Site.

[109] The Plaintiff’s position is that the fact that his interest in the Summerhill Condominium Site is not mentioned in the Signed Release does not mean that it has been released. He argues that this interest should be treated in the same way as the other payments set out in the July 16, 2008 Letter, which are expressly not released. He submits that it is clear from the wording of the July 16, 2008 Letter that the intentions of the parties were that Mr. Cohen would retain his 5% interest in the Summerhill Condominium Site. The Plaintiff states that the ordinary and grammatical meaning of the July 16, 2008 Letter is that he is entitled to a 5% interest in the profit from the development or future sale of the Summerhill Condominium Site.

[110] The Plaintiff points out that the February 6, 2008 Letter did not provide for Mr. Cohen to retain his interest in the Summerhill Condominium Site, and that the July 16, 2008 Letter was amended to include a sentence regarding his entitlement to this interest. He argues that if the July 16, 2008 Letter is interpreted in a way that does not allow Mr. Cohen to retain his interest in the Summerhill Condominium Site, this interpretation would fail to give meaning to the words that were added to the July 16, 2008 Letter.

[111] With respect to the sentence in the July 16, 2008 Letter that states that Woodcliffe will make a payment in the amount of $65,000 “in consideration of any and all other claims save and except for your continuing interest in the Chambers Equity Limited”, the Plaintiff argues that the record shows that the $65,000 payment was to settle the issue of his bonus, and that it cannot be interpreted as a payment to waive a $1.4 million interest in a project. Further, the Plaintiff refers to the previous inconsistent position of Woodcliffe that additional payments had been made to him for the release of his interest in the Summerhill Condominium Site. He argues that there would have been no reason for Woodcliffe to believe that a further payment was required in order to have Mr. Cohen release his 5% interest in the Summerhill Condominium Site if the understanding was that Mr. Cohen had released his interest in the July 16, 2008 Letter in exchange for $65,000.

[112] The Plaintiff submits that where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. He argues that the general terms of the release are qualified by the more specific term of the July 16, 2008 Letter pertaining to his interest in the Summerhill Condominium Site. He states that the court should apply the principle of interpretation that where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term not to extend to the subject-matter of the specific term.

[113] According to the Plaintiff, the court should reject Mr. Colson’s interpretation of his notes of his telephone conversation with Mr. Oberman on July 16, 2008. The Plaintiff points out that Mr. Colson set out a different interpretation in his September 16, 2014 Letter and subsequently confirmed this interpretation in an answer to undertaking in February 2018. The Plaintiff states that Mr. Colson inexplicably changed his interpretation for the first time in February 2020, one day before the trial of this matter was originally scheduled to proceed. He submits that this interpretation is not consistent with the record and common sense. Among other things, the Plaintiff argues that there was no reason for Mr. Colson to amend the February 6, 2008 Letter on July 16, 2008 to add a reference to Mr. Cohen’s entitlement to a 5% interest in the Summerhill Condominium Site unless his instructions were to offer the 5% interest to Mr. Cohen. If Mr. Colson’s instructions and Woodcliffe’s intention were not to offer the 5% interest, there was no reason to amend the February 6, 2008 Letter as Mr. Colson had the same instructions on February 6, 2008 and, therefore, nothing had changed on that issue.

[114] The Plaintiff also submits that the following points support his interpretation of the Signed Release and the intentions of the parties:

a. the evidence shows that, prior to July 16, 2008, Mr. Cohen and Mr. Oberman had reached an agreement to include the 5% interest in the Summerhill Condominium Site in Mr. Cohen’s package (see, e.g., e-mail dated March 26, 2008 from Mr. Oberman to Mr. Colson), and there is no evidence that anyone advised Mr. Cohen that this agreement had changed;

b. Mr. Oberman and Mr. Ryan did not ask any questions or clarification of Mr. Colson with respect to his draft July 16, 2008 Letter, but a lay person would have asked questions about the sentence which recognized Mr. Cohen’s entitlement to the 5% interest if their intention was not to include that interest in the offer;

c. the September 30, 2008 Letter regarding the temporary vs. permanent locations of the Five Thieves, which is referred to in the Signed Release, was necessary only if Mr. Cohen was getting an interest in the Summerhill Condominium Site. There was no point in specifying the exact lands for an interest that was being released. If Mr. Cohen’s interest was released, he had no interest with respect to either the temporary or the permanent locations of the Five Thieves. The Plaintiff argues that if the Signed Release is interpreted in a way that does not allow him to retain his 5% interest in the Summerhill Condominium Site, then the September 30, 2008 Letter and the specific reference to this letter in the Signed Release are rendered meaningless and ineffective; and

d. similarly, the negotiation of the change in the language of the July 16, 2008 Letter from “Summerhill Condominium” to “Rosedale Condominium” only has meaning if Mr. Cohen retains his 5% interest in the Summerhill Condominium Site as there is no reason to be concerned about the description of the property if Mr. Cohen was releasing all possible interests except for his interest in Chambers Equities.

(ii) Position of the Defendant

[115] The Defendant’s position is that the Signed Release is not ambiguous and that any claim Mr. Cohen had to an interest in the Summerhill Condominium Site has been released.

[116] The Defendant submits that an objective approach to the interpretation of the Signed Release leads to the conclusion that Mr. Cohen’s interest in the Summerhill Condominium Site has been released. It points out and argues that:

a. Schedule “B” to the Signed Release, which lists all of the entities that are being released, includes all the joint venture companies (including the joint venture companies that held title to real estate comprising the Summerhill Condominium Site) except for Chambers Equities and Ottawa Chambers. According to the Defendant, this supports the conclusion that the only interest that was intended not to be extinguished by the Signed Release was the interest in Chambers Equities/Ottawa Chambers.

b. Compared to the February 6, 2008 Letter, the July 16, 2008 Letter adds a promise to pay $65,000 “in consideration of any and all other claims save and except for your continuing interest in the Chambers Equity Limited.” This added language was considered by Mr. Cohen’s lawyer as he suggested minor changes to this sentence, but he left unchanged the wording confirming that the $65,000 was being provided “in consideration of any and all other claims save and except for your continuing interest in the Chambers Equity Limited.”.

c. As part of his severance, Mr. Cohen was paid seven months of salary and $65,000, even though he fully mitigated his damages by starting work for Westdale at a similar salary immediately following his termination, which is consistent with the payments being in return for a release of all claims and not pay in lieu of notice.

d. The sentence in the July 16, 2008 Letter about Mr. Cohen being entitled to an interest in the Summerhill Condominium Site has to be read and interpreted in the context of the letter and the release as a whole, including: (i) the sentence in the July 16, 2008 Letter that states that the $65,000 payment is in consideration of any and all other claims, and (ii) the absence of the mention that this interest is unaffected, as mentioned in relation to Chambers Equities. Woodcliffe’s interpretation, i.e. that the reference to the Summerhill Condominium Site is to expressly set out that this interest is being released, is the only one that does not require a finding that the drafters of the settlement documents made mistakes in three other places in the release.

e. If the intent of the parties was that Mr. Cohen’s interest in the Summerhill Condominium Site was to remain unaffected, it would have been mentioned in the Signed Release, like his interest in Chambers Equities. The July 16, 2008 Letter and the Signed Release cannot reasonably be read as preserving Mr. Cohen’s interest in the Summerhill Condominium Site. The Defendant argues that as a matter of plain English and pursuant to the law of releases, all the interests that were not specifically preserved – i.e. everything but for Chambers Equities – are released.

f. The reference in the Signed Release to the payments set out in the letters attached to the Signed Release is a reference to the seven months’ salary and the $65,000 payment and does not include the 5% interest in the Summerhill Condominium Site.

g. There is no evidence that Mr. Cohen and Mr. Oberman reached an agreement between February and July 2008 according to which Mr. Cohen was to keep his interest in the Summerhill Condominium Site.

h. If the intention was to maintain Mr. Cohen’s interest in the Summerhill Condominium Site, a more precise definition of “profit” would have been included in the July 16, 2008 Letter, as Mr. Colson requested in his letter dated April 14, 2008 to Mr. Oberman.

i. Mr. Cohen does not recall the period at issue and his evidence is unreliable – the Defendant points to examples in Mr. Cohen’s evidence where he contradicted himself or gave evidence that was not accurate. The Defendant’s view is that Mr. Cohen’s evidence was both evasive and inconsistent.

j. There is no record whatsoever of any entitlement to the claimed interest after the execution of the Signed Release. Further, Mr. Cohen did not mention anything about his claimed interest until years after Mr. Oberman’s death.

3. Calculation of damages

(i) Position of the Plaintiff

[117] The Plaintiff points out that both experts agree on the definition of “profit”. Mr. Froese’s three “caveats” are set out above.

[118] With respect to the third caveat, i.e. the allocation of proceeds of sale and whether the price set out in the Lands APS should be used to calculate profit, the Plaintiff argues that Woodcliffe has not shown that the purchase price is unreliable. According to the Plaintiff, there is no basis to conclude that the allocation of purchase prices negotiated by sophisticated arm’s length parties would not be a reasonable allocation. He submits that the evidence does not establish that the purchasers under the Lands APS and the Shops APS were the same, that there was any manipulation of the purchase price, or that the purchasers’ intention was to develop both the Summerhill Lands and the Shops of Summerville as a whole. He further submits that the articles relied upon by Mr. Froese should not be accepted for the truth of their contents. The Plaintiff points out that Woodcliffe used the purchase price in the Lands APS for accounting and tax purposes. His position is that there is no evidence supporting the adoption of an adjusted cost base approach to calculate profit. He also points out that Mr. Froese did not provide an explanation in his report as to how he calculated the adjusted cost base for either the Shops of Summerville or the Summerhill Condominium Site.

[119] The Plaintiff argues that because he was granted a 5% interest in the profit from the entire project, and not an interest in Woodcliffe’s profit, Woodcliffe should not be entitled to deduct its expenses that could not be charged to the relevant joint venture companies (including management compensation for Mr. Oberman and Ms. Lewis and interest on invested capital) before Mr. Cohen’s share is calculated. The Plaintiff further argues that Mr. Oberman and Mr. Cohen were fully aware that Woodcliffe was providing capital to a joint venture company at the time the 5% interest was granted to Mr. Cohen and, nevertheless, they made no provision for the deduction of notional interest from Mr. Cohen’s interest. The same argument applies to management compensation and other expenses. According to the Plaintiff, by seeking to make these deductions from Mr. Cohen’s interest, Mr. Froese and Woodcliffe are adding a new term to the agreement between Mr. Cohen and Woodcliffe.

[120] The Plaintiff submits that if interest is to be deducted from his 5% share of the profits, the interest rate of prime plus 1% should be used, consistent with the rate of interest used in the Co-Tenancy Agreement. With respect to management compensation, the Plaintiff argues that there is no evidence that $450,000 per year is the actual market rate for the services of Mr. Oberman and Ms. Lewis and no adequate basis was provided for the allocation of this amount between the joint venture companies. The Plaintiff points out that Mr. Froese admitted that the calculation of management compensation was a very “rough approximation”.

[121] As for the additional overhead expenses that Woodcliffe is seeking to deduct, the Plaintiff’s position is that the evidence at trial was that Woodcliffe was fully reimbursed for its overhead expenses incurred with respect to the Summerhill Condominium Site, other than the alleged expenses incurred by Woodcliffe for management compensation and interest on invested capital. The Plaintiff points out that none of the witnesses called by Woodcliffe identified which operating and overhead expenses were incurred by Woodcliffe with respect to the Summerhill Condominium Site and not recouped from the joint venture companies.

(ii) Position of the Defendant

[122] The Defendant argues that the global reasonableness (or unreasonableness) of the $1.373 million amount sought by the Plaintiff should be considered. The Defendant submits that the size of the amount claimed by the Plaintiff is inconsistent with the facts of this case and commercial common sense. The Defendant refers to the informality of the agreement, how it was made and the fact that it was not documented. It also refers to the fact that it amounts to more than the entire compensation that Mr. Cohen received over seven years of employment at Woodcliffe. According to the Defendant, the amount should be consistent with a bonus, not a huge payment.

[123] The Defendant submits that its position on damages is more reasonable and consistent with the evidence than the Plaintiff’s. It argues that the Plaintiff has overreached and claimed the maximum amount conceivable for each disputed item.

[124] The Defendant submits that the court should adopt the adjusted cost base approach described by Mr. Froese instead of relying on the price set out in the Lands APS to calculate the value of Mr. Cohen’s interest. The Defendant argues that the Summerhill Lands and the Shops of Summerville were sold together to a group of related purchasers after the negotiation of a global price for the two properties. It states that the vendors were indifferent as to how the purchase price was allocated between the two properties. The Defendant also points out that the two agreements of purchase and sale were intertwined and that the two properties have been part of single development applications. According to the Defendant, there is sufficient evidence to question whether the allocation of the global purchase price used in the Lands APS and Shops APS was an accurate reflection of fair market value. The Defendant argues that the Lands APS does not reflect a sale in the open market that is untethered to the other property and does not give a complete picture.

[125] The Defendant’s position is that any profit awarded to Mr. Cohen should be based on Woodcliffe’s actual profits, not the profits recorded in the financial statements of the joint venture companies. It submits that the latter are much higher than the true profits because they do not include numerous expenses that were excluded from the financial statements as a result of the peculiarities of the joint venture agreed upon by Messrs. Oberman and Kimel. The Defendant states that there is no evidence that Mr. Oberman intended Mr. Cohen to enjoy a higher scale of profit than Mr. Oberman himself enjoyed from the project. It points out that both accounting experts agreed that in calculating profit an attempt should be made to deduct all expenses, both direct and indirect, that were incurred in order to make the profit. The Defendant argues that these indirect expenses include overhead, interest and management compensation.

[126] The Defendant argues that management compensation is an appropriate deduction from profits as profits are artificially inflated if management compensation is not deducted. It submits that the court should adopt Mr. Trotter’s calculation of Mr. Oberman’s income, which results in an average annual compensation of $450,000. According to the Defendant, the fact that Mr. Cohen made $200,000 per year as an employee with significantly less seniority than the President, Mr. Oberman, provides strong objective evidence of the reasonableness of compensation in the amount of $450,000 for Mr. Oberman.

[127] As stated above, no evidence was adduced as to whether management compensation was deducted before Mr. Cohen received his payout from Ottawa Chambers. The Defendant submits that I cannot make assumptions one way or the other in this regard, that the Plaintiff has the burden of proof and had access to the documentation regarding Ottawa Chambers, and that I cannot draw any adverse inference against the Defendant on this point.

[128] The Defendant also argues that interest on invested capital is an appropriate deduction from profit because not deducting this expense would significantly overstate and distort Woodcliffe’s true profits. The Defendant submits that, based on the evidence, the rate of prime plus 3.5% should be used.

[129] Finally, the Defendant submits that its operating and overhead costs that were not recouped from the joint venture companies are an appropriate and necessary deduction from profit as they are real expenses that were incurred by Woodcliffe and without which none of the joint ventures could have existed. It further submits that it is appropriate to use the same allocation method for these expenses than the method used by its expert, Mr. Froese, for management compensation.

D. DISCUSSION

1. Principles applicable to contractual interpretation

[130] The Supreme Court of Canada set out the current approach to contractual interpretation in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (“Sattva”) . In a nutshell, courts are to read a 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. While the meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement, the surrounding circumstances must never be allowed to overwhelm the words of that agreement. Thus, even though the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement. Relevant surrounding circumstances consist only of objective evidence of the background facts at the time of the execution of the contract, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. See Sattva at paras. 47-48, 57-58 and Corner Brook (City) v. Bailey, 2021 SCC 29 at para. 20 (“Corner Brook”).

[131] These general principles of contractual interpretation apply to releases: Corner Brook at para. 21. However, the Supreme Court of Canada noted in Corner Brook that tension between the ordinary meaning of the words and the surrounding circumstances can arise more often in the context of the interpretation of a release for two reasons. First, releases are often expressed in the broadest possible words. Second, parties to a release are often trying to account for risks that are unknown at the time of contract, and there is an imprecision inherent in this task that can give rise to disagreement as to what was intended. See Corner Brook at paras. 35-37. The Supreme Court stated the following with respect to this tension (at para. 38):

For these reasons, releases may tend to lead to dissonance between the words of the agreement on their face and what the parties seem to have objectively intended based on the surrounding circumstances, with greater regularity than other types of contracts: see Cass, at p. 89. In resolving this tension, courts can be persuaded to interpret releases narrowly more so than other types of contracts, not because there is any special rule of interpretation that applies to releases, but simply because the broad wording of releases can conflict with the circumstances, especially for claims not in contemplation at the time of the release. The broader the wording of the release, the more likely this is to be so.

[132] Thus, while releases signed in the course of a settlement of a dispute are often worded in a broad and general fashion, they must be considered in the context of the dispute, which can serve as a limiting factor to the breadth of wording found in a release: see Corner Brook at para. 36.

[133] While evidence of negotiations and of the parties’ subjective intent is generally not admissible in interpreting a contract, there are some exceptions. In Simpson v. Canada (Attorney General), 2011 ONSC 5637 at paras. 66-70, Justice Perell reviewed the principles applicable to the admissibility of extrinsic evidence regarding the parties’ subjective intentions. He stated the following at paragraph 70 with respect to cases of latent ambiguities:

Extrinsic evidence is also admissible to resolve latent ambiguities, i.e. interpretative problems which arise when in seeking to interpret the contract for a particular circumstance more than one meaning is possible. In these circumstances, the court should first attempt to interpret the contract without any extrinsic evidence, apart from evidence of the surrounding circumstances, and extrinsic evidence should not be admitted for the purpose of showing a latent ambiguity. If, however, without extrinsic evidence, there is a latent ambiguity, then extrinsic evidence may be introduced to show that: (a) there is in truth no ambiguity, so the literal meaning of the language governs; (b) there is ambiguity, but the literal meaning governs because it is the best choice of the competing alternatives; c) there is ambiguity, but a non-literal meaning that is consistent with the wording of the document governs because it is the best choice of the competing alternatives; (d) there is ambiguity revealing a case of mistake; or e) there is ambiguity revealing that the parties had not reached a consensus ad item [sic], in which case the contract fails for uncertainty. See: Transcanada Pipelines Ltd. v. Northern and Central Gas Corp. Ltd. (1983), 1983 CanLII 1617 (ON CA), 41 O.R. (2d) 447 (C.A.); Leitch Gold Mines Ltd. v. Texas Gulf Sulphur Co. (Incorporated), 1968 CanLII 405 (ON SC), [1969] 1 O.R. 469 (H.C.J.); Leitch Transport Ltd. v. Neonex International Ltd., [1979] O.J. No. 1093 (C.A.).

2. Certainty of terms

(i) Applicable legal principles

[134] For an agreement to be legally binding, there must be sufficient certainty that the parties have agreed as to its essential terms. An agreement to agree or an agreement to negotiate an agreement is not enforceable. In performing its task of determining objectively whether the parties have reached an agreement on the fundamental terms of their bargain, the court should not be too quick to hold that there is not the degree of certainty in any of the contract’s essential terms needed for a binding contract. This does not mean that the court is to make a contract for the parties or go beyond the words used by the parties, but it means that if satisfied that there was an ascertainable and definitive intention to contract with a definite meaning, the court will do its best to make sense of the contract. If the essential terms are complete, the court will give effect to the contract and the failure of the parties to agree on minor matters will not invalidate the contract. See Electek Power Services Inc. v. Greenfield Energy Centre Limited Partnership, 2022 ONSC 894 at paras. 97, 104, 106.

[135] Both parties in this case rely on the seminal decision of the Court of Appeal in Canada Square. In that case, Morden J.A. set out the applicable principles on the issue of certainty of contractual terms and referred to a number of U.K. cases and authorities. He stated the following:

Taking all of the foregoing into account I am satisfied that the trial judge was right in finding that in executing the October 14, 1969, document the parties intended to make a contract. However, this does not end the matter. Notwithstanding that the parties may have thought they were bound, if the essential terms of the alleged contract lack certainty, either because they are vague or because they are obviously incomplete, the result will not be a binding contract: 9 Hals., 4th ed., para. 262; Treitel, The Law of Contract, 5th ed. (1979), at. p. 40; Corbin on Contracts at p. 394.

In this case, as I have said, Versafood submits that there is uncertainty with respect to: (1) the description of the premises to be leased; (2) the commencement of the term; and (3) certain material terms of the contract not being matters incident to the relation of landlord and tenant. Before I consider each of these issues it may be of value to refer to some general statements on the appropriate judicial response to this kind of issue.

In Hillas & Co. Ltd. v. Arcos (1932), 147 L.T. 503 at p. 514, Lord Wright said:

... [I]t is clear that the parties both intended to make a contract and thought that they had done so. Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the Court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat [words are to be understood that the object may be carried out and not fail]. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail.

At p. 517 he said:

It must always be a matter of construction of the particular contract whether any essential terms are left to be determined by a subsequent contract. When the learned Lord Justice [referring to the judgment of Greer L.J. in the same case in the Court of Appeal] speaks of essential terms not being precisely determined, i.e., by express terms of the contract, he is, I venture with respect to think, wrong in deducing as a matter of law that they must therefore be determined by a subsequent contract; he is ignoring, as it seems to me, the legal implication in contracts of what is reasonable, which runs throughout the whole of modern English law in relation to business contracts.

The same learned judge said this in G. Scammell & Nephew, Ltd. v. Ouston et al., [1941] A.C. 251 at p. 268:

The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted.

In G. Scammell & Nephew, Ltd. v. Ouston et al. Viscount Maugham said at p. 255:

In commercial documents connected with dealings in a trade with which the parties are perfectly familiar the court is willing, if satisfied that the parties thought that they made a binding contract, to imply terms and in particular terms as to the method of carrying out the contract which it would be impossible to supply in other kinds of contract: see Hillas & Co. v. Arcos, Ld.

Treitel, The Law of Contract, at p. 41 says:

But the courts do not expect commercial documents to be drafted with strict precision, and will do their best to make sense of them. This is particularly the case if the parties have acted on the agreement.

In this case there is no doubt that the document of October 14, 1969, as an agreement to lease, is crudely expressed and contains some very loose language. Further, a more sophisticated document would probably have covered several other matters in addition to those dealt with in it. Nonetheless, accepting that the parties intended to create a binding relationship and were represented by experienced businessmen who had full authority to represent their respective companies, a court should not be too astute to hold that there is not that degree of certainty in any of its essential terms which is the requirement of a binding contract.

[136] In Canada Square, the Court of Appeal affirmed the trial judge’s conclusion that there was an enforceable agreement and held that, when the agreement was read as a whole and against the commercial background, it was possible to determine the necessary elements of a lease.

(ii) Application to this case

[137] In my view, at the time of the execution of the Signed Release, there was an enforceable agreement between Woodcliffe and Mr. Cohen with respect to Mr. Cohen’s entitlement to a 5% interest in the profit from the development or sale of the Summerhill Condominium Site.

[138] I disagree with Woodcliffe’s submission that there is insufficient evidence of a meeting of the minds between Mr. Cohen and Mr. Oberman. I accept Mr. Cohen’s evidence on this issue. While Mr. Cohen could not remember, among other things, the timing of his conversation with Mr. Oberman during which he was offered a 5% interest in the profit from the development or sale of the Summerhill Condominium Site, this is not unusual or surprising given that the relevant events took place many years ago. Rather, it would be surprising if Mr. Cohen remembered everything in great detail. Mr. Cohen was clear on the essence of what was discussed and agreed upon, his evidence on this issue was straightforward, and he did not try to embellish his evidence or pretend that more terms or details were discussed.

[139] Very importantly, Mr. Cohen’s entitlement to a 5% interest in the profit from the development or sale of the Summerhill Condominium Site was recognized in writing by Woodcliffe through its lawyer in the July 16, 2008 Letter. This was a number of years after the interest was granted and at a time when Woodcliffe and Mr. Cohen were adverse. In light of this, I find that Mr. Oberman (on behalf of Woodcliffe) and Mr. Cohen were of the view that they had reached an enforceable agreement with respect to Mr. Cohen’s 5% interest in the Summerhill Condominium Site.

[140] The real question is whether the terms agreed upon by Mr. Cohen and Mr. Oberman were sufficiently certain to create a binding contract. Applying the principles of contractual interpretation and the principles set out in Canada Square, I come to the conclusion that they were.

[141] In my view, based on the surrounding circumstances known to both parties at the relevant time, there is no uncertainty regarding the expressions “Summerhill Condominium lands” or “Rosedale Condominium lands”, which are both used in the correspondence between Mr. Colson and Mr. Ducoffe to discuss the object of Mr. Cohen’s interest. These expressions refer to the Summerhill Condominium Site, i.e. the three # 2 parcels on the Diagram.

[142] Woodcliffe raises three main issues with respect to certainty of terms: (1) whether the interest was 5% of the whole project or 5% of Woodcliffe’s share of the project; (2) the meaning of “profit”; and (3) the time period over which Mr. Cohen’s interest should be calculated.

[143] Whole project vs. Woodcliffe’s share. With respect to the first point, I find that the wording of the agreement is clear: Mr. Cohen is entitled to a 5% interest in the profit from the development or sale of the Summerhill Condominium Site, not a 5% interest in 50% of the profit from the development or sale of the Summerhill Condominium Site. Woodcliffe’s position on this point is seeking to change the plain terms of the agreement.

[144] It is true that Woodcliffe did not own 100% of the Summerhill Condominium Site. However, Mr. Cohen’s entitlement, as worded in the July 16, 2008 Letter, was not a 5% interest in the Summerhill Condominium Site itself, but, rather, an entitlement to 5% of the profit from the development or sale of the Summerhill Condominium Site. A percentage of profit is a monetary amount that can be paid by Woodcliffe, whether or not it is the sole owner of the underlying project or lands. Thus, the fact that Woodcliffe was not the sole owner of the Summerhill Condominium Site does not prevent it from accepting the contractual obligation to pay to Mr. Cohen an amount equivalent to 5% of the profit from the development or sale of the Summerhill Condominium Site.

[145] While I do not think that there is ambiguity on this point, I would come to the same conclusion were I to consider extrinsic evidence. Mr. Cohen’s evidence was that when he and Mr. Oberman were discussing the projects on which they were working, they would always talk about the total value of the projects, and not the value of Woodcliffe’s interest in the project. This evidence is supported by at least two communications from Woodcliffe:

a. According to Mr. Colson’s notes of his telephone conversation with Mr. Ryan on November 29, 2007, Mr. Colson was advised by Mr. Ryan (who would have obtained this information from Mr. Oberman) that Mr. Cohen had a “documented equity interest in one of the [properties] at 5% that he’s getting paid on”. This passage refers to Mr. Cohen’s interest in Chambers Equities and shows that Woodcliffe was describing Mr. Cohen’s interest as a 5% interest in the whole project even though he had a 10% interest in Ottawa Chambers, i.e. the company holding Woodcliffe’s interest in Chambers Equities.

b. Similarly, in his e-mail dated January 28, 2008 to Mr. Colson, Mr. Oberman wrote that Mr. Cohen “was permitted to purchase a 5% interest in an office building in Ottawa”, i.e. Chambers Equities. This is further evidence that Mr. Oberman was referring to the total value of the project when he was describing the value of Mr. Cohen’s interest. In the same sentence, Mr. Oberman stated that Mr. Cohen “was also granted a 5% interest in the profits from an as yet undeveloped condo project at Summerhill”. It would be odd and inconsistent if, in the same sentence, Mr. Oberman was referring to a percentage of the total value of the project for one project (Chambers Equities) and referring to a percentage of Woodcliffe’s interest in the project for the other project (Summerhill Condominium). I note that Ms. Lewis acknowledged during her cross-examination that Mr. Oberman’s January 28, 2008 e-mail to Mr. Colson appears to say that Mr. Cohen had a 5% interest of the entire project related to the Summerhill Condominium Site.

[146] I do not agree with Woodcliffe’s argument that the fact that Mr. Cohen initially sued Westdale and the joint venture companies supports the position that the interest that was granted to him was a 5% interest in Woodcliffe’s 50% share of the profit instead of a 5% interest in the profit from the entire project. If, at the time he commenced the action, Mr. Cohen was of the view that he only had a 5% interest in Woodcliffe’s 50% interest, there would have been no need to sue Westdale and the joint venture companies. In my view, a more likely explanation for the additional Defendants is the fact that the action was commenced before the closing of the sale of the Lands APS and Mr. Cohen was seeking an interim order for the payment into court of 5% of the net proceeds of the sale. I also note that the Statement of Claim alleges that Woodcliffe was responsible for the interests granted to Mr. Cohen.

[147] Thus, I conclude that the term that Mr. Cohen was entitled to a 5% interest is not uncertain and that it refers to a 5% interest in the profit from the entire project.

[148] Profit. I also come to the conclusion that the meaning of “profit” is not so uncertain so as to invalidate the agreement.

[149] In support of its position that the meaning of “profit” is uncertain, Woodcliffe relies on the reasons of the dissenting judge in Pedersen v. Soyka, 2014 ABCA 179 who found that the agreement in issue lacked certainty for an essential term given that the word “profit” was not defined by the parties. However, the majority came to a contrary conclusion. Among other things, the majority pointed out that the word “profit” was construed and explained by the Supreme Court of Canada a number of times and it was never suggested that the word was uncertain or meaningless, especially with respect to an existing ongoing enterprise with a history: see paragraph 60. I agree with the reasoning of the majority at paragraphs 60-63 of its reasons. In my view, based on the English authorities quoted in Canada Square, this Court can ascertain the just and reasonable “boundaries” of profit as a matter of “machinery” if the parties’ contractual intention is clear, but the contract is silent on some detail. As stated by the Court of Appeal in Canada Square, this Court should not be too astute to hold that there is not the required degree of certainty with respect to a particular term when the parties intended to create a binding relationship, which I have found to be the case here.

[150] I discuss the issue of profit further below in the context of the calculation of damages and the analysis of the expert evidence. However, I note that my finding that Mr. Cohen’s interest was an interest in the profit of the whole project and not an interest in Woodcliffe’s share of the project eliminates most of the “uncertainties” alleged by Woodcliffe.

[151] Time period. Finally, I also find that there is no uncertainty regarding the time period over which Mr. Cohen’s interest should be calculated. Mr. Cohen was granted a 5% interest in the profit from the development or sale of the Summerhill Condominium Site. The profit from the future sale of the Summerhill Condominium Site can only refer to the profit that the landowners would make from the sale of the lands. Such profit has to be calculated from the time of the acquisition of the lands. I note that the agreement refers to 5% of the profit from the sale of the lands, not to 5% of part of the profit from the sale based on an unknown value of the lands a few years after they were acquired.

[152] The agreement does not contain any limiting time period. It is Woodcliffe that is now seeking to add one and argue uncertainty in the process.

[153] In light of the foregoing, I conclude that the terms agreed upon by Mr. Cohen and Woodcliffe/Mr. Oberman were sufficiently certain to create a binding contract.

2. Interpretation of the Signed Release

[154] In my view, as the parties’ submissions clearly show, more than one interpretation of the Signed Release is possible in relation to Mr. Cohen’s interest in the profit from the development or sale of the Summerhill Condominium Site, even after considering the entirety of the Signed Release and its attachments and the surrounding circumstances.

(i) Wording of the Signed Release and attached letters

[155] I consider first the wording of the Signed Release itself. While the wording of the Signed Release does not refer to Mr. Cohen’s interest in the Summerhill Condominium Site and expressly preserves his interest in Chambers Equities but nothing else, I find that this is not determinative because the Signed Release incorporates by reference a series of letters between counsel. Some of these letters refer to Mr. Cohen’s interest in the Summerhill Condominium Site. For instance, the September 30, 2008 Letter mainly concerns Mr. Cohen’s interest in the Summerhill Condominium Site and clarifies that the exclusion of the property occupied by the “Five Thieves” is limited to the permanent location of the Five Thieves and does not include their temporary location. The reference to these letters at the beginning of the Signed Release has to be given meaning. While it may have been lazy drafting to simply include a list of letters at the beginning of the Signed Release instead of incorporating in the Signed Release itself the information contained in these letters that needed to be incorporated, the difficulties created by this lazy drafting do not justify ignoring the letters and relying exclusively on the second paragraph of the Signed Release which only preserves Mr. Cohen’s interest in Chambers Equities. The reference to the letters creates an ambiguity.

[156] The reference to the letters in the Signed Release is in relation to “the payments set out” in the February 6, 2008 Letter as revised by the other letters. In my view, it is not possible, as argued by Woodcliffe, to interpret the word “payments” as being restricted to the seven-month notice payment and the $65,000 payment and as excluding any payment relating to Mr. Cohen’s 5% interest in the profit from the development or sale of the Summerhill Condominium Site. This is because the revisions set out in the various letters referred to at the beginning of the Signed Release, notably the September 30, 2008 Letter, are not restricted to the seven-month notice payment and the $65,000 payment. Thus, the meaning of “payments” in the Signed Release is also ambiguous.

[157] I am of the opinion that the list of entities in Schedule “B” to the Signed Release does not assist on the issue of whether the Signed Release was intended to extinguish Mr. Cohen’s interest in the Summerhill Condominium Site. While Woodcliffe relies on the fact that the joint venture companies that held title to the lands comprising the Summerhill Condominium Site are listed in Schedule “B”, but Chambers Equities is not, I conclude that this does not prove anything. First, the fact that Price Equities Limited, Price Leaseholds Limited and Rosedale Equities Limited are listed in Schedule “B” is neither here nor there as Mr. Cohen’s claim is against Woodcliffe, not the joint venture companies.

[158] Second, the Signed Release, by its terms, releases “any companies or other entities owned by [Woodcliffe and Westdale] and/or by their respective officers and directors (including but not limited to the entities listed in Schedule ‘B’ hereto)” [emphasis added]. Thus, whether or not a corporation was listed in Schedule “B”, it was a releasee if it was owned by Woodcliffe and Westdale. Accordingly, Chambers Equities and Ottawa Chambers were releasees, like all the joint venture companies, even though they may not have been expressly listed in Schedule “B”. Mr. Cohen’s interest in the Chambers Equities project was not affected by the Release not because Chambers Equities and Ottawa Chambers were not listed in Schedule “B”, but, rather, because of the specific exclusion set out in the Signed Release. Thus, if Mr. Cohen had had a claim against Chambers Equities that was unrelated to his ownership interest (e.g. a claim for damages for personal injury suffered as a result of a fall on the property), such a claim would have been released by the Signed Release.

[159] While I do not think that there is ambiguity on this issue, the extrinsic evidence confirms this interpretation and shows that Woodcliffe’s argument on this point is an after-the-fact reconstruction. On April 14, 2008, Mr. Colson sent a letter to Mr. Oberman seeking instructions on a number of issues. I note that it does not appear that Mr. Colson ever received a response to most of the questions set out in his letter (I discuss further the lawyer-client relationship between Mr. Colson and Mr. Oberman below). Mr. Colson’s letter included the following sentence:

You will recall that when we did the original form of Release we listed a number of companies in Schedule A, but I see, for example, that the Chambers Equities Limited is not one of them and I know that this list was put together in a bit of a hurry at your end so this is our opportunity to make sure that everyone who we need to include is listed.

[160] This suggests that the omission of Chambers Equities from Schedule “B” was accidental, not intentional, and that Mr. Colson thought that Chambers Equities should be included in the list despite the fact that Mr. Cohen’s interest in this project was being preserved. As noted above, other corporate entities were omitted from the list, probably inadvertently.

[161] I now turn to the wording of the July 16, 2008 Letter, which is referred to in the Signed Release. The last sentence of the second paragraph states that the payment of $65,000 is “in consideration of any and all other claims save and except your continuing interest in the Chambers Equity Limited.” The letter goes on in the third paragraph to repeat that Mr. Cohen’s interest in Chambers Equities is unaffected. It then states: “You are also entitled to a 5% interest in the profit from the development or future sale of the Summerhill Condominium lands and, for greater certainty, it is agreed that those lands do not include the properties occupied by what are commonly known as the ‘The Five Thieves’.” [Emphasis added.]

[162] It is difficult to reconcile the last sentence of the third paragraph with the last sentence of the second paragraph. After stating that the $65,000 payment was in consideration of any and all other claims except for Chambers Equities, the letter goes on and states that Mr. Cohen is also entitled to the interest in the profit from the development or sale of the Summerhill Condominium Site. There would be no need to mention the interest in the Summerhill Condominium Site, and to specify that the Five Thieves properties were excluded from this interest, if it were part of all the other claims that were being released.

[163] Further, looking at the July 16, 2008 Letter in light of the other letters attached to the Signed Release, it is noteworthy that Mr. Cohen’s interest in the Summerhill Condominium Site was not mentioned in the February 6, 2008 Letter and was added at the time of the July 16, 2008 Letter. I agree with the Plaintiff’s argument that there was no reason to amend the February 6, 2008 Letter and add a reference to the interest in the Summerhill Condominium Site if Woodcliffe’s intention was not to offer the 5% interest to Mr. Cohen.

[164] The September 30, 2008 Letter also throws some light on the added reference to the interest in the Summerhill Condominium Site in the July 16, 2008 Letter. As argued by the Plaintiff, the clarification regarding the temporary location of the Five Thieves was necessary only if Mr. Cohen was getting an interest in the Summerhill Condominium Site. There was no point in specifying the exact lands for an interest that was being released. If Mr. Cohen’s interest was released, he had no interest with respect to either the temporary or the permanent locations of the Five Thieves.

[165] In light of the words of the Signed Release and the letters attached to it, and the objective surrounding circumstances, I find that the Signed Release is ambiguous as more than one interpretation is possible in relation to Mr. Cohen’s interest in the Summerhill Condominium Site. Therefore, I turn to the extrinsic evidence.

(ii) Extrinsic evidence regarding the subjective intentions of the parties

[166] In my view, the extrinsic evidence resolves the ambiguity and confirms that the intention of the parties was that Mr. Cohen’s 5% interest in the profit from the development or sale of the Summerhill Condominium Site was to continue after his termination and the execution of the Signed Release.

[167] It is clear from the communications between Messrs. Colson, Oberman and Ryan that the issue of Mr. Cohen’s 5% interest in the Summerhill Condominium Site was raised before his termination. On February 4, 2008, Mr. Colson was instructed not to acknowledge this interest in the termination letter, i.e. in the February 6, 2008 Letter. However, on March 26, 2008, Mr. Oberman instructed Mr. Colson that Mr. Cohen was to receive an additional $65,000 payment in lieu of bonuses and 5% of the profit from the sale or redevelopment of the Summerhill Condominium Site, excluding the Five Thieves. The next communication regarding the terms of the settlement was in an e-mail sent on May 23, 2008 by Mr. Ryan to Mr. Colson. That e-mail did not mention the 5% interest in the Summerhill Condominium Site. It simply stated that a bonus payment in the amount of $65,000 was to be added to the original severance offer.

[168] The next substantive communication was the telephone conversation between Mr. Colson and Mr. Oberman on July 16, 2008. One interpretation of Mr. Colson’s telephone note, which is also the interpretation set out in his September 16, 2014 Letter, is that Mr. Colson went over the terms of the deal as set out in the May 23, 2008 e-mail from Mr. Ryan ($65,000 payment + original offer of seven-month notice payment and interest in Chambers Equities), but Mr. Oberman said in response: no, Mr. Cohen also gets a 5% interest in the profit from the development or sale of the Summerhill Condominium Site, excluding the Five Thieves.

[169] In my view, this is the most natural interpretation of the notes, in light of all the circumstances and the correspondence that precede and follow the July 16, 2008 telephone conversation. However, as set out above, Mr. Colson subsequently changed his evidence regarding the interpretation that should be given to his notes, and adopted the position that Mr. Oberman told him at the beginning of the call that the offer to Mr. Cohen was to include the 5% interest in the Summerhill Condominium Site, but Mr. Oberman changed his mind during the call and his instructions changed, prompting Mr. Colson to insert the word “NO” in his notes.

[170] I do not accept Mr. Colson’s evidence on this point.

[171] Before discussing Mr. Colson’s specific evidence regarding his telephone conversation with Mr. Oberman on July 16, 2008, I wish to comment on Mr. Colson’s lawyer-client relationship with Mr. Oberman and Mr. Colson’s evidence more generally.

[172] In his testimony at trial, Mr. Colson stated that Paul Oberman “was a character, a challenging sort of individual in many ways for a lawyer who wants to maintain control of things”. This observation is supported by the record before me and, in particular, the contents of Mr. Colson’s file. The communications sent by Mr. Colson in relation to Mr. Cohen’s termination show that he had great difficulty obtaining clear instructions and answers to his questions, at all or in a timely manner. Further, Mr. Oberman was having discussions and negotiations with Mr. Cohen without involving Mr. Colson, and the “deal” was completed in November 2008 while Mr. Colson was out of the country and without his knowledge. Mr. Colson also testified that Mr. Oberman: (a) thought that this matter was being “over-lawyered”, and (b) did not share some of the concerns expressed by Mr. Colson (for instance, on the issue of liability to pay taxes). Ultimately, Mr. Oberman decided to proceed in the manner that he, Mr. Oberman, wanted to proceed. An additional layer of difficulty was the fact that Mr. Oberman attempted to delegate certain tasks to Mr. Ryan who was new at Woodcliffe and did not have the necessary information or knowledge to be useful or answer Mr. Colson’s questions independently and in a complete fashion. Another relevant factor is that the discussions and negotiations were spread over what appears to be an unusually long period of time (the Signed Release was executed 9 months after Mr. Cohen’s termination), with some of the delay caused by the parties and some delay caused by the lawyers.

[173] Given that the relevant events took place in 2008, 14 years ago, it is not surprising that Mr. Colson does not have a good recollection of the events. However, the problems with his evidence go beyond that. During his testimony, both in-chief and in cross-examination, Mr. Colson was unable to remember the important correspondence that was exchanged at the relevant time, even though some of the letters and e-mails were reviewed with him several times during his testimony. He had no or very little grasp of the basic facts, the correspondence, and the chronology of the communications and events. In cross-examination, he stated a number of times that he could not tell what he was thinking when he wrote something. Further, he put forward an interpretation of certain of his notes and correspondence (excluding the July 16, 2008 notes) that did not make sense and, in my view, was clearly wrong, in light of all the circumstances and correspondence. One example is that he refused to acknowledge that the references in some of the notes and correspondence to the “one or two deals” in which Mr. Cohen had an interest were references to Chambers Equities and the Summerhill Condominium Site. Mr. Colson stated that he had a recollection that “the Chambers Equities properties were actually treated as two deals.” While he acknowledged that this recollection may be wrong, it is clearly wrong as this was never suggested by anyone. In addition, it is clear from the correspondence that the “one or two deals” were Chambers Equities and the Summerhill Condominium Site as both of them had been referred to and acknowledged in prior correspondence. However, as stated above, Mr. Colson had no or very little grasp of the correspondence and the chronology of the communications, which caused him to misunderstand and misinterpret his own notes and correspondence.

[174] Against this background, I do not accept Mr. Colson’s changed evidence and recent interpretation of his notes of his telephone conversation with Mr. Oberman on July 16, 2008. Mr. Colson’s evidence that Woodcliffe’s intention was to terminate Mr. Cohen’s entitlement to his 5% interest in profit from the development or sale of the Summerhill Condominium Site turns almost entirely on his interpretation of the word “NO” in his notes of the July 16, 2008 telephone conversation. Given how poor his recollection of events was at trial, even after reviewing his file and being taken to the relevant correspondent at trial, I conclude that his account of his telephone conversation with Paul Oberman on July 16, 2008 is a reconstruction, and an incorrect one.

[175] Clearly, Mr. Colson had no direct recollection of the instructions he received on July 16, 2008 in September 2014 as he signed the September 16, 2014 Letter which contains a different account. Had he had a direct recollection, he would have realized when reading the September 16, 2014 Letter that it was inaccurate, and he would not have signed it. This conclusion is reinforced by the fact that he later confirmed the contents of the September 16, 2014 Letter in response to an undertaking given during Ms. Lewis’ examination for discovery, although he corrected the date of the conversation from July 15 to July 16, 2008. Given that he corrected the date of the call, this strongly suggests that he looked at his notes at that time, but, still, he did not correct anything else. I do not accept, in light of his very poor memory, that by rereading his notes more recently his memory was somehow refreshed and he now remembers clearly his discussion with Mr. Oberman, how it progressed and an alleged change of instructions in the middle of the conversation. I am not suggesting in any way that Mr. Colson is deliberately lying, but his evidence is unreliable and inconsistent with the communications that were exchanged at the time. As stated above, he also clearly misinterpreted some of his other notes and correspondence at trial.

[176] It is clear from the correspondence that Mr. Colson knew before drafting the February 6, 2008 Letter that Mr. Cohen had an acknowledged interest in the Summerhill Condominium Site. His instructions, received on February 4, 2008, were not to include this interest in the offer at that time. If his instructions on this point had not changed on July 16, 2008 and had remained the same, then there would have been no need for him to amend the February 6, 2008 Letter on July 16, 2008 to add a sentence about Mr. Cohen’s entitlement to a 5% interest in the profit from the development or sale of the Summerhill Condominium Site.

[177] Further, Mr. Colson was unable to explain why he addressed the issue of the temporary location of the Five Thieves in the September 30, 2008 Letter. His evidence at trial was as follows:

Q. And so if Mr. Cohen is not going to receive the five percent interest in the profit from the development or future sale of Rosedale condominium, why would you be discussing with Mr. Oberman whether it matters to change from Summerhill to Rosedale? Can you assist us with that in any way?

A. I actually cannot. This was an issue that – the problem was that the Five Thieves, as they’re called, were a series of five stores that were in a – that permanent building that begins at the southeast corner of Yonge and I think it’s Price Street and extends up to the – it extends northward on Yonge Street, so towards the liquor store. And in order to – there, there was a period of time during which we think four of the five of the Five Thieves, maybe five of the six, or all but one of them in any event, were moved out of that permanent building and into a temporary structure, so that they could continue to carry on business during the course of the renovation of the permanent building. And the permanent building was substantially renovated. It was added to. I think there – a bank was put in. There was a restaurant, a large restaurant, popular restaurant called Terroni put in with a rooftop patio, and other changes were made. And then the stores were moved back to the premises which they previously occupied. And for some reason, Paul wanted it to be clear that if we were, if we were talking about those premises, he wanted to be clear whether we were talking about the permanent premise or the temporary one. And he had raised that with me and it came up, you know, more than once. But to your question, you know, why were we discussing that issue, apart from the fact that it seemed to be something that Paul had an interest in, an interest in our communicating, there was no reason that I’m aware of thinking back on why that was material to anything in terms of this deal.

Q. […] And so I want to be very clear, Mr. Colson, and so I’m, I’m - for the sake of clarity, that letter of September 30th does talk about that it’s the permanent location and not the temporary location. Can you help us as to why Mr. Oberman would have cared about whether it was the permanent location and not the temporary location if Mr. Cohen was not to receive it?

A. I cannot help you with that.

Q. Okay.

A. Other than, other than what I’ve said previous, this is something that Paul’s repeated two or three times and, and seemed to think was important.

[178] Mr. Colson also gave evidence that had he received instructions to include the 5% interest in the Summerhill Condominium Site in the offer to Mr. Cohen, he would have insisted on getting from Mr. Oberman a more precise definition of what was meant by “profit”. A similar request is set out in his letter dated April 14, 2008 to Mr. Oberman in which he seeks instructions and clarifications on a number of points, including the meaning of “profit” and the list of entities to be released. However, Mr. Colson never received a response to his questions. Instead, he received short, non-responsive and “cryptic” e-mails from Mr. Ryan, and most of the questions set out in the April 14, 2008 letter (including the issue of the definition of profit and the completeness of the list of entities in Schedule “B” to the Full and Final Release) were not raised again in correspondence. The next time that Mr. Colson heard directly from Mr. Oberman was by phone, three months later, on July 16, 2008. The notes from that telephone conversation are short and do not record any discussion about the meaning of “profit” or the list of entities in Schedule “B”. The telephone conversation itself was also short, only 8 minutes. At the time of the call, Mr. Colson may not have remembered the issues he had raised in his correspondence three months earlier and/or he may not have had the time to raise them during the call. I infer from the notes and the circumstances that Mr. Oberman wanted to proceed with the offer and the revised letter quickly. If Mr. Colson raised any concerns during the conversation that were not recorded in his notes, they would likely have been dismissed by Mr. Oberman like other concerns raised by Mr. Colson were. Thus, I do not accept the position that Mr. Colson would not have proceeded with an offer including the 5% interest in the Summerhill Condominium Site without a more precise definition of what was meant by “profit”.

[179] Ultimately, I interpret Mr. Colson’s notes of the telephone conversation of July 16, 2008 in the manner in which he and his associate originally interpreted the notes when they prepared the September 16, 2014 Letter. In my view, this is the more natural and likely interpretation. Among other things, as stated above, there would have been no need for Mr. Colson to amend the February 6, 2008 Letter to refer to the interest in the Summerhill Condominium Site if his instructions had remained not to include that interest in the offer. Further, the only reason why Mr. Oberman would have thought that it was important to deal with the issue of the temporary location of the Five Thieves was if Mr. Cohen kept his 5% interest in the Summerhill Condominium Site.

[180] This interpretation is also supported by the following arguments of the Plaintiff, with which I agree:

a. If, during his telephone conversation with Mr. Colson on July 16, 2018, Mr. Oberman changed his mind about including the 5% interest in the Summerhill Condominium Site in the offer to Mr. Cohen, one would have expected Mr. Oberman to communicate this change of position to Mr. Cohen either before the July 16, 2018 Letter was sent or more clearly in the July 16, 2008 Letter. The record before me reflects that Mr. Oberman and Mr. Cohen were negotiating directly, without lawyers, and they had reached an agreement on terms. It would be surprising for Mr. Oberman to instruct his lawyer to send a letter reflecting different terms without a prior discussion with Mr. Cohen. This is particularly the case since Mr. Oberman had a continuing working relationship with Mr. Cohen as the latter was now working at Westdale. Mr. Kimel was also involved in the process and was putting pressure on Mr. Oberman to finalize the settlement. There is no evidence that Mr. Cohen was advised of any change in position before the July 16, 2008 Letter was sent. The addition of the reference to the interest in the Summerhill Condominium Site in the July 16, 2008 Letter was consistent with this term being added to the deal that was previously offered in the February 6, 2018 Letter. It was also consistent with Mr. Oberman’s e-mail dated March 26, 2008, which instructed Mr. Colson to include the 5% interest in the Summerhill Condominium Site in an offer to Mr. Cohen. As stated above, it would be very unusual if after agreeing on a settlement that included a 5% interest in the Summerhill Condominium Site in March 2008, Mr. Cohen were to agree a few months later on a settlement that did not include the 5% interest with all the other terms unchanged.

b. Mr. Oberman and Mr. Ryan did not ask any questions or clarification of Mr. Colson with respect to his draft July 16, 2008 Letter. However, a lay person would very likely have asked questions about the sentence that recognized Mr. Cohen’s entitlement to the 5% interest if the intention was not to include that interest in the offer.

[181] In light of the foregoing, I conclude that the extrinsic evidence resolves any ambiguity and confirms that the Signed Release and the attached letters should be interpreted as not releasing Mr. Cohen’s 5% interest in the profit from the development or sale of the Summerhill Condominium Site.

[182] As for other extrinsic evidence referred to by the parties, I find that the fact that Mr. Cohen may not have raised the issue of his interest in the Summerhill Condominium Site with Ms. Lewis until a few years after Mr. Oberman’s death does not have any impact on the interpretation of the Signed Release. Mr. Cohen did not consider that he had a good relationship with Ms. Lewis, and there was no reason for him to raise the issue of his interest until there were plans to sell the Summerhill Condominium Site.

[183] Finally, I do not give any weight to Ms. Lewis’ evidence that Mr. Oberman told her in the summer of 2008 that everything had been resolved with Mr. Cohen and that Mr. Cohen’s interest in the Summerhill Condominium Site was now gone as Mr. Oberman had agreed to pay him more. Ms. Lewis was not involved in the negotiations with Mr. Cohen, it is unclear when this conversation took place in relation to the exchange of correspondence, and her conversation with Mr. Oberman took place many months before the Signed Release was executed and the discussions between Woodcliffe and Mr. Cohen were completed. Further, the extrinsic evidence shows that the only additional payment that was agreed upon, i.e. the payment of $65,000, was agreed upon in early spring of 2008 and it was a payment in lieu of bonuses: see the March 26, 2008 e-mail from Mr. Oberman to Mr. Colson and the May 23, 2008 e-mail from Mr. Ryan to Mr. Colson.

[184] While Woodcliffe took the position during the litigation that, in addition to the payments set out in the July 16, 2008 Letter, Mr. Cohen had received a payment in the amount of $400,000 in exchange for his giving up his interest in the Summerhill Condominium Site – which position was consistent with Ms. Lewis’ recollection of her conversation with Mr. Oberman – this position was later abandoned as it became clear that Mr. Cohen had not received an extra $400,000. I note that Woodcliffe’s earlier position is somewhat inconsistent with Woodcliffe’s current position as an extra payment of $400,000 would not have been necessary if Mr. Cohen’s interest in the Summerhill Condominium Site had been released by the Signed Release.

[185] Thus, I conclude that Mr. Cohen’s 5% interest in the profit from the development or sale of the Summerhill Condominium Site has not been extinguished by the Signed Release. The July 16, 2008 Letter and subsequent correspondence should be interpreted as preserving Mr. Cohen’s 5% interest in the Summerhill Condominium Site, and the Signed Release should be interpreted as not extinguishing this interest as a result of the correspondence referred to above which is incorporated in the Signed Release. The reference at the beginning of the Signed Release to “payments” set out in the correspondence should be interpreted as including the 5% interest in the profit from the development or sale of the Summerhill Condominium Site.

3. Calculation of damages

[186] I have found that Mr. Cohen is entitled to a 5% interest in the profit from the development or sale of the Summerhill Condominium Site, not a 5% interest in Woodcliffe’s 50% share of the profit from the development or sale of the Summerhill Condominium Site. Given this finding, I conclude that the appropriate approach to calculate the value of a 5% interest in the profit from the sale of the Summerhill Condominium Site is the approach adopted by Mr. Mandel, which he applied at the level of the joint venture companies, not at Woodcliffe’s level. The value of the profit from the sale of the lands should be determined at the level of the owners of the lands, i.e. the joint venture companies. In my view, the additional deductions proposed by Mr. Froese, i.e. senior management compensation and interest on invested capital, are not proper deductions as they are notional costs of Woodcliffe, not costs of the whole project that were incurred by or properly charged to the joint venture companies in light of the Co-Tenancy Agreement.

[187] In any event, the evidence regarding senior management compensation, interest on invested capital and other overhead costs[^6] adduced by Woodcliffe was inadequate. The proposed figure with respect to senior management compensation is based entirely on a letter prepared by Mr. Trotter for the purpose of a different piece of litigation. The letter sets out the amount of money taken out by Mr. Oberman from 2000 to 2011, not only as salary, but as dividends as well. The “average” number arrived at is heavily skewed by the fact that in 2008, Woodcliffe paid dividends to Mr. Oberman in the amount of $2,466,155, which is out of proportion to the amounts he received in other years and to any reasonable salary for a member of senior management in a company like Woodcliffe. Further, there was no evidence regarding Ms. Lewis’ compensation, there was no evidence that $450,000 represented the fair value of compensation for the services of Mr. Oberman and/or Ms. Lewis at the relevant time, and there was insufficient evidence to support an allocation of management compensation among all the joint venture projects. The Defendant’s own expert, Mr. Froese, stated that the calculation of management compensation was a very rough approximation.

[188] On the issues of interest on invested capital and overhead costs, I accept the evidence of Rick Morante, who was the controller of Woodcliffe from 2002 to 2012 and the main source of information of Mr. Trotter when he became Woodcliffe’s external accountant. Mr. Morante left Woodcliffe after the death of Mr. Oberman and, like Mr. Cohen, he went to work for Westdale. He is now Westdale’s Chief Financial Officer.

[189] While Mr. Morante was controller of Woodcliffe, he maintained the books and records of Woodcliffe and all the joint venture companies in which Woodcliffe and Westdale were involved, including Price Equities Limited, Price Leaseholds Limited and Rosedale Equities Limited.

[190] Mr. Morante’s evidence was that: (a) Woodcliffe’s capital contributions to the joint ventures were paid by Westdale, not Woodcliffe, and were treated as loans; (b) the joint venture companies, not Woodcliffe, paid interest on these loans at the rate of prime + 1%; and (c) the contributions were ultimately repaid from proceeds. Mr. Morante’s evidence was also that Woodcliffe’s expenses, including rent, office supplies, telephone, staff, etc., were charged to the joint venture companies. He stated that, on a monthly basis, Woodcliffe would bill the individual joint venture companies for its expenses. He added that Westdale did not do this, but Woodcliffe did as it was the “managing partner”. Mr. Morante also gave evidence to the effect that in addition to granting loans to the joint venture companies, Westdale also granted loans to Mr. Oberman personally, not to Woodcliffe. According to Mr. Morante, the rate of interest on these personal loans was prime + 3%, with a minimum of 8%.

[191] Mr. Trotter also gave evidence on the issue of overhead costs. He started doing Woodcliffe’s financial statements and tax returns after Mr. Oberman’s death, but Woodcliffe’s previous accountants continued preparing the financial statements for the joint venture companies. According to Mr. Trotter, some of Woodcliffe’s expenses could not be charged back to the joint venture companies. He stated that such expenses included accounting expenses, legal expenses, entertainment expenses and “day-to-day” expenses. However, Mr. Trotter admitted that the information provided by the financial statements alone was insufficient to determine whether certain expenses were incurred in relation to a joint venture company, and that further information would be needed in order to do an allocation. Such additional information was not put in evidence before me.

[192] I also note that Ms. Lewis’ knowledge about Woodcliffe’s financial statements appeared to be very limited and she was unable to substantiate some of the general statements that she made and some of the positions that she took.

[193] In light of the foregoing, I do not accept the additional costs deductions proposed by Woodcliffe.

[194] The only other issue with respect to the calculation of profit is whether it should be based on the purchase price set out in the Lands APS or using an adjusted cost base approach.

[195] While the lawyers for Woodcliffe were bullish on an adjusted cost base approach, their own expert was not. As stated above, Mr. Froese described such an approach as a “very, very rough tool” and he stated that there was a lot of “softness” in the numbers generated by this approach and that they were an indication, at best. This is hardly compelling evidence in support of an adjusted cost base approach.

[196] The argument that this Court should use a cost base approach to calculate profit in this case is premised on Woodcliffe’s position that the purchase price in the Lands APS is not reliable. It is not disputed that the best number to use to calculate profit is the purchase price if it is reliable.

[197] I do not accept Woodcliffe’s position that the purchase price in the Lands APS is unreliable. Its position is based on speculation rather than evidence. Among other things:

a. There is no satisfactory evidence that the purchasers of the Summerhill Lands and the Shops of Summerhill were the same. On the face of the Lands APS and the Shops APS, the purchasers are different. While Adrian Rocca signed both the Lands APS (on behalf of Scrivener Square GP Inc.) and the Shops APS (on behalf of Summerhill Shops GP Inc.), the second signatory for the purchasers is not the same on the two agreements. For instance, Riocan Acquisitions Inc. is only a party to the Shops APS.

b. The TRNTO.com article referred to in Mr. Froese’s report in support of the position that the Summerhill Lands and the Shops of Summerhill were sold to the same buyers does not support this conclusion. The article does not state that the owners of the Shops of Summerhill are the same as the owners of the Summerhill Lands and mentions that “[t]he Five Thieves building is not included in the [development] proposal”. While the article mentions Diamond Corp. and Tricon Capital Group, it does not mention Riocan Acquisitions Inc.

c. Ms. Lewis’ evidence on the issue of the identity of the buyers was too vague and non-specific to support the conclusion that the buyers for the two properties were the same.

d. The City of Toronto Staff Report relied upon by Woodcliffe and Mr. Froese does not support the statement in Mr. Froese’s report that “[t]he buyers intend to develop the property as a whole, using the air rights from the Shops of Summerhill in developing the proposed condominium project.” There is no mention of air rights in the Report. Further, the Report does not establish that the development of the Summerhill Lands depends on common ownership of the Shops of Summerhill. Among other things, the Report states that the Shops of Summerhill “are to remain unaltered”. In any event, this Report, like the TRNTO.com article also referred to by Mr. Froese, constitutes hearsay.

e. The $43 million price for the Summerhill Lands has been constant and is the same price as the price proposed in the letter of intent. After negotiations, the purchase price of the Shops of Summerhill increased to $42 million from the proposed price of $40 million in the letter of intent. There is no evidence of manipulation of the purchase prices.

f. Woodcliffe used the purchase price in the Lands APS for accounting and tax purposes.

g. While the Lands APS and the Shops APS are connected by a few provisions (e.g. concurrent closings and assumption of mortgages), this is insufficient in itself to conclude that the purchase price for the Summerhill Lands is not an accurate reflection of fair market value. There is no evidence before me as to whether there were agreements among the owners of the Summerhill Lands and the Shops of Summerhill regarding mortgages and other issues and what the provisions of such agreements were.

[198] In light of the foregoing, I agree with the Plaintiff and Mr. Mandel that there is no basis in the evidence before me to: (a) find that the purchase price for the Summerhill Lands in the Lands APS does not reflect fair market value, and/or (b) change the allocation of the proceeds of sale from the allocation indicated in the Lands APS and the Shops APS.

[199] In circumstances where the purchase price has not been found to be unreliable, both experts agree that the purchase price in the Lands APS should be used instead of an adjusted cost base approach to calculate profit. Accordingly, I adopt the approach and calculations of Mr. Mandel and conclude that the value of a 5% interest in the profit from the sale of the Summerhill Condominium Site is $1,372,992.

E. CONCLUSION

[200] The action is granted. Woodcliffe is ordered to pay damages to Mr. Cohen in the amount of $1,372,992, with pre-judgment interest from June 15, 2016, i.e. the date of the closing of the sale of the Summerhill Lands.

[201] If costs cannot be agreed upon, the Plaintiff shall deliver submissions of not more than four pages (double-spaced), excluding the bill of costs, within 14 days of the date of this Judgment. The Defendant shall deliver its submissions (with the same page limit) within 14 days of its receipt of the Plaintiff’s submissions.

Vermette J.

Released: October 3, 2022

[^1]: Mr. Ryan had almost no recollection of the relevant events. His testimony was cut short as, after discussion, counsel agreed to stipulate as follows: where written communications state that Mr. Ryan was told something by Mr. Oberman, Mr. Ryan conveyed what he understood from his conversations with Mr. Oberman.

[^2]: Mr. Ryan only worked at Woodcliffe for approximately 20 months.

[^3]: It was conceded by the Plaintiff that a strip of land owned by 1101 Yonge Street Limited as part of the Shops of Summerhill was transferred to the purchasers under the Lands APS. As a result of a ruling I made during the trial regarding, among other things, an attempt to correct an answer given by Ms. Lewis during her examination for discovery, the Defendant was not allowed to use the fact that a strip of land from the Shops of Summerhill was included in the Lands APS to argue that: (a) the purchase price in the Lands APS should be reduced for the purpose of calculating the value of Mr. Cohen’s interest; or (b) the allocation of the purchase price between the Summerhill Lands and the Shops of Summerhill was not reliable. There is no evidence before me (nor was there any attempt to adduce evidence) as to whether any part of the purchase price of $43 million under the Lands APS (as opposed to any part of the purchase price under the Shops APS) related to the strip of land in issue. I note that the owner of the strip of land, 1101 Yonge Street Limited, was not party to the Lands APS. I also note that the description of the Summerhill Lands in the Letter of Intent does not include any part of the Shops of Summerhill and the proposed purchase price for the Summerhill Lands in the Letter of Intent was the same as the final purchase price, i.e. $43 million.

[^4]: Mr. Lisso stated during his cross-examination that he was provided with a copy of the Co-Tenancy Agreement only after he prepared his report.

[^5]: In their written closing submissions and at times during oral argument, the Defendant also argued that the appropriate year to use was 2006. I reject this argument as it is too late after the bar mitzvah took place.

[^6]: The proposed deduction for additional overhead costs is not included in Mr. Froese’s report, but was advanced by Woodcliffe in its closing argument.